Personal Bankruptcy: Comparisons

If you’re overwhelmed by debt, filing for personal bankruptcy isn’t the only option. Discover practical alternatives that may offer the relief you need.

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Why Bankruptcy Isn't Always the First Option

Bankruptcy can offer a much-needed fresh start, but it’s not the only path to becoming debt-free.

At Spergel, our Licensed Insolvency Trustees work hard to help you understand and explore all possible alternatives to bankruptcy — so you can make the decision that feels right for your unique situation.

Reasons to Consider Bankruptcy Alternatives:

You may be able to pay down your debt through a structured budget or debt consolidation loan.
Some alternatives — like debt management plans — allow you to keep your assets and avoid bankruptcy’s impact on your credit.
Filing for bankruptcy affects your credit report for up to 7 years. Exploring other routes may help you minimize long-term impact.

Find Out How Much You Can Save With a Consumer Proposal!

Try our easy-to-use calculator and learn how much a consumer proposal could cut down your debt.

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comparison chart

Personal Bankruptcy vs. Consumer Proposal

It can be difficult to weigh up a consumer proposal vs bankruptcy when you are struggling with overwhelming debts, which is where we are here to help.

Every single situation is different, depending on your own unique financial circumstances.
But here is a high-level overview chart to help narrow things down:

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Debt Relief Option	How It Works	Pros	Cons
Budgeting	Manage payments on your own with a spending plan	No credit impact; total control	Only works if debt is manageable
Debt Consolidation Loan	Combine all debts into one loan, often with lower interest	One payment; can reduce interest	Still owe full debt; requires good credit
Debt Management Plan	Credit counselling agency negotiates with creditors	Simplifies payments; may reduce interest	Full repayment required; doesn’t reduce principal
Debt Settlement	Negotiate directly with creditors for lump sum settlement	May reduce total debt owed	Impacts credit; not guaranteed; must pay lump sum
Consumer Proposal	Formal legal process to reduce debt, filed through a Licensed Insolvency Trustee	Keeps assets; freezes interest; reduces debt	Impacts credit; some debt types not included
Bankruptcy	Legal process to discharge most unsecured debts	Full debt forgiveness; protection from creditors	Impacts credit; surplus income and asset loss possible

Budgeting

How It Works

Manage payments on your own with a spending plan

Pros

No credit impact; total control

Cons

Only works if debt is manageable

Debt Consolidation Loan

How It Works

Combine all debts into one loan, often with lower interest

Pros

One payment; can reduce interest

Cons

Still owe full debt; requires good credit

Debt Management Plan

How It Works

Credit counselling agency negotiates with creditors

Pros

Simplifies payments; may reduce interest

Cons

Full repayment required; doesn’t reduce principal

Debt Settlement

How It Works

Negotiate directly with creditors for lump sum settlement

Pros

May reduce total debt owed

Cons

Impacts credit; not guaranteed; must pay lump sum

Consumer Proposal

How It Works

Formal legal process to reduce debt, filed through a Licensed Insolvency Trustee

Pros

Keeps assets; freezes interest; reduces debt

Cons

Impacts credit; some debt types not included

Bankruptcy

How It Works

Legal process to discharge most unsecured debts

Pros

Full debt forgiveness; protection from creditors

Cons

Impacts credit; surplus income and asset loss possible

Which option is right for you?

Everyone’s financial situation is different, and so is the right debt solution. Whether it’s bankruptcy or one of its many alternatives, we’ll walk you through all of your options and help you make an informed, confident decision. Book a free consultation with Spergel today.

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When Is an Alternative Better Than Bankruptcy?

Here are five reasons to consider an alternative first, such as a Consumer Proposal:

You may keep all your assets, including tax refunds
It may have a less severe impact on your credit
No monthly income reporting is required (unlike bankruptcy)
Creditors may be open to a partial settlement or a repayment plan
Alternatives are often quicker and more flexible than bankruptcy

Consumer Proposals

When Is Bankruptcy the Right Choice?

In some cases, bankruptcy is the best or only way forward. Here’s when it may be the most effective option:

You owe more than $250,000 in unsecured debt
Creditors won’t accept a repayment plan
You need immediate protection from collection action
You need a complete legal discharge from your debts

FAQ

next steps

How Do I Get Started?

It all starts with a conversation.

Licensed Insolvency Trustees (LITs) are the only professionals in Canada legally authorized to file for personal bankruptcy. At Spergel, we make it simple, supportive, and judgment-free. Here’s what we offer:

Free consultations — no pressure, no commitment
A clear explanation of your options
A customized plan based on your needs
Ongoing support from your dedicated LIT — not a call centre

Everyone’s Situation is Different. Let’s Talk About You.

Book a free consultation with Spergel. We’ll walk through your situation and build a plan that gives you the relief you deserve.

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Real Canadians. Real Success — Like David

“Spergel has been a true lifesaver for me. Facing overwhelming debts and a very challenging time in my life in general, they expertly navigated me through the bankruptcy process with compassion and efficiency. Their hands-on approach made the process seamless. Now, I’m on the road to financial recovery, free from the burdens of the past. Thank you, Spergel, for providing the support I needed for a fresh start.”

– David, Ontario

Read David’s Story

David’s Story is just one of many

David’s story is just one example of how bankruptcy, when guided by the right support, can offer real hope and lasting relief. Whether you’re dealing with personal loans, tax debt, or creditor pressure, bankruptcy can be a lifeline. Explore more Success Stories from Canadians we’ve helped — or reach out so we can help you, too.

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