Editing Bankruptcy (section)

====Consumer proposals====
{{Main|Consumer bankruptcy in Canada}}
In Canada, a person can file a consumer proposal as an alternative to bankruptcy. A consumer proposal is a negotiated settlement between a debtor and their creditors.

A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors. Even though most proposals call for payments of less than the full amount of the debt owing, in most cases, the creditors accept the deal—because if they do not, the next alternative may be personal bankruptcy, in which the creditors get even less money. The creditors have 45 days to accept or reject the consumer proposal. Once the proposal is accepted by both the creditors and the Court, the debtor makes the payments to the Proposal Administrator each month (or as otherwise stipulated in their proposal), and the general creditors are prevented from taking any further legal or collection action. If the proposal is rejected, the debtor is returned to his prior insolvent state and may have no alternative but to declare personal bankruptcy.

A consumer proposal can only be made by a debtor with debts to a maximum of $250,000 (not including the mortgage on their principal residence). If debts are greater than $250,000, the proposal must be filed under Division 1 of Part III of the [[Bankruptcy and Insolvency Act (Canada)|Bankruptcy and Insolvency Act]]. An Administrator is required in the Consumer Proposal, and a Trustee in the Division I Proposal (these are virtually the same although the terms are not interchangeable). A Proposal Administrator is almost always a licensed [[trustee]] in bankruptcy, although the [[Superintendent of Bankruptcy]] may appoint other people to serve as administrators.

In 2006, there were 98,450 personal insolvency filings in Canada: 79,218 bankruptcies and 19,232 consumer proposals.<ref>[http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01702e.html "Insolvency in Canada in 2006"]. {{webarchive |url=https://web.archive.org/web/20070329033435/http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01702e.html |date=March 29, 2007 }}. Office of the Superintendent of Bankruptcy ([[Industry Canada]]). Retrieved 30 May 2007.</ref>