So, what is a consumer proposal? It is a legally binding agreement between you and the people you owe money to. You offer to repay part of what you owe, over a fixed period. If enough of your creditors agree and you complete it, the rest of the covered debt is written off. Filing it also stops most collection.

It is set out in federal law, the Bankruptcy and Insolvency Act, so the process is the same in Ontario as everywhere else in Canada. What you can keep is set by provincial law. It is not a loan. It is not a consolidation. And it is not a private deal worked out in the background. If the payments are choking you, there is a way through it.

Who can use one

A consumer proposal is for an individual, not a company. Your total debts have to be $250,000 or less, not counting debts secured by the home you live in. You also have to be insolvent. In plain terms, you owe at least $1,000 and either you cannot pay your debts as they come due, or what you own is worth less than what you owe. If you owe more than that, there is a different kind of proposal. The process is similar, but the rules differ. The rules are on the Office of the Superintendent of Bankruptcy’s own page.

You also need a way to fund the offer. For most people that is regular income and a monthly payment. A lump sum, for example from family or from the sale of an asset, can also fund one. A proposal is a repayment plan. If there is nothing to repay from, it is the wrong tool for you.

What debts a consumer proposal covers

It covers unsecured debt. That is money you owe with nothing pledged against it.

Credit cards, lines of credit, personal loans and payday loans.
Money you owe the Canada Revenue Agency: income tax, penalties and interest, and HST if you are a sole proprietor. We wrote a separate page on CRA debt in a consumer proposal.
Government student loans, if it has been seven years or more since you stopped being a full-time or part-time student.

It does not touch secured debt. Your mortgage and your car loan carry on as they are, and you keep paying them if you want to keep the house and the car. It also leaves out child and spousal support, most court fines, debts that came from fraud, and government student loans inside the seven years. Those generally survive it.

How does a consumer proposal work?

Your whole situation is reviewed: what you owe, to whom, what you own, and what you earn.
An offer is prepared. It says how much you will repay in total and over how many months.
A Licensed Insolvency Trustee files it with the Office of the Superintendent of Bankruptcy.
The moment it is filed, a stay of proceedings begins against your unsecured creditors. Most wage garnishments, collection calls and lawsuits stop. A garnishment for child or spousal support does not stop, and secured lenders keep their rights over what is pledged to them.
Your creditors have 45 days to consider it. If no meeting is called, it is accepted automatically.
If it goes to a vote, it passes when creditors holding more than half the dollar value of the claims voted say yes.
You make the payments and attend the required counselling sessions. When you have done everything the proposal requires, the rest of the covered debt is released, and you receive a certificate that says so.

Take that first step slowly. How you answer the questions about your file is very important, so understand each question before you answer it. Every file is different, and your buddy’s file is not yours.

How long does it take to be approved?

Count about two months from the filing to a proposal that binds everyone. Your creditors get 45 days. A meeting is held if creditors holding at least a quarter of the proven claims, by dollar value, ask for one, or if the official receiver calls one. A meeting adds time. After acceptance there is a further 15 days in which the Superintendent’s office, or anyone else with an interest, can ask for the court to review it.

You do not wait those two months for the protection. The stay of proceedings starts on the day of filing.

How long it lasts

A consumer proposal can run for up to five years. You can pay it out early with no penalty, and many people do when things get better for them.

Here is an example. Say the offer your creditors accept is $24,000 over 48 months. That is $500 a month, fixed, for four years. If you come into money in year two and pay the rest in one go, it is finished in year two. The number does not go up if your income goes up.

Do you keep your house and your car?

In a consumer proposal, usually yes, as long as you keep up the secured payments on them. A proposal does not require you to sell anything unless its own terms say so. That is one reason people choose a proposal over a bankruptcy.

Your equity still matters, because your creditors compare your offer with what they would get if you went bankrupt instead. In Ontario, the law sets what a bankrupt keeps: one vehicle up to $8,578 of value, household furnishings up to $17,091, tools of your trade up to $17,362, and the equity in your home only if it is $12,997 or less. Those figures are in Ontario Regulation 657/05. The amounts were last updated in December 2025. If your equity is above those lines, your offer has to reflect it. That is a number to work out before anything is filed, not after.

