WHAT DISTINGUISHES A BANKRUPTCY FROM A CONSUMER PROPOSAL? WHAT IS SUPERIOR?

I've always believed that filing for bankruptcy is never the best option if you can afford the monthly payment under a consumer proposal. A bankruptcy will remain on your government record indefinitely. Self-esteem can suffer because of bankruptcy. A consumer proposal is also a considerably easier process.

The choice is, nonetheless, a private one. The choice is up to you alone.

A consumer proposal reduces the debt-often significantly-stops the accrual of all interest, and you make monthly payments for typically five years or until the agreed-upon amount is paid. Even though your income increases, the amount you pay remains the same. When compared to what you would have had to pay to carry your debt with interest, the monthly payment you make under a consumer proposal is typically minimal. You make a single, lower payment at 0% interest each month rather than several installments with hefty interest rates. You'll experience less stress and more monthly cash flow. It is a great chance to arrange your monthly spending, rebuild your savings, and restore your general financial stability. Always remember that having cash on hand is preferable to using credit.

The bankruptcy process is substantially more difficult.

Although declaring bankruptcy is a voluntary procedure, once the bankruptcy forms have been signed, there is no going back. I'll use the example that you declare bankruptcy voluntarily and shut the door on yourself. You now lack the key to escape bankruptcy and are therefore stuck inside. The only people with the keys to let you out are the trustee, your creditors, and the government.

You now have clear responsibilities, a rigid schedule, and the goal of receiving your release as soon as possible. If this is your first bankruptcy, you will have to make payments every month for nine or twenty-one months. If it's your second bankruptcy, you'll have to pay for up to three years. Every month, you must complete and submit income and spending forms. As your tax return will be completed by the trustee's office and, if there is a refund, it will be collected for the benefit of your creditors, you will need to supply your tax information for the year of the bankruptcy.

Bankruptcy is not free. The debtor has expenses to cover before they can receive a bankruptcy discharge. Bankruptcies vary widely from one another. Your income, the equity in your realizable assets, the number of dependents in your family, and the equity in those assets all play a role in determining the payment. Your bankruptcy payment will be larger the more you earn. Your bankruptcy payment may increase if your income increases while you are filing for bankruptcy; this must be stated.

Being bankrupt is like being on "financial probation" because your income and expenses are tracked regularly. If your income increases or you have a windfall-like an inheritance or lottery win-you must disclose it and give the money to the trustee so that your creditors will benefit.

If you don't fulfill one of your obligations, the trustee may contest your discharge, and you'll need to appear in court to discuss what must be done to make your discharge possible in the future. This may be a possibility for you if you have a lot of debt, a low income, rent rather than own a home, lose nothing in a bankruptcy, and can be discharged after nine months.

This is not meant to sway your opinion in any certain direction. It is merely to educate you on how bankruptcy and a consumer proposal are handled. In the end, it is up to you to decide.

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