Bankruptcy vs. Consumer Proposals in Edmonton

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.

Book your free consultation today.

What is a Consumer Proposal?

A Consumer Proposal is a legally binding agreement that offers debt relief and protection from unsecured creditors – without having to file for Bankruptcy. 

Consumer Proposals are available to individuals who owe less than $250,000, excluding a home mortgage. Your Licensed Insolvency Trustee will develop, with you, a revised debt repayment plan which will encompass more manageable terms.  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

Consumer Proposals Quick Facts

  • 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 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 (eg: 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 for example. 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.

Who Can Benefit From Bankruptcy? 

Filing for bankruptcy may be your best option, if:

  • You’ve been unemployed for an extended period of time 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 

Bankruptcy Quick Facts:

  • 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


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 Division II Consumer Proposal or bankruptcy is right for you? We can help. Call our professional credit counselors at A.C. Waring & Associates Inc. at 844-712-0331 or 1-855-827-1847  to schedule a free consultation today.