What about your spouse?

A consumer proposal is usually filed by one person. Spouses whose debts are mostly shared can file a joint one. Your spouse does not have to file one because you did. Two things do reach across the table. Any debt in both your names, or that your spouse co-signed, stays fully collectable from your spouse. And your household income is usually looked at when the offer is built, because the payment has to be one your household can carry. Every file is different. If there is a joint account, a joint card or a spouse on the title of the house, tell us at the start.

What it does to your credit

It goes on your credit report. Equifax removes it three years after you finish it, or six years after it was filed, whichever comes first. TransUnion also removes it three years after you finish it, and it sets its own six-year outer limit. The general rule is also on the Financial Consumer Agency of Canada’s page, and we go through it on our page about what a consumer proposal does to your credit.

Here is an example. Say you pay it out at year two. Three years after that final payment is year five, which comes before the six-year mark, so it comes off at year five.

We will be plain with you about this part. A consumer proposal damages your credit. But what it is up against is usually not a clean report. It is up against missed payments, collections and judgments, which are on the report too, and which can stay there for six years or more.

What it costs

The fees for administering a consumer proposal are fixed by federal tariff, not set by whoever files it. They are paid out of the payments you are already making. They do not sit on top of your offer as a separate bill.

Questions people ask

Is a consumer proposal always accepted?

No. It is an offer, and your creditors can say no. A well-built offer gives creditors more than a bankruptcy would, and that is what they compare it with. It can be amended before or at the creditors’ meeting. If it is refused, a new proposal can be filed, or you look at the other options. The work is in getting the number right the first time.

Can you pay it off early?

Yes, at any time, with no penalty. Paying it out early can also bring forward the date it leaves your credit report.

Can the CRA be included?

Yes. Personal income tax, interest and penalties owed when you file go in with everything else, and the CRA votes like any other creditor. The details, including what the CRA looks for before it votes yes, are on our CRA and a consumer proposal page.

What is the first step?

Write down what you owe and to whom, what you own, and what comes in each month. Then call. There is nothing to sign to have that conversation, and you can ask the same question five times if you want. Every consultation is free.

What are the disadvantages?

The credit mark, the closed cards, the public record, and the fact that you have to finish it. We put them all on one page, the disadvantages of a consumer proposal, because you should read them before you decide, not after.

Where we fit

Get Total Debt Relief is a debt consulting and representation firm, not a Licensed Insolvency Trustee. Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy. However, he is not the only one you should get your information from. Unlike a Trustee, we look to preserve your equities and assets, not liquidate them. What we do is make sure you only pay what you have to pay, not what someone thinks you can pay. We use every tool available to make sure you protect your home, your business and other equities as well as Spousal rights. Once you’re ready to move forward with whichever process you choose, that’s when it’s time to move on to the selection of a Trustee. Please keep in mind that if for any reason, you have to deal with a legal matter during your Bankruptcy or Proposal, a Trustee can NEVER legally represent you. However, he CAN act against you. Choose your representation wisely!

You can read more about proposals and bankruptcy, or about the kinds of debt we handle.

DISCLOSURE:

Get Total Debt Relief is a debt consulting and representation firm. We are not a Licensed Insolvency Trustee, and we are not connected to the Canada Revenue Agency or any government body.

Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy.

OUR SERVICE:

However, any Trustee you choose can’t legally represent you over your Creditors nor can he give you any advice that will benefit you over your Creditors. The Trustee’s job is to maximize how much he can get from you and your estate for the benefit of your Creditors and the more he collects in a Proposal, the more he makes.

What we do is the work before the filing and the path you choose will come from the advice and information that goes with it. More importantly, we use tools that are not available to the Trustee because of who’s interests he represents. We go through your whole situation with you. We answer your questions, for as long as it takes and as many times as you need to ask them. Every consultation is free and if or when you decide to move forward, you’ll know which option best suits you, your family and or your business. And, unlike the Trustee, we will NEVER use the information you’ve given us against you in Court. The bottom line is that we don’t look to liquidate your assets and equities, we look to protect them.

Every consultation is free, and you can call as many times as you need. Call 647-276-8844 or talk to us.