What are the Alternatives to Bankruptcy in Nova Scotia?

When you are full of debt and do not find any solutions, the simple thought of filing for bankruptcy can be scary.

Once you file for bankruptcy a notification will be placed on your credit report and remain there for 6 more years after you’ve been discharged.

When you visit a trustee for the initial consultation, they may advise you to try other alternatives and only file bankruptcy as a last resort.

There are several other bankruptcy alternatives available that can help you avoid the consequences linked with filing for bankruptcy.

One of the most common alternatives is a Consumer Proposal instead of filing for bankruptcy.

Most Popular Alternative to Bankruptcy – What is a Consumer Proposal?

A consumer proposal is a legal agreement that is governed by the Bankruptcy and Insolvency Act.

Similar to filing for bankruptcy, for a consumer proposal you’ll have to obtain the assistance of a trustee.

In this circumstance, the trustee instead of filing a bankruptcy, he/she will adminster the consumer proposal.

You should consider carefully whether to file a consumer proposal instead of bankruptcy.

There are some obvious advantages, but it depends on each person’s circumstances whether the pros outweigh the cons.

Here are some advantages and disadvantages of filing a consumer proposal.

  • Pros –  Filing a consumer proposal can significantly reduce the amount you owe to your creditors. You will also be able to keep all of your assets that would be lost in bankruptcy. It does not impact your credit score as severely as a bankruptcy does. It usually produces an R7 rating while a bankruptcy produces an R9 on your credit report.
  • Cons – You must be able to afford a viable proposal to your creditors. In the eventuality that you do not pay regularly, you might be required to file for bankruptcy.

Normally, you can expect a debt repayment plan over a period of 3 to 5 years.

The consumer proposal is a legal process under the Bankruptcy and Insolvency Act.

When you file for the consumer proposal, it has to be accepted by your creditors.

Other Available Bankruptcy Alternatives

The Consumer Proposal is regulated by the Bankruptcy and Insolvency Act.

However, before thinking about filing for bankruptcy or a consumer proposal, you might want to look at other options.

There may be various options to try depending on your circumstances.

These options are usually not regulated through a legal process, but may prove most convenient.

Some options that you can consider depending on your circumstances include:

  • Selling some assets – instead of filing for bankruptcy, you might decide to sell assets yourself. This option is preferable because it allows you to choose what to sell. If the money you receive from the sale of those assets can cover your debt, then you have solved your problem.
  • Obtaining a debt consolidation loan – Rather than file for bankruptcy and tarnish your credit score, you can find a creditor willing to offer you a debt consolidation loan. Obviously, the total amount you’ll have to pay will exceed your initial debt, but it’s going to be negotiated according to your financial standing and for a longer period allowing you to easily pay your monthly dues.
  • Informal proposal – Occasionally, it might be advantageous to reach out to your creditors and make alternative arrangements between the two parties without the need of a trustee or filing for bankruptcy.
  • Debt management program – there are institutions that offer debt management programs. These institutions act almost like a trustee with the exception that it is not a legal regulated solution. In fact, the debt management program helps you to better manage your income. The institution will look at your income and expenses and determine where to reduce spending so that you can regularly be able to pay your bills when they are due.


When you go to a trustee to file for bankruptcy, he/she will advise you to seek alternative solutions and think of bankruptcy only as a last resort.

Seeking an alternative to bankruptcy is advantageous for the debtor as well as the creditor.

You also do not need to worry about any of your assets being seized.

The alternative solutions are therefore the most reassuring methods of repaying your loans as long as those options are available to you.