Both a consumer proposal and bankruptcy will give you a new financial start, but there are some differences.

• A consumer proposal has a debt limit of $250,000. Bankruptcy has no limit.
• With a consumer proposal, you pay a fixed amount each month to the LIT. 

Bankruptcy payments will vary depending on the “surplus income” each month.

• With a consumer proposal, you get to keep assets. With bankruptcy, some of your assets will be sold to repay debt.

All fees are included in the single monthly remittance to the LIT.

Any form of unsecured debt may be included. That is any debt that does not have the backing of a physical asset, like a mortgage or car loan. Commonly you can include:

• credit cards
• personal loans
• payday loans
• income taxes
• lines of credit

A student loan can be included if you have been out of school for more than seven years.

Consumer proposals are not used to reduce mortgages or vehicle loans. These are secured debts in that the asset is used for security. If you are unable to make those payments, the lender can repossess the asset for nonpayment.

• If you file a consumer proposal for unsecured debt, you must continue to make mortgage and car loan payments or those items will be repossessed by the lender
• If you can maintain the payments on your mortgage and vehicles, the consumer proposal will not affect them.

Your LIT will work with you to develop a budget to accommodate all the monthly payments.

After the LIT negotiates with the creditors, you will agree in writing to repay the agreed-to portion of the debt. This is handled through fixed monthly payments for a specified term, usually three and five years. You may the same payment to the LIT, who will then distribute the appropriate amounts to the creditors.

• If you file a consumer proposal for unsecured debt, you must continue to make mortgage and car loan payments or those items will be repossessed by the lender
• If you can maintain the payments on your mortgage and vehicles, the consumer proposal will not affect them.

Your LIT will work with you to develop a budget to accommodate all the monthly payments.

It has a maximum of five years, but your individual circumstances will determine its term.

You credit score will be rated R7, which indicates that you have made a settlement with your creditors. The rating will remain for three years after the proposal is completed.

The consumer proposal will only be recorded on your individual credit report. 

However, if you have joint debts, your spouse could be responsible for the entire debt after you file a consumer proposal.

The co-signer then becomes solely responsible for the debt repayment, unless you file a joint consumer proposal.

You will be required to turn over all credit cards to your LIT when you file the consumer proposal. You will be unable to apply for a new card while you are making the consumer proposal payments, with the exception of a prepaid or secured card.

Yes. 

After the consumer proposal is filed, the collection agencies are no longer allowed to contact you.

Yes. 

After the consumer proposal is filed, all legal actions will end, including wage garnishments.

If you miss three payments, the consumer proposal becomes void and you again are responsible for all your debt.