Wednesday, May 13, 2026
Learn how a consumer proposal can lower monthly debt payments, freeze interest, and reduce the amount you owe while helping you become debt-free.
Living with a large amount of debt can feel overwhelming. It can feel like you’re being crushed by the weight of your bills and stress. Paying the minimum each month doesn’t work anymore as your bills continue to rise. It can seem like there’s no way to ever escape from the debt.
A consumer proposal allows you to break free from the debt cycle. They reduce the amount you owe and help you to become completely debt-free. They’re a way to get out of debt without having to declare bankruptcy and allow you to regain control of your finances.
A consumer proposal is a legal agreement between you and your creditors to repay a portion of your debts over a set period, usually five years.
One of the key benefits of a consumer proposal is that a portion of your debt is legally written off, meaning you no longer need to pay it. This lowers your monthly payments to an amount you can afford.
One of the largest advantages to a consumer proposal is that you get to keep all your assets. This includes your home and car.
A Licensed Insolvency Trustee is responsible for putting the consumer proposal together. The Licensed Insolvency Trustee reviews your income, expenses, and total debts to help them determine what you can afford to pay. They then negotiate with your creditors on your behalf to lower your payments.
If your creditors accept your proposal, you then begin making monthly payments of the agreed-upon amount to your Licensed Insolvency Trustee, who distributes the money to your creditors.
You must attend two financial counselling sessions as part of filing a consumer proposal.
If you complete all the requirements of your proposal. you will be debt-free.
Filing a consumer proposal will affect both your credit rating and credit score. When you file, your credit report receives an R7 rating, which shows you have made a proposal to your creditors.
Equifax and TransUnion, Canada’s two largest credit bureaus, will keep a record of the consumer proposal for either:
Your credit