While the rate varies by province and year, more than 4 in every 1,000 Canadians get out of debt by filing insolvency each year in Canada. In 2013 alone, almost 123,000 people utilized the protection provided in the Bankruptcy & Insolvency Act to eliminate their debt and gain a new start. For many however, bankruptcy is not the final solution.
In 2013 42% of insolvent debtors chose a consumer proposal as their debt relief solution. Consumer proposals were introduced into the Bankruptcy & Insolvency Act in 1992. The purpose was to add some flexibility for consumers to find a way to reorganize their debts, without the need to file bankruptcy. It allowed individuals the opportunity to make a proposed settlement offer to their creditors while retaining the protection provisions otherwise available when filing bankruptcy. Despite this, consumer proposals did not become a significant alternative until the legislation was changed in 2009 increasing the debt limit for proposals to $250,000.
For debtors, there are advantages to filing a consumer proposal. The increase in popularity of consumer proposals can also be attributed to the fact that creditors have widely accepted consumer proposals as a preferred debt relief solution. This, combined with the fact that formal court approval is not typically required, has played a role in the increasing rate of consumer proposals over bankruptcy as a way of getting out of debt.
If you are looking for debt relief, a consumer proposal may be the right option. Try our Consumer Proposal Calculator and compare your debt relief alternatives so you can choose the best way to get out of debt.