Is There A Difference Between Bankruptcy and Consumer Proposals?

Many individuals are under the assumption that bankruptcy and consumer proposals are synonymous. However, is filing for a consumer proposal really the same thing as filing for bankruptcy? The quick answer here is no. Here are a few of the major differences between the two, to help clarify the confusion.

Non exempt assets will not be assigned to the trustee in a consumer proposal.

In comparison to bankruptcy, when it comes to consumer proposals, you are in fact not surrendering all your assets. Instead, you must pay your creditors a percentage of what is owed to them and/or extend the amount of time you have to pay off your debts, taking into account the value of these assets.

A consumer proposal is better for your credit rating generally speaking.

Filing for bankruptcy is worse for your credit rating and could potentially leave a mark on your credit report for up to 14 years., if you have been bankrupt previously. On the other hand, if you file for a consumer proposal, your credit rating will read that you are in the process of making a settlement with your creditors, and it will remain on the credit report for 3 years from the day it’s paid out.

To qualify for a consumer proposal, your total debt (not including your home’s mortgage) must not exceed $250,000.

In comparison to filing an assignment in bankruptcy, in order to qualify for a consumer proposal your debts cannot exceed $250,000. In addition to this, you must also be able to pay back a percentage of thes debts.  If you are unable to do so and your debts do in fact exceed the $250,000 limit, bankruptcy is often your  only option.

You are entitled to tax refunds with a consumer proposal.

Whereas when filing an assignment in bankruptcy, you are no longer entitled to receiving certain tax refunds.

As Licensed Insolvency Trustees, we have extensive experience in addressing financial challenges and many other questions you may have.

Feel free to email us at, call us at 416 736 4357 (HELP), or fill out the contact form on this website, to book a free, no obligation consultation with one of our debt solutions’ experts. We look forward to assisting.