Debt Repayment Plans
These are plans sculpted between you and your credit counsellor. These are arrangements to repay debt based on what you can afford and to advise you of other applicable options. Typically this decision is made in the beginning stages of debt management to help you get your finances on track.
Bankruptcy is a legal process you can enter if you have insufficient, non-exempt assets to pay your debts. In bankruptcy, the assets of a debtor (business or individual) are distributed among his or her creditors and the unpaid balance of the liabilities held are relieved. The bankrupt (or insolvent) is typically the initiator of the proceedings.
A Consumer Proposal (or Business Proposal in the case of a business) is an arrangement formally negotiated with creditors. As your consumer proposal administrator, the bankruptcy trustee obtains a legally binding agreement with creditors on your behalf so that you can pay the debt owed (at a portion of the original amount owed) and your creditors agree to forgive the balance.
Debt consolidation is the act of combining your loans or liabilities into a single account which is used to pay off the individual debts, usually involving another loan. A.C. Waring & Associates Inc. discusses Debt Consolidation as the consolidation of present debts which does not include the acquisition of more debt such as loans. This alternative pools your present debts into one monthly payment to settle the debt over time.
The Trustee negotiates this with creditors officially. This method often results in a great reduction of the original amount owed. This then becomes a Consumer Proposal.