How to Avoid Bankruptcy and Save Your Assets
Bankruptcy is not the only option for someone in severe debt there is another option which people should be aware of namely the consumer proposal. Whereas in a bankruptcy your assets are assigned to a trustee (subject to exemptions) who then liquidates them to pay your unsecured creditors, this is not the case for a consumer proposal. The consumer proposal, under the Bankruptcy and Insolvency Act, is an offer to pay your secured creditors an agreed amount of money to extinguish your debts and thus avoid bankruptcy. This money is paid interest free over a period of up to 5 years. When a consumer proposal is filed 3 major things happen: Interest stops on your debts Your assets are protected from the creditors and a stay of proceedings is in place Creditors can no longer contact you by phone or mail or any other means So long as you keep up the payments your assets are protected under the Act. This option is usually the preference for people with savings or equity in their house or for sm...