Bankruptcy, Credit Counseling and Consumer Proposals – Things to Consider

There are many trying situations – relationships, career changes, and layoffs. When their revenues vary, many people have difficulty managing debts. If the debt is considerate and surpasses your ability to manage, it might be a good idea to see a credit counselor.


One option for you is bankruptcy. You will need to do the following:

  • Most first-time bankrupts pay an amount each month that is based on how much they earn to a trustee over nine months.
  • After nine months of regular installments, you can usually be out of bankruptcy and your requirements to your creditors and trustee are completed.
  • Your credit rating will be affected for up to seven years (for first time bankrupts) after you complete your obligation.

How to File Bankruptcy in Canada – things you need to consider

Often, the most favorable way to lead yourself out of a difficult financial situation is by filing for bankruptcy. You need to know the legislation in Canada. It is never really simple or fast to declare bankruptcy and it is an important choice because of what it can bring with it.

It is strongly advised that you discuss with Alliance Credit Solutions consultants prior to meeting a Bankruptcy Trustee.

What is not well known is that a Trustee will file an assignment for bankruptcy and you will advance funds to them. They do this for your creditors.

Your Trustee is a court appointed representative for your creditors and they don’t work with your interests at heart. They help to give back what is due to the creditors as you hand over your capital and assets while going through the process of bankruptcy.

Not very much of what you own is excluded from bankruptcy. You will need to provide a listing of all that you owe and own to the Trustee. There are some exemptions in Ontario: automobiles valued less than $6000, clothing valued less than $5,650, some implements or tools necessary for you to work, and some kinds of insurance. Most of the other things you own can be taken, possibly forever. This includes your house and investments (excluding RRSP's or pension plans sometimes).

Alliance Credit Solutions is on your side, whereas a Bankruptcy Trustee acts on behalf of the creditors. Alliance Credit looks after your interests only. You should consider all of your possibilities. Each approach has pluses and minuses with respect to the steps. Consider the following:

The Pros of Bankruptcy:

  • Credit collectors will stop irritating you
  • If you don’t own anything, you will not be worse off
  • The quick and sure way to deal with what you owe
  • A suitable option if you have a small or lowered revenue source

The Cons of Bankruptcy:

  • Your bankruptcy is public information
  • Will affect your credit rating considerably
  • Anything that you own that is not excluded must be handed over to the Bankruptcy Trustee
  • Can affect some career opportunities

Overall, if you are having difficulty managing your debts, have no money, or very little, or have been let go from your job, and the large part of what you own is not included in bankruptcy seizure, it might be good for you to ask for a no charge session with Alliance Credit about the possibility of declaring bankruptcy.

Bankruptcy is a situation that happens to many people. It is normal for these things to happen and you need to deal with your situation so that you can start to enjoy being without financial sorrow.

You can go to our home page to ask for an assessment of how much it will cost to improve your financial situation and decrease the money that you owe other people.

Consumer Proposal

Usually, people who own a lot of things or have a considerable income but still can’t clear all their debts cannot declare bankruptcy – they can file a consumer proposal.

When you want to file a proposal, this is what will happen:

  • The trustee will make a proposal for a portion of the amount you owe to be paid back
  • You will need to make payments every month to your trustee, if the offer is agreed on, and the amount that is decided can have terms of 24, 36, 48 or 60 months
  • The offer stays on your credit report for up to three years.

Consumer Proposal

If there are no other options for you, you can do a consumer proposal and decrease the amount you pay each month that falls within the Bankruptcy and Insolvency Act because Consumer Proposals are better on your credit rating than declaring Bankruptcy.

For people who owe from $10,000 up to $250,000, which does not include your mortgage, Consumer Proposals are the best option. Consumer proposals are like Debt Management plans, and the difference is that a proposal is legally binding and you will have a longer period to clear out the reduced part that you owe. Consumer proposals are also managed by Licensed Trustees in Bankruptcy, whereas Debt Management plans are administered by Accredited Credit Counselors.

You will receive advice from Alliance Credit Solutions on how to get the most out of Consumer Proposals and they will help you with each step along the way.

To find out more and to set up your no charge consultation, call or email!

Credit Counseling

  • Not for profit Credit Counseling organizations will offer to have the interest frozen or to have you pay back what you owe according to what you can afford.
  • The organization will send payments every month to the people you owe money to with an amount kept for their expenses.
Call us today and ask any questions that might be on your mind at (416) 663-5444
Alternatively you can write to us here and one of our Counsellors will be happy to assist you.
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