Consumer proposals are an alternative to bankruptcy.
In bankruptcy the borrower may lose property, where no is taken in a consumer proposal.
The consumer proposal is a debt settlement, negotiated between the creditor and debtor, payable over a maximum of 5 years.
Debt relief services usually prefer a consumer proposal because:
- bankruptcy does not remove all debts
- bankruptcy is more expensive than a consumer proposal
- bankruptcy stays on the record longer
Payments and the total amount paid are less in a consumer proposal than the full amount of the debt owing. At the end of the term
The creditors are encouraged to accept the deal—because if they do not, the next alternative may be personal bankruptcy.
In bankruptcy most creditors would receive little or nothing in bankruptcy proceedings.