Consumer Proposal vs. Bankruptcy

What are my debt relief options?
Like filing a consumer proposal, declaring personal bankruptcy will help you to clear your debts and protect you from creditors. Understanding the pros and cons of a Consumer Proposal vs. Personal Bankruptcy will help you make the right decisions.
Differences to be aware of:
- When declaring bankruptcy, your creditors may require you to surrender some of your personal assets.
- When you declare personal bankruptcy, the amount you pay will go up if your income increases. With a consumer proposal, your repayment amount will not change. For this reason, many of our clients choose to file a consumer proposal because there are no surprises.
- You have the option to pay off your consumer proposal early and begin the road to financial recovery sooner. You dont have this option when declaring personal bankruptcy.
- There are fewer requirements and duties involved with a consumer proposal than with a bankruptcy.
- When you file a consumer proposal, it does not appear as a personal bankruptcy on your credit report. In some cases, your career can be negatively impacted by a personal bankruptcy.
If you have more questions about consumer proposal vs personal bankruptcy, we are just a phone call away.
Consumer Proposal vs. Bankruptcy
We help folks from all walks of life and we can help you, too.
We are a team of Licensed Insolvency Trustees (LIT) which means we can help you out of whatever financial difficulty you’ve found yourself in and we’ll do so with compassion.
Take a moment to learn the difference between a Consumer Proposal and a Bankruptcy and make a decision your future self will thank you for.
Book your free consultation today.
Consumer Proposal vs. Bankruptcy
Filing a consumer proposal or declaring personal bankruptcy will help you to clear your debts and protect you from creditors but there are some important differences to be aware of.
One major advantage of a consumer proposal is that you will not lose any of your assets and you are not required to surrender anything.


Consumer Proposal
Bankruptcy
Total debt must be less than $250,000
No limit to size of debt
Only available to individuals
Available to individuals or companies
You keep your Assets: Home, Car, RRSP’s, RESP’s, & Investments
Surrender your assets (Exemptions)
Keep Your Tax refund
Calendar year’s tax refunds go to creditors
Payments are structured based on what you can afford
Payments based on household income and value of assets
The payment is flexible you can pay everything immediately (lump sum), or stretch your payments over a maximum of 5 years the choice is yours
The payment is NOT flexible, first bankruptcy 9-21 months, second-time bankruptcy 24-36 months
Consolidation loans vs. consumer proposals and bankruptcy
Lenders often market high-interest debt consolidation loans as easy money. However, what they don’t tell you is that this “easy money” is hard to pay back and can result in a debt spiral that is even harder to get out of.
Many people perceive high-interest debt consolidation loans as a quick, cheaper alternative to government-regulated, debt relief programs like consumer proposals or bankruptcy. In reality, these loans end up costing people far more than what they currently owe.
While the concept of getting a high-interest consolidation loan to pay off debt quickly may seem like a good idea, it’s a short-term band-aid solution with long-term adverse effects. There is a lot that lenders won’t tell you.
Avoid high-interest lenders
If you find yourself in a difficult financial situation and you have poor credit, finding a low-interest loan may be difficult. For many of our customers, turning to a subprime or high-interest lender is the only way they can
access the funds they need. The Canadian Government has laws in place that prohibit lenders from charging interest rates that exceed 60%.
*However Payday loans are exempt from the 60% interest rate limitation, the annual interest rate on a Payday loan is close to 400% or higher if you miss payments.
Examples of non-bank loans, with high-interest rates:
Cash Advance
Payday loans*
High-Interest Term Loans
High-Interest Lines of Credit
Car title loans
Rent-to-own products

The cost of using high-interest loans at 30%
Loan Amount | Interest Rate | Monthly Payment | Total Cost (Over 5 years) | Total Interest (Over 5 years) |
---|---|---|---|---|
$20,000 | 30% | $647.07 | $38,824 | $18,824 |
$30,000 | 30% | $970.60 | $58,236 | $28,236 |
$40,000 | 30% | $1,294.14 | $77,648 | $37,648 |
*Interest rates can fluctuate based on the lender.
Advice on Consumer Proposals
Getting into debt is easy. Getting out is a different story.
But it's still possible!
Did you know there is a Canadian debt relief program federally regulated by the Canadian Government, designed to help citizens avoid claiming bankruptcy? This amazing program can only be administered by a Licensed Insolvency Trustee (LIT).
If you’re struggling to make your payments every month and creditors won’t stop calling, we can help.
What our clients are saying.
We are David Sklar
Our team of Licensed Insolvency Trustees in Ontario can help you get out of debt and in control of your own financial future. We’ve helped thousands of people and we can help you too.
We know this is stressful, but you're not alone.
It’s going to be okay.
Book your free consultation today. We’ll do the rest.