Originally published in Comments - Spring 2011
Most people are familiar with the concept of bankruptcy.
Creditors are owed money assets are liquidated and the liquidation
proceeds are paid to creditors. The process is usually very
difficult for the person filing bankruptcy as his/her assets may
consist of a family home or a cottage, which possibly has been in
the family for generations. The disruption can be devastating for
the family and their children.
The Bankruptcy and Insolvency Act (BIA), the federal
statute that governs bankruptcy and restructuring in Canada,
provides an option other than bankruptcy.
The BIA allows an insolvent person whose aggregate debts are
less than $250,000 (not including mortgages on residential
property) to file what is known as a "consumer proposal".
A consumer proposal is not the same as bankruptcy, even though they
are both governed by the same laws.
