May 21, 2025
A consumer proposal can reduce your debt and stop collection calls. Discover how the process of filing one works here.
A consumer proposal allows you to repay a portion of your debt while having the remainder forgiven. It stops debt collector calling, wage garnishments, and other collection efforts, giving you the breathing room to focus on rebuilding your financial future.
Choosing to file a consumer proposal is not a simple decision to make. It’s a choice often made after a long debt journey. Taking this step requires careful thought, but it can be empowering. Filing one is not as complicated as you likely think it is.
A consumer proposal reduces your unsecured debt by up to 80%, making your monthly payments much more manageable.
You must work with a Licensed Insolvency Trustee to file a consumer proposal; you can't do that on your own. You and your Trustee will come up with a proposal for your creditors, where you agree to make regular payments to pay off a portion of your debt. The remainder of your debt is then written off.
One major benefit is the stay of proceedings. This legal protection immediately stops wage garnishments, collection calls, and lawsuits from creditors. It gives you the breathing space to focus on repayment without constant pressure.
Consumer proposals last up to five years, but you can pay off the agreed amount sooner without penalties, helping you regain financial independence faster. A consumer proposal also allows you to keep your assets, including your car, home, and personal belongings. You won't lose anything by filing a proposal.
There are no interest charges, meaning every payment directly reduces your debt.
A consumer proposal is meant to provide you with structure and relief while helping you avoid drastic measures like selling your property.
As we said, you must work with a Licensed Insolvency Trustee (LIT) to file a consumer proposal.
Your first meeting with a LIT is free of charge, and you are under no obligation to agree to or sign anything.
During this meeting, your LIT gets a full understanding of your financial situation, including your income, assets, monthly expenses, and total debt. They provide a supportive, judgment-free environment to help you explore solutions.
Your LIT will examine your financial situation, looking at things like your income and the amount you owe, so they can recommend the best debt relief solution for you.
They will help you determine if a consumer proposal is the most appropriate choice for your situation.
If the Trustee recommends filing a consumer proposal, and you agree to file one, then the process moves forward.
Once you have decided to file a consumer proposal, the Trustee will look at your income and expenses to see what percentage of your debt you are able to repay.
The Trustee will then prepare the necessary documents before filing the proposal and notifying your creditors.
From that moment, you benefit from legal protection: interest on your debts stops, wage garnishments end, and creditors cannot take legal action against you.
A consumer proposal is approved if creditors holding at least 51% of your total debt vote to accept it.
Creditors have 45 days to review and vote on a consumer proposal. If they accept it—or if no objections are raised within that period—the proposal is automatically accepted.
If a meeting of creditors is required, the acceptance process may take longer.
Once creditors accept the proposal, the court automatically grants final approval 15 days later.
Each creditor’s vote carries weight based on how much you owe them. For example, if one creditor holds 40% of your total debt, their vote counts for 40% of the total decision.
To approve the proposal, the majority of your creditors—based on the dollar amount of your debt—must agree to the terms.
If the majority approves, the proposal becomes legally binding for all creditors, even those who may have voted against it. This means everyone must follow the agreed-upon repayment plan.
Your LIT handles all communication with your creditors during this process, so you won’t need to negotiate or deal with them directly. This ensures the process remains professional and stress-free for you.
Consumer proposals don't last forever, see what it's like do be declared debt-free here.
Learn how a consumer proposal endsOnce your proposal has been accepted by your creditors, you will have crossed the biggest barrier to becoming debt-free.
You will now be on a path to become debt-free as long as you meet the obligations you have agreed to in the proposal.
You make one equal monthly payment, the funds of which are then distributed to your creditors.
These payments will last no more than five years, although as we said, you can pay it off earlier if you are able to.
To complete your consumer proposal, you must attend two credit counselling sessions. These sessions help you build better financial habits, create a practical budget, and manage your money effectively. Your LIT will guide you through each step, ensuring you stay on track toward financial recovery.
These sessions are not a punishment, they’re designed to help you avoid financial issues in the future.
Once you complete all the payments in your consumer proposal, you are officially debt-free. Your Trustee will issue you a Certificate of Full Performance, confirming that you’ve met the terms of the proposal. Your creditors will not be able to pursue you for any debts that were included in the proposal.
Completing a consumer proposal allows you to move forward without the weight of overwhelming debt. Becoming debt-free marks the start of a fresh financial chapter. This is your chance to take control of your financial future.
If you’re struggling with debt, speaking to a Licensed Insolvency Trustee at BDO Debt Solutions can help you regain control of your finances.
Our Trustees will take the time to understand your financial challenges and explain how a consumer proposal could work for you.
Licensed Insolvency Trustees are regulated by the government of Canada and can be trusted to offer professional advice tailored to your situation.
Every conversation is confidential and judgment-free. Our Trustees will ensure you understand all your options.
With their help, you can take the first step toward financial stability and discover what becoming debt-free could mean for your life.
May 21, 2025
A consumer proposal can reduce your debt and stop collection calls. Discover how the process of filing one works here.
