We’re asked—on a daily basis—about consumer debt proposals vs bankruptcy, and which one is right for you. And the simple answer is….that there is no simple answer.
These two, unique, approaches to debt management are unique in their own rights—and offer their own benefits and drawbacks. Having said that however, neither of them should be entered into lightly, as both can affect your ability to buy a car, buy a home, rent a home and even buy a TV at a department store—for years and years to come. For the best possible assessment of whether a consumer debt proposal vs bankruptcy is right for you—call one of our debt professionals today.
For a general guideline on the difference between proposals and bankruptcy, keep reading…
Consumer Debt Proposal vs Bankruptcy—Which One is Right for YOU
To understand which version of debt management is right for you, you should strongly consider the following….
The Advantages of Consumer Proposals Over Bankruptcy
- It offers less losses to your creditors, which means a greater negotiating position for you.
- You may be able to retain some assets, vs a bankruptcy where 100% of assets must be turned over.
- Your credit rating is punished less severely than with a bankruptcy.
So, performing a consumer proposal is always an advantage over a bankruptcy as it is less punitive in the long-term—however the decision between a consumer proposal and bankruptcy isn’t always an option…
Consumer Proposals Vs. Bankruptcy: Is There an Option?
There is a difference between proposals and bankruptcy—a HUGE difference. One of the biggest differences is in who qualifies for each. Considering the following elements and how they relate to your debt situation…
1. Your Monthly Income: if you make enough money to be able to pay the monthly payments needed for a consumer proposal, then that route is for you. This however considers the reliability of your income as well. If you don’t make enough or have irregular pay periods then bankruptcy may be your only option.
2. Your Age: if you’re near retirement age or are already retired and your income won’t last the life of the payment plan (generally 36 months) then bankruptcy may be the best option.
3. Your Debt Load: if your debt load is simply unmanageable relative to your earnings than a consumer proposal won’t make sense.
Deciding between a consumer debt proposal vs bankruptcy is a difficult decision—and one not to be taken lightly. If you are still unsure which venue is right for you—and/or if you qualify for a consumer debt proposal…then call the professionals here at Clear Debt. We can help highlight your best solutions and get your debt…clear.