Consumer Proposal: Comparisons
Not sure which debt solution is right for you? Discover how consumer proposal compare to options like bankruptcy.
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Why a Consumer Proposal Beats Most Alternatives
Many Canadians facing insolvency opt for a consumer proposal over bankruptcy, as it enables you to keep your assets and face less severe consequences than a bankruptcy.
Reasons to File a Consumer Proposal:
- Keep your assets, including your home and car. In bankruptcy, you have to surrender any non-exempt assets
- Reduce your unsecured debt by up to 80%, with lower monthly payments
- Protection from creditors, including collection calls and legal threats
- Avoid bankruptcy and the more severe consequences
- Avoid surplus income – fixed payments, no matter if your income increases
- Legally binding, so your creditors must comply provided the majority accept
- Debt free in a maximum of 5 years
- Interest is frozen as soon as you file
Find Out How Much You Can Save With a Consumer Proposal!
comparison chart
Consumer Proposal vs. Bankruptcy
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:
| Feature Comparison | Consumer Proposal | Bankruptcy |
|---|---|---|
 Eligibility |
Unsecured debt of no more than $250,000; living in or owning property in Canada |
Owe at least $1,000 in unsecured debt; have debts that are worth more than the value of your assets |
 How Pay-Back Is Calculated |
A negotiated agreement, typically starting at 20% of debt |
A statutory calculation, based on income and assets |
 Length of Time |
A maximum of 5 years, although it can be paid off early |
9 months or 21 months, depending on your income |
 Debts Covered |
|
|
 Credit Score |
The earlier of 3 years from completion, or 6 years from filing – whichever comes first |
7 years from completion |
 Advantages |
|
|
 Disadvantages |
|
|
Eligibility
Consumer Proposal
Unsecured debt of no more than $250,000; living in or owning property in Canada
Bankruptcy
Owe at least $1,000 in unsecured debt; have debts that are worth more than the value of your assets
How Pay-Back Is Calculated
Consumer Proposal
A negotiated agreement, typically starting at 20% of debt
Bankruptcy
A statutory calculation, based on income and assets
Length of Time
Consumer Proposal
A maximum of 5 years, although it can be paid off early
Bankruptcy
9 months or 21 months, depending on your income
Debts Covered
Consumer Proposal
- Credit card debts
- Retail store cards and accounts
- Unsecured lines of credit
- Payday loans
- Personal loans
- Unsecured bank loans
- Finance company loans
- Loans from individuals
- Outstanding bill payments
- Instalment loans
- Tax debts
- Judgement debts from lawsuits
- Student loans (provided you have been out of school for at least seven years)
Bankruptcy
- Credit card debts
- Retail store cards and accounts
- Unsecured lines of credit
- Payday loans
- Personal loans
- Unsecured bank loans
- Finance company loans
- Loans from individuals
- Outstanding bill payments
- Instalment loans
- Tax debts
- Judgement debts from lawsuits
- Student loans (provided you have been out of school for at least seven years)
Credit Score
Consumer Proposal
The earlier of 3 years from completion, or 6 years from filing – whichever comes first
Bankruptcy
7 years from completion
Advantages
- Reduction of debt by up to 80%
- A stay of proceedings
- Avoids bankruptcy
- Keep your assets
- One monthly manageable payment
- Freezes any interest
- Avoids surplus income
- Complete clearance of debt
- A stay of proceedings
- A fresh financial start
- Cost not associated to amount owed
Disadvantages
- Does not cover all debts, including secured debt
- Negative impact on credit report
- Potential impact on employment
- Typically takes longer to complete than bankruptcy
- Does not cover all debts, including secured debt
- Damaging impact on credit report
- Potential impact on employment
- Non-exempt assets must be surrendered
- Surplus income factored in
Which option is right for you?
Book a free consultation with Spergel today, and we’ll help determine the best solution tailored to your unique financial circumstances.
Why a Consumer Proposal May Be Better Than Filing for Bankruptcy
Here are 7 key reasons for a consumer proposal being favourable over filing bankruptcy:
- You propose the amount you can afford to pay for a consumer proposal, putting you in control
- All of the conditions of a consumer proposal are agreed up front
- You do not lose your tax refund or assets when filing a consumer proposal
- Consumer proposal are much simpler to file than bankruptcy
- If you have a high income, consumer proposal are much more affordable than bankruptcy
- Your credit report will be less severely impacted
- You do not have to report your income on a monthly basis like you do with bankruptcy
When is Bankruptcy The Answer?
Here are the key reasons for filing bankruptcy over a consumer proposal:
- If you owe more than $250,000 in debt, bankruptcy is the only form of debt relief you can take
- Bankruptcy is a good option if your creditors are not open to negotiating an agreement with a consumer proposal
- A first time bankruptcy can be completed quickly within as little as 9 months, while a consumer proposal can take up to 5 years
- It offers a completely fresh financial start as soon as you file
Next Step
How Do I Get Started?
The first step is to speak to a Licensed Insolvency Trustee.
(LITs) Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief. At Spergel, our experienced Licensed Insolvency Trustees offer the following:
- Free consultations
- Meetings with you as often as you need
- A review of your financial situation and an explanation of all your debt relief options
- Affordable debt relief solutions
- A 99% acceptance rate on any consumer proposals we file
Everyone’s Situation is Different. Let’s Talk About You.
Book a free call with Spergel today, and we will make a plan with you on how to help.
Real Canadians. Real Success — Like Larissa
“I can’t thank Spergel enough for their support and expertise during one of the toughest times in my life. Their consumer proposal not only reduced my debt significantly but also stopped the constant stress of creditor calls. Now, I’m able to focus on providing a stable future for my children without worrying about money. And, I can now sleep at night! Spergel truly gave me a fresh start.”
– Larissa, Ontario
Larissa’s Story is just one of many
It shows that once you face your debt and get the right help, life can get better – quickly. Discover more Success Stories of Canadians we’ve helped, or reach out to us.
They Said It Best
Don’t take our word for it. See what some of our past clients have said.
Ask an Expert if A Consumer Proposal Is the Right Fit for You
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