How Are Canadians Getting Out of Debt

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.

consumer insolvencies in Canada

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