Canada’s New Bankruptcy Laws

On September 18th 2009, several new bankruptcy laws took affect in Canada. In the interest of keeping Canadian’s up to date on important consumer credit and bankruptcy news, here is a brief break down of the changes to bankruptcy law in Canada:

Consumer Proposal

A consumer proposal is an alternative to bankruptcy available in Canada. It is essentially a negotiated settlement between an insolvent consumer and their creditors.

Just like debt consolidation, a consumer proposal allows a person to consolidate multiple loans into one monthly payment. For many consumers having one monthly payment is easier to manage.

Bankruptcy Definition

In Canada bankruptcy is a form of financial protection that both businesses and individuals can use to absolve debt and protect themselves from creditors. Filing bankruptcy in Canada is usually a last resort used to wipe out debt and start over fresh.

Once bankruptcy is complete, all of the debt included in the bankruptcy is considered absolved or wiped. The bad credit history leading up to the bankruptcy and the bankruptcy itself are not wiped and will remain on the individuals credit bureau for 7 years.