You have debts. You are researching your options. You are finding lots of websites that talk about consumer proposals and bankruptcies.  You see other information that says, “file a consumer proposal” or “file a bankruptcy” and even more that might advise staying away from both options.

What is the difference?

Both options are available through a Licensed Insolvency Trustee (like Goldhar & Associates Ltd.).  Both are legal options under the Bankruptcy and Insolvency Act that provide protection from your unsecured creditors. Both options present your personal information in the same way but then the process for each becomes quite different.

Monies to be paid – the actual amount depends on your situation:

Bankruptcy – the amount to be paid will depend on income and assets or be a base amount and the time to pay it will depend on how many times you have filed a bankruptcy previously. The amount to be paid could change during the process if your income changes.


Consumer Proposal – the amount to be paid will normally be more than bankruptcy but the time frame to pay will be longer and therefore monthly payment amounts will be lower. Once the proposal is accepted by the creditors, the amount to be paid remains the same no matter the change in your income – good news if your income is going up during the proposal period

Use of Assets – all assets must be disclosed:

Bankruptcy – you will not lose your assets, but you could be restricted in selling or cashing in some assets such as real estate or RSPs.  Receiving an inheritance, proceeds from life insurance or other large sums of money could also present issues in the bankruptcy process.

Consumer Proposal –  you will not lose your assets and unless the proposal terms say an asset must be made available, you can deal with your assets once the proposal is accepted by the creditors in any manner you wish.  Just make sure you complete your proposal duties so that what you may have done with assets does not become an issue if you need to file bankruptcy because your consumer proposal was not completed

Taxes – in all cases, any monies owed to CRA will be included in your debt up to the date of the bankruptcy or consumer proposal:

Bankruptcy – the trustee will file a prior year and the income tax return for the year you file the bankruptcy and any refunds will go to the trustee for your creditors.  If previous years are adjusted, any monies will go to the trustee, even if you have completed the bankruptcy process.

Consumer Proposal – if your tax returns are up to date in filing when you start your proposal, all returns going forward will be filed by you and thus any refunds will be forwarded to you.  Your proposal could be affected if you do NOT file your taxes yearly.

These are just a few of the differences and to find out which option is the best one for you to deal with your debts, give Goldhar & Associates a call at 1.855.541.5114 😊