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Doug Hoyes, co-founder of bankruptcy trustee firm Hoyes, Michalos & Associates Inc., says many of his clients pick a consumer proposal over bankruptcy, even if it costs them more.

“Most of the people I deal with don’t want to go bankrupt, they want to at least pay some of their bills, they want to at least make some kind of arrangement with their creditors,” he said.

However, there are limits.

Your total debt cannot exceed $250,000, excluding a mortgage, and you’ll need to be able to show that you’ll be able to repay at least a portion of what you owe.

Your creditors aren’t obligated to accept a proposal just because you make one, and you need to convince them that they would be better off than if you went bankrupt.

But Bolduc said there are scenarios when bankruptcy may make more sense.

“We’re talking about individuals that have a low income and can probably not afford to pay more money in a consumer proposal because they have other priorities such as food and shelter,” he said.

Under a bankruptcy, you surrender your assets which are then sold to pay your creditors. You are allowed to keep your car, personal possessions and other things within certain limits, but otherwise they must be handed over and you will have to make monthly payments during your bankruptcy depending on how much you make.