Short Answer

No, a consumer proposal is not the same as a personal bankruptcy in Alberta, as each have different rules, methods and guidelines as set out by the federally-appointed Office of the Superintendent of Bankruptcy. A consumer proposal can be a faster, easier and much more painless way to pay back debt.

Longer Answer

Personal bankruptcy and consumer proposals are the two best options available in Canada to help debtors find relief. Both solutions are legally binding methods to resolve debt and both options provide legal protection from creditors. However a consumer proposal is removed from a credit report in 3 years after completion compared to 6 after a bankruptcy. A consumer proposal also allows the debtor to keep all of their assets, and have lower fixed monthly payments.

In Alberta a consumer proposal is much simpler than bankruptcy, the terms are determined up front and are mutually agreed upon between you and your creditors. Payments under a bankruptcy can shift if you make more income, receive a tax refund or other funds, and there is potential to lose assets like property or vehicles.

Just a warning though, both of these processes fall under the same legislation called the “Bankruptcy and Insolvency ACT” and some inexperienced lenders or other parties will see documents with this on it and presume that you filed a Bankruptcy. It is a continual teaching process for us to inform them and we always encourage our clients to keep their documents in a safe place so they can prove it was a proposal not a bankruptcy.