Something we spend quite a lot of time talking to our clients about is the difference between a consumer proposal and bankruptcy, and which is a better solution for their debt problems. This week, we met with a young professional who was looking for a debt solution that would give him a fresh start. He came in to see us, thinking that bankruptcy was going to be the right solution with him, but after we got talking, we were able to show him why in many cases, including his, a consumer proposal is actually better than a bankruptcy.
In a bankruptcy, if you earn above a certain government-set threshold, your bankruptcy may end up costing you a lot of money, and lasting longer than you originally expected. In a consumer proposal, once your creditors agree to the terms of the contract, you know exactly what your payments are going to be, and you are free to go out and earn as much money as you can without having to worry about whether your Trustee will be taking it from you! Not only do you get to keep any hard-earned raises, a consumer proposal is much simpler than a bankruptcy. When I explained to this young professional that a bankruptcy would involve submitting a monthly income and expense statement to us and collecting his tax information to send in to us, he commented that it sounded like a lot of work – it can be! In a consumer proposal, you don’t have to submit monthly statements and you continue to file your own taxes (which means you get to keep any tax refund you may have coming – another bonus over bankruptcy!). He had also been nervous as he had heard stories about people having to attend court when they are bankrupt which is a possibility for anyone declaring bankruptcy – again, not the case in a consumer proposal. After the initial 45 day voting period after the contract is accepted, as long as you continue to make your regular reasonable monthly payments, there is nothing further you have to worry about.
This only highlights a few of the reasons why a consumer proposal is often better than a bankruptcy. Take a look here to read more about the differences between a consumer proposal and bankruptcy. As always, there is no charge for you to come in and meet with one of our professional team members who will be able to talk with you about your own financial situation. We’re here to help you understand your options and come up with a plan that works for you in order for you to get the fresh start that you’re looking for. Give us a call at 310-PLAN or email us to set up a meeting today.