In 2022, total Canadian consumer debt had risen to more than $2.23 trillion. Financial issues impact people from all walks of life, and these issues can get out of control if not dealt with easily..
When issues start to pile up, there are several ways to deal with the situation. Two of the most common methods are personal bankruptcy and consumer proposals. Both can wipe out even massive debts.
The difference between a consumer proposal and personal bankruptcy isn't obvious to everyone, especially if you don't have a financial background. That's why we've written this guide. Read on to get a thorough understanding of the issue.
A consumer proposal is an agreement between you and your creditors. It allows you to pay a certain amount of money to settle the issue.
The process is a formal contract overseen by a professional called a Licensed Insolvency Trustee or LIT. Your LIT can help you to create an agreement that might be more palatable to your creditors than an agreement.
The presence of a Licensed Insolvency Trustee may seem daunting to those not familiar with these financial processes. But remember, the Licensed Insolvency Trustee is there to help all parties.
Using a consumer proposal means you will have more control over your assets than with a bankruptcy. As long as you stick to the agreement, you should be able to avoid personal bankruptcy.
Filing for personal bankruptcy is one way of totally wiping clean your debts. Your assets will be sold, and the money raised will be distributed to your creditors.
Personal bankruptcy will see you lose temporary control over your assets. For as long as the bankruptcy lasts, you won't be able to take out loans, buy property, or make other big financial decisions. You will receive allowances for general living expenses, so don't expect to be put out on the streets.
But it's not all bad news. Personal bankruptcy benefits are strong, offering you the chance to get back on your feet in the face of mounting debts. While it may take a little while to get your finances into a good position, gaining debt relief allows you to end up in a much better state in the long term.
Financial Help On Your Side
When you're facing financial issues, it can be difficult to know what to do. A consumer proposal or personal bankruptcy can help in many of these situations. Think carefully about each solution, and you'll find the option that's best for you.