Bankruptcy Protection under the Insolvency and Bankruptcy Act

The process of bankruptcy is lawfully designed to help sincere individuals, and offer them a relief from their debts. When this procedure is over, the person who was in debt is no longer obligated to repay the debts, which they had at the time of filing for the bankruptcy, with certain conditions applied.

Types of Proposals

There are two different kinds of proposals. These proposals include a particular amount of money, and the time period till which the debt should be repaid to the creditor. The proposal is put forward by the debtors, however the creditors can vote against or in favor of it, accordingly. The two proposals are:

  1. Consumer Proposal
  2. Commercial Proposal

Consumer Proposal

If you owe the amount of $250,000 after leaving out the mortgages, then you can utilize this proposal. It is usually for single individuals and spouses.

Commercial Proposal

On the other hand, this proposal is more feasible for businesses as well as individuals owing greater debt than $250,000. There is no debt limit set in this proposal. It is also called Division I proposal.

CCAA Proceedings

These are specifically for insolvent companies who are in debt of more than $5 million. The companies under this act request for protection in order to plan or arrange the offer for the creditors in the form of a payment. Moreover, the court is responsible for supervising these proceedings.

The debt relief is provided as soon as all the requirements of the selected proposal are met.

Why Bankruptcy Protection is Necessary?

When you are unable to pay off the money, your creditor is permitted to take the necessary legal actions that will force you to repay the debt you owe. This authorized action basically involves filing of the law suit against you, which will lead to freezing of your bank account, and confiscation of your assets and the wages, if it is passed.

According to the Bankruptcy and Insolvency Act section 69, once you have filed for the bankruptcy, the creditors cannot take any official action. Moreover, this also puts a stop to the proceedings that have already started. This state is called as the ‘stay of proceedings’ according to the act. Moreover, the lawful process under the BIA is time consuming and prevents creditors from taking away your assets or income. Additionally, through bankruptcy or consumer proposal, you can get rid of your unsecured debt such as credit card loans, personal loans, and student loans.


Declaring bankruptcy or filing a consumer proposal may be the silver lining for you. However, there are some exemptions that these do not cover. This includes the alimony, secured debts, child support, etc. Secured debts include your vehicle loan and house mortgage. So if you want to keep your house and car, you need to pay for it.

If you are still under stress, and searching for ways to protect yourself from the creditors, you can get the help of counselors who deal with bankruptcy and consumer proposal matters. They will facilitate you in opting for the best alternative so you can start fresh.

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