A proposal, or settlement with your creditors, is an option that is available if you lack the resources to meet all of your debt obligations as they ordinarily become due, but you have the means to offer a reduced amount either in a lump sum or over a period of time.

The main difference between a bankruptcy and a proposal is that in a proposal situation, you maintain more control of your assets and your financial affairs.

A proposal will provide you with immediate protection from your creditors and most garnishments, and legal proceedings will stop. Creditors holding security over specific assets (i.e., mortgages, car loans) will continue to require payment from you in accordance with the specific loan agreement, or they may take steps to realize on their security. In certain circumstances, you may also receive immediate protection from your secured creditors.

A proposal is commenced by:

• Meeting with a Trustee or Administrator who will agree to act on your behalf;
  
  
• Completing a financial information sheet which discloses all relevant details of your financial situation;
  
  
• Providing the Trustee or Administrator with copies of all relevant financial information; and
  
  
• Signing the proposal documents, which are then filed with the Superintendent of Bankruptcy.

We will conduct an assessment to determine if a proposal is a viable option. We will look at your earnings, your available assets, the number and nature of your creditors, and other factors relevant to your situation.

There is no set formula for determining how much to offer your creditors - every situation is unique. But generally speaking, a proposal must offer your creditors more than they would realize if you went bankrupt.

Our philosophy in formulating a proposal is that it is a "win-win" situation for both you and your creditors. You will not be encouraged to file a proposal that you cannot afford, or one that will likely be rejected by your creditors. Viability is foremost in our minds when advising you on making your proposal.

After the proposal is filed, the Trustee or Administrator prepares a report that is forwarded to your creditors, along with copies of your proposal, a statement of your assets and liabilities, and details of your earnings or cash flow position;

• In certain circumstances, a meeting of creditors will be held to vote on the proposal. In other circumstances, no meeting is required. In any event, if the required number of creditors agree to the terms of your proposal, it is accepted and is binding on your other creditors. In certain circumstances, the proposal will require Court approval.

• Once the proposal has been accepted, you will carry out its terms.

• In certain circumstances, you will receive two financial counselling sessions.

• Once you have completed the terms of your proposal, you will receive a certificate discharging you from your debts.

• You will receive immediate protection from your creditors;
  
  
• You may maintain control of your assets;
  
  
• You are not bankrupt; and
  
  
• Your credit is less adversely affected than in a bankruptcy situation.
  
  

• Your credit rating will be adversely affected during the proposal, and for a period of time after the proposal has been completed.

Bankruptcy is an option that is available if you lack the resources to meet your debt obligations as they ordinarily become due, or if you lack the resources to make a settlement to your creditors.

Bankruptcy will provides you with immediate protection from your creditors, and most garnishments and legal proceedings will be stopped immediately.

A bankruptcy is commenced by:

• Meeting with a licensed Trustee who will agree to act on your behalf;
  
  
• Completing a financial information sheet which discloses all relevant details of your financial situation;
  
  
• Providing the Trustee with copies of all relevant financial information; and
  
  
• Signing the bankruptcy documents, which are then filed with the Office of the Superintendent of Bankruptcy.
  
  

For most individuals, bankruptcy is a nine-month process during which you will:

• Report your income and expenses on a monthly basis and possibly make payments to Trustee, depending on your financial circumstances;
  
  
• Attend two financial counselling sessions; and
  
  
• Provide tax information to enable the Trustee to complete and file tax returns for the year prior to and the year in which you file for bankruptcy.

Bankruptcy requires that you turn over your non-exempt assets to the Trustee for the benefit of your creditors. Bankruptcy is not, however, meant to strip you of the necessities of life. In a bankruptcy situation, you will in most cases be able to keep the following exempt assets:

• Clothing;
  
  
• Household furnishings and appliances not exceeding $4,000 in value;
  
  
• Equity in your principal residence not exceeding $12,000 within the Greater Vancouver Regional District or $9,000 outside the Greater Vancouver Regional District;
  
  
• Equity in a motor vehicle up to $5,000 in value;
  
  
• RRSPs, excluding contributions made in the past twelve months;
  
  
• Tools that you use to earn your living not exceeding $10,000 in value; and
  
  
• Medical devices.
  
  

• You will receive immediate protection from your ordinary, unsecured creditors;
  
  
• You will receive a fresh start in life, free of burdensome debts; and
  
  
• You may receive an automatic discharge from your debts after nine months if you are a first-time bankrupt.

• Your credit rating will be adversely affected during the bankruptcy, and for a period of time after you are discharged; and
  
• You may lose some of your assets.