A Bankruptcy is when you assign (surrender) everything you own to a Licensed Insolvency Trustee in exchange for the elimination of your debt. Some exceptions vary by province allows you to keep some minimum necessities. The Bankruptcy and Insolvency Act is what governs bankruptcies in Canada. The Bankruptcy and Insolvency Act is designed for an honest but unfortunate debtor to obtain relief from his or her debts while treating creditors equally and fairly. The process features a "Stay of Proceeding" that prevents employment garnishment or any legal action from happening and stops your creditors from calling. You can apply for bankruptcy only if you have lived or conducted business in Canada within the last year, and must be insolvent. You may be entitled to an automatic discharge from personal bankruptcy in as little as nine months. The court sets this minimum provided you have never been bankrupt before, and you have completed various duties and responsibilities. The bankruptcy will remain on your credit report for several years, which could impact you obtaining credit in the future
A Consumer Proposal is a legal agreement between you and your creditors to repay part of the debt that you owe. This arrangement, governed by Canada's Bankruptcy and Insolvency Act and is proposed to your creditors by a bankruptcy trustee as an alternative to you declaring personal bankruptcy. The amount the trustee will offer your creditors is assessed based on your income and what you owe. Consumer Proposals are attractive because it reduces the amount of debt owed to creditors with a straightforward monthly payment plan. There is a cost when going the route of the Consumer Proposal. Ensure that you discuss all your options with the trustee before signing any agreements.
It typically takes five years to pay-off a Consumer Proposal. A Consumer Proposal is a great option to lower monthly payments, consolidate unsecured debts into one monthly payment, and eliminate personal debts.