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Bankruptcy vs. Consumer Proposals in Edmonton

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Are your creditors calling? Are your wages being garnished? Do you need help climbing out of a surmounting pile of debt? 

Both consumer proposals and bankruptcy are effective forms of debt relief when overwhelmed. But what exactly are they and which one is right for you? The professionals at A.C. Waring & Associates Inc. can help you determine the best debt solution for your unique situation. No referral is required.

What Is a Consumer Proposal?

A consumer proposal is a legally binding agreement that offers debt relief and protection from unsecured creditors—without filing for bankruptcy. 

Consumer proposals are available to individuals who owe less than $250,000, excluding a home mortgage. Your Licensed Insolvency Trustee will develop a revised debt repayment plan that will encompass more manageable terms with you. Once approved by a majority of creditors, you will need to abide by the new terms.

When Would You Pursue a Consumer Proposal?

Consumer proposals are best for individuals who:

  • Have debt over $5,000 but not over $250,000 (not including a home mortgage)
  • Have a regular source of income and can make some monthly payments
  • Cannot repay debts on time
  • Want to avoid issues regarding income and asset rules if filing bankruptcy
  • Division I Consumer Proposals are only available to individuals with less than $250,000 of debt
  • Licensed Insolvency Trustees are the only professionals who can file consumer proposals
  • Once a Consumer Proposal is filed and a plan is presented to creditors, they have 45 days to vote on approval
  • A majority vote will uphold the proposal, which then becomes legally binding on all unsecured creditors subject to Section 178 debts (e.g.: student loans, child support, etc.)

What Is Bankruptcy?

Bankruptcy is a legal proceeding involving an individual or corporation unable to repay outstanding debt.

When a bankruptcy action is filed, it stops collection, legal action, and wage garnishment. Although not all debt may be discharged, it can provide financial relief and a fresh chance to get back on track.

When Should You Pursue Bankruptcy?

If you simply do not have the financial resources to pay your debts and your creditors will not agree to a consumer proposal or another remedy, you may want to consider filing for bankruptcy.

Filing for bankruptcy may be your best option, if:

  • You’ve been unemployed for an extended period without any savings or unemployment income
  • Your wages are being garnished
  • You have delinquent income taxes
  • You’re facing lawsuits for delinquent bills
  • Your home is nearing foreclosure
  • You’re not sure how much you owe exactly
  • You’re using credit cards to pay for necessities
  • You frequently take out payday loans
  • Certain specific debts are not discharged as a result of filing for bankruptcy
  • Bankruptcy stops legal action by unsecured creditors—including wage garnishees
  • Bankruptcy does not follow you forever, and you may be discharged in as little as 9 months
  • Bankruptcy will not release your third party’s personal guarantee of the debt

The Main Differences Between Bankruptcy & Consumer Proposals

Although either a consumer proposal or bankruptcy can provide relief from debt, which action you choose depends largely on your unique situation. 

If you have a lack of income, pending lawsuits, are unable to pay back any amount of your debt and are financially overwhelmed, filing for bankruptcy may be your better option.  

However, if you have a source of income, savings, or assets and the means to pay down at least some of your debt, but not all, a consumer proposal can be a great option for you. 

Consumer Proposals

Consider if you:

  • Have a source of income, assets, or savings
  • Can make some financial payments 
  • Do not rely on credit cards for necessities
  • Can maintain a residence
  • Have no creditor lawsuits

Bankruptcy

Consider if you:

  • You do not have an income, assets, or savings
  • Creditors have initiated lawsuits 
  • A home foreclosure is pending
  • Credit cards are maxed
  • Credit cards or loans are used to pay for necessities and bills
  • You have liquidated your retirement assets

Schedule Your FREE Consultation Today

Still unsure whether a Consumer Proposal or bankruptcy is right for you? We can help. Contact our professional credit counsellors at A.C. Waring & Associates Inc. at 780-424-9944 or 1-800-463-3328 to schedule a free consultation today.

Where To Find Us

Find us in the First Edmonton Place building on the corner of Jasper Avenue and 107th Street, behind the Corona LRT Station. Street meter parking is available along Jasper Avenue as well as 106th and 107th Streets, and paid surface parking is off of 106th Street, and underground parking for First Edmonton Place is off of 107th Street.

A.C. Waring &
Associates Inc.

  • First Edmonton Place
    410-10655 Jasper Ave NW
  • Edmonton, AB T5J 3S9

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