A Consumer Proposal Case Study in London

I’ve recently had the great pleasure of helping someone avoid what could have been a very difficult bankruptcy, and I wanted to share some of what happened.  I’m changing a lot of detail here for this person’s privacy, but the basic story is what’s important.

Several months ago I had my first meeting with this person – he was convinced coming in that he would be filing bankruptcy (in fact, had received advice from his accountant to do just that).  It turns out that over the past 10 years or so he had won a battle with addiction but in the process had built a debt level of over $100,000.  He’d been ‘robbing Peter to pay Paul’ as they say for most of this time, but luck had run out and his creditors were not just calling, but now suing him.  There was no more credit available and he decided it was time to act.  To add to his unfortunate situation a relative had passed recently.

Obviously, a very stressful time for him.  As we spoke, he mentioned that he was due to receive an inheritance, not large enough to pay the debts off, but relatively substantial.  He’d been told by his accountant friend that if he filed bankruptcy, he’d lose the inheritance.

But here is the good news – the amount of the inheritance would be enough to make a lump sum Consumer Proposal to his creditors!  We discussed all of his options, and how they all worked.  He decided to file a consumer proposal, with the creditors getting the majority of the inheritance but with him actually keeping part of it.

The proposal was voted on and accepted by the creditors, payment of the agreed upon amount was made, and his consumer proposal will have been completed in about three months, versus a bankruptcy that would have been at least nine months.  He was able to keep a small portion of the money he’d received, and get a fresh start.  Not only that, but his proposal will come off of his credit report in three short years, instead of seven years after bankruptcy.

Not everyone is going to have that type of situation, but the point of sharing this case is this:  there are options, and bankruptcy is not the only one.  Sometimes personal bankruptcy can be exactly the fresh start you need, but let’s look at everything so you can decide what is best for you.

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