Bankruptcy vs. Consumer Proposal
Are you wondering what the difference might be between Bankruptcy vs. a Consumer Proposal? Here are some major difference between the two:
Consumer Proposal:
What is it?
A consumer proposal is an agreement between you and your creditors agreeing to pay back a portion of your debt.
Assets
Your assets are protected.
Payments
Low monthly payments (locked in at whatever amount was agreed upon by your creditors).
Credit Rating
A consumer proposal will remain on your credit report for 3 years after completing your payments, or 6 years from the date you filed.
Income
Your monthly payments will remain the same even if your income increases.
Tax Refunds
You will continue to receive your tax refunds or credits.
Interest
Once a consumer proposal is accepted by your creditors they cannot charge interest.
Bankruptcy:
What is it?
Bankruptcy is a legal process that relieves you of your debts.
Assets
A licensed insolvency will take control of your assets (with limited exceptions) to help repay your debts.
Payments
Payments vary depending on your income.
Credit Rating
Bankruptcies appear on your credit report for 7 – 14 years (depending on the circumstances)
Income
If your income increases during your bankruptcy, your payments may increase.
Tax Refunds
You will lose all tax refunds or credits owed to you.
Interest
Even after filing for bankruptcy, you creditors can still charge interest.