When you are in financial difficulty you have several options. Some of your options are debt consolidation, debt settlement, consumer proposal and bankruptcy.
When debt consolidation is not possible for you could not meet the lending requirement of lenders, you may consider debt settlement where you offer your creditors cash (if you have a source of cash) settlement of your debts. In this option, you offer to pay a portion of your debts up to 50% of your total amount owing as full and final settlement of your debts.
When both debt consolidation and settlement of debts are not applicable to you, you may consider consumer proposal or bankruptcy.
If you can afford to pay your creditors about 50% of your regular monthly payment you may consider a consumer proposal. In a consumer proposal your debts would be reduced to at least 50% (depending on your income and assets) of your outstanding debts.
However, if your income is just enough for your basic needs, and you do not have much assets, bankruptcy maybe your option.
When you are experiencing financial difficulty, delaying action to deal with it will do more harm than good for you. First, you will be stressed out with the harassment of collection agents, and second, it may cost you time and money when your creditor would sue you in court, where you are required to appear otherwise, default judgment would be rendered against you.
After said judgment, garnishment of your wages could follow and attachment of your properties including your house (if you own a house). Furthermore, the cost (lawyer’s fee and related disbursements) incurred by your creditor(s) in the filing a case against you would be added to your outstanding debts.
As to which is best for you, consumer proposal or bankruptcy, consider the above general guidelines. However, you need to seek an advice (usually free initial advice) from a professional to evaluate your financial status particularly: the nature of your debts (secure or unsecure), income (with or without surplus), and assets (whether exempt or not exempt from creditors right to attach them).