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The difference between bankruptcy and consumer proposal

If you’re considering a bankruptcy in Moncton NB, you should know that you have options. Bankruptcy is a serious financial undertaking and a trustee may recommend a consumer proposal instead. Knowing the difference can help you make an informed decision.

Consumer Proposal

If you owe less than $250,000 in total debts, you are eligible to file for a consumer proposal. A trustee will help you contact your creditors and negotiate a settlement for all of your debts, typically for far less than you actually owe. It’s important to note that filing for a consumer proposal doesn’t guarantee anything – your creditors must agree to the amount and the repayment terms. Once a repayment plan has been agreed upon, you will have to pay the agreed monthly payments until paid off. As a result, you will have an R7 credit rating that will show on your credit report for 7 years. With a consumer proposal you will be able to keep all of your assets, including your car, house, etc.


If you owe more than $1,000, have no way of paying back any of your debt, and need quick financial relief, bankruptcy may be the right option for you. Filing for bankruptcy means you are absolved of paying back your creditors. There is a substantial fee for bankruptcy and you will be required to pay monthly payments based on your income. The more you make, the more you’ll be required to pay.

Think of bankruptcy as wiping a slate clean – you will have zero debt; but there is a catch. Your credit rating will show as R9 (the worst rating you can have), and it will stay on your record for at least 7 years.

You may also have to give up certain assets, such as your car, house, etc. A bankruptcy trustee can help you decide which option is right for you, and will guide you through the process.

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