What is the difference between Bankruptcy and Consumer Proposal?
A Consumer Proposal
is a legal procedure where you enter an agreement with your unsecured creditors to pay back a portion of your debts ( often as low as 30%) over a period of time. Once this portion is paid, the balance of your debts is forgiven and you are considered to have paid in full. Once your creditors accept your proposal you are able to keep ownership of your assets ( like a house or car) as long as you can continue to make your usual monthly loan payments. In Ontario, a Consumer Proposal will remain on your credit history for three years after it is completed.
In a Bankruptcy,
if you have any assets the Trustee takes over possession of your assets (outside of certain exempt assets like tools of your trade, equity in an automobile and personal effects). The proceeds from the sale of these will go into a pool of funds which is used to repay your creditors. In addition if you earn income over a certain amount defined by the government, part of this surplus must also go into the pool to repay your creditors. Once all of the conditions of your Bankruptcy have been met, you will be legally released from your debts. A first bankruptcy where there are no unique issues or surplus income will normally take nine months to complete and will remain on your credit history for six to seven years after it is completed.
I received my Discharge from Bankruptcy earlier in the week, and I just wanted to thank you for helping me through this process. Before meeting with you I stressed out and terrified about my future; now I'm a lot less stressed (the job market still isn't great), and a lot more hopeful.
I appreciate everything you've done, and if I know anyone needing similar help (I hope not), I will definitely refer them to A. Farber and Partners.