Changing your mind

When you have started into a bankruptcy you may have some second thoughts and wish that you had instead made a consumer proposal.

This idea might also be raised by your Licensed Insolvency Trustee if it becomes clear your debts are much less than you thought. In that case, for example, your unsecured creditors could perhaps be fully paid off in a manageable consumer proposal and avoid a bankruptcy process in which you could effectively overpay and your discharge and release of your debts could take much longer.

A consumer proposal can be made by someone who is bankrupt. This is what you should take note of:

  • a consumer proposal accepted by creditors and approved by the court will nullify your existing bankruptcy but will not improve your credit rating.
  • practically, the LIT in your bankruptcy process will be the same LIT in your consumer proposal process. You cannot change your LIT just because you want to.
  • your LIT will want to approve the terms of your requested consumer proposal and before filing it may require you to firstly pay further amounts into your bankruptcy estate to ensure s/he receives sufficient monies to cover its costs of administering your bankruptcy.
  • your LIT may require that a meeting of your creditors be called for the purpose of electing estate inspectors who would be asked to approve your making of a consumer proposal.
  • if creditors reject your consumer proposal you are still bankrupt.


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