Why Would I Chose A Bankruptcy Or A Proposal

 Why would you choose to file a bankruptcy instead of a proposal? What are the advantages of the two different choices? Most people who select a bankruptcy do so because they have no other choice. They have no assets left, no surplus income (and therefore no ability to make any meaningful payment towards their debts) and no ability to raise any lump sum of money. Around 70% of filings nationally are bankruptcies. A first time bankruptcy will stay on your credit history for six years after the bankruptcy is finished. Having said that you can usually restore your credit rating to “OK” in a couple of years after a bankruptcy if you work at it. However, a second (or subsequent) bankruptcy will stay on your credit rating for 14 years after you complete the bankruptcy and that itself can take two or three years, or longer. If a person does have the ability to make payments to their creditors or can access a lump sum (from family members, for example, or from cashing in an RRSP) a proposal may be a more attractive option. Proposals only stay in your credit history for three years after you finish, and your credit rating will not fall as far as it would in a bankruptcy. Accordingly, a proposal can be very attractive alternative to a bankruptcy and will have a lesser, although still significant, impact on your credit rating than a bankruptcy. This is particularly true if you are considering a second or subsequent bankruptcy filing. This is a complicated subject and we encourage you to meet with our insolvency team members in the nearest office to review your particular situation. No blog post can adequately cover all the points that could affect the decision as to which of these (or any other) alternative might be the correct one in your particular situation. Ian Schofield MNP Regina 306-790-7904