When is a Consumer Proposal a Better Option than Bankruptcy?

When you have financial issues that you cannot resolve alone, it may be time to consider a consumer proposal or bankruptcy. How can you tell the difference, and which is right for you?

Crowe MacKay & Company’s Licensed Insolvency Trustees in Vancouver and Surrey share what each means and how they can affect you, helping you choose the one that is best for you with confidence. If you require assistance, contact our team in Vancouver and Surrey to start your debt relief journey.

Help for Financial Issues

There are some similarities between a consumer proposal and bankruptcy. They are both forms of relief from debt, and they both offer legal protection from creditors.

Both require a Licensed Insolvency Trustee (LIT), which are free to speak to, to weigh in their expertise. You can ask how the process works and ask their opinion on which option would be better for your situation. It is good to ask their opinion because, while there are similarities, there are significant differences, too.

Consumer Proposal vs. Bankruptcy: The Difference

A significant difference is how each will affect your assets. If you go bankrupt, in exchange for getting rid of your debt, you must surrender assets.

With a consumer proposal, however, there is no impact on your assets. Instead, you must pay back some of your debts.

Other important differences include the cost, the agreement’s duration, the impact on your credit score, and the minimum amount of debt required for each. Here is a specific breakdown of the requirements for each.

Consumer Proposal

Excluding your mortgage, you can only have a maximum of unsecured debt totaling $250,000. The cost for a consumer proposal is a negotiated settlement. It usually begins with 20% of your debt, and they divide this into monthly payments.

The duration is up to five years. There is no penalty for early termination. Also, there are no requirements for monthly reporting.

You keep your assets. The R7 rating will stay for three years on your credit after you complete it or six years after you file. It depends on which comes first.


To file for bankruptcy, the minimum requirement is $1,000 in unsecured debt. Under government regulations and based on your typical monthly income, there will be an assignment of monthly payments.

The duration is nine months or 21 months. It is based on your income. There is an income requirement for filing bankruptcy and a monthly reporting obligation for your budget.

Further, with bankruptcy, you must surrender non-exempt assets. Your credit will have an R9 rating for six to seven years after the completion of the bankruptcy.

When to File a Consumer Proposal

While every situation is unique, it is important to weigh your options. A consumer proposal may be better for you but ask an expert to help you make the right decision. Although, there are three reasons to choose a consumer proposal over bankruptcy.

With a consumer proposal, you can:

  • keep your assets,
  • make affordable monthly payments, and
  • get less of an impact on your credit rating.

Working Toward Financial Freedom Together

With over 60 years of consumer proposal experience, trust the professionals at Crowe MacKay & Company to get you on the road to a debt-free life in Vancouver and Surrey.

Crowe MacKay & Company is ready to listen with compassion and respect. They have a commitment to you and will guide you to the financial freedom you deserve. Click here to contact Crowe MacKay & Company now.

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This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual needs. This publication is not a substitute for obtaining personalized advice.

If you require corporate or personal Insolvency services, Crowe MacKay & Company provides custom solutions for clients, allowing them to live debt-free.

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Common Questions about Debt Relief

Our Licensed Insolvency Trustees are experienced and qualified to answer all your questions about personal and corporate debt. From identifying imminent financial trouble to providing commercial and personal debt relief options, we are committed to educating you so you feel confident and informed. Depending on your income, the amount of debt you have, your monthly financial commitments, and your future goals, we can recommend the best way forward and assist you with all legal and documentation processes.