Know Your Options: Bankruptcy VS Consumer Proposal


With the economy in its current state, many Canadians have found themselves indebted and unaware of what resources they have available to restructure their debt and rebuild their credit. At Canada Auto Experts, customer friendly credit specialists are available to listen to your situation and help you know your options.

Both consumer proposal and bankruptcy procedures were created by federal bankruptcy law and is legally binding on all creditors. Once you file for bankruptcy or consumer proposal, creditors cannot pursue you for those debts.


Total debt owing must be under $250,000, not including mortgage. Once the terms of the proposal have been met the debtor is legally released from those debts. The debtor is usually able to keep all of their assets including their homes and cars.

Through a bankruptcy trustee, the debtor makes an agreement with his/her current unsecured creditors to pay off a portion of the outstanding unsecured debt over a period not longer than 5 years.

At the end of the term, if the debtor honored the agreement, he/she is released from the outstanding unsecured debts and it remains on their credit history for 3 years after the term of the proposal.


This occurs when a debtor cannot meet their financial obligations, this person is considered insolvent and according to the federal government deserves a fresh start. The debtor is allowed to keep some assets but mostly are required to release major assets such as homes, which are in turn settled by the Trustee with the proceeds divided among the creditors. If the debtor has what is deemed surplus income, then they may have to pay a portion of their income into their bankruptcy estate over a certain period of time.

  • 21 Months – Automatic discharge for first time bankrupts
  • 24 – 36 Months – No automatic discharge for second time bankrupts
  • 2+ Times – A report of conduct during the administration must be filled with the government

A first bankruptcy remains on your credit report for 6-7 years after your final discharge.

Many Canadians find themselves in bankruptcy and consumer proposal situation and do not know their options or are not sure which choice suits their situation best. Canada Auto Experts are reputable with assisting people of all credit situations rebuild their history. For a free no-obligation consultation, call 1-855-550-5565 or visit

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