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Personal Bankruptcy vs Consumer Proposal in Canada

Both Personal Bankruptcies and Consumer Proposals are governed by the Bankruptcy and Insolvency Act. They are offered as ways for “honest but unfortunate debtors” to put their unmanageable debt behind them and get on with their lives. Under the act, only Licensed Bankruptcy Trustees are able to file Proposals and Bankruptcies.


If your debt load is too much to handle and you are thinking about filing for Bankruptcy or a Consumer Proposal, it is essential that you speak with a Bankruptcy Trustee first. In the Greater Toronto Area, David Sklar & Associates, Bankruptcy Trustees – offers a Confidential & Free Initial Consultation to help you decide the best course of action to get you out of debt – and on with your life. For your free consultation – call 416-498-9200 – we can help.

In a Personal Bankruptcy – the individual filing the bankruptcy (the bankrupt) is allowed to keep certain assets exempted by the Ontario Execution Act – but is required in certain situations to submit all other assets for settlement. Once those assets have been settled by the Bankruptcy Trustee, the proceeds are disbursed to the creditors, and upon successful completion of your duties as defined by Section 158 of the Bankruptcy and Insolvency Act, the bankrupt is released from any legal requirement to pay those unsecured creditors covered in the bankruptcy. Providing there are no extraordinary occurrences, and there is no surplus income, the process from filing to release for a first-time bankrupt usually takes nine months. Where there is surplus income a first-time bankruptcy will usually take 21 months.

In a Consumer Proposal – the individual filing the Proposal is able to keep all their assets (providing they continue to make any required payments – ie mortgage, car loan etc). The individual who has filed the Proposal then (through their Trustee) pays off the unsecured creditors covered in the proposal, usually at a reduced amount. A Consumer Proposal, by law, cannot be for a period greater than five years. At the completion of the Proposal, the individual is released from the unsecured debt covered by the Proposal.

Filing Bankruptcy is the ‘last resort’ option. It is only taken when all other options have been considered. Even then, there are situations where an individual may choose a Consumer Proposal over a Bankruptcy:

  • the debtor’s bankruptcy may force their spouse to have to declare bankruptcy too
  • the debtor has filed bankruptcy in the past and realizes how difficult another filing will be for them
  • the debtor has a professional designation that prohibits the filing of bankruptcy
  • the debtor has assets (ie a home or family jewellery) that they are unwilling to part with
  • the debtor thinks that they will be receiving a large sum of money in the near future and do not want to have it taken in the bankruptcy
  • the debtor is considering sponsorship of a family member overseas the debtor simply does not want to go into bankruptcy

The Professionals at David Sklar & Associates will help you to make the decision that best fits your needs.

Get The Help You Need

If your debt problems are forcing you to think about Bankruptcy or a Consumer Proposal, call the caring Professionals at David Sklar & Associates for a Free Consultation. With six convenient Greater Toronto Area offices – we are here to help you. Call 416-498-9200 or get started with our Quick Assessment Form to book your Free Consultation.


We Can Help

If your debt problems seem insurmountable – we can help. At David Sklar & Associates, our Licensed Debt ProfessionalsTM have the experience and knowledge to help you get out of debt. During your consultation, we will help you understand what your current financial situation is, how best to fix it, and how to move on to a better life. With six offices in the Greater Toronto Area – we are here to help.

Call Us Today For a Confidential & Free Initial Consultation Call 416-498-9200

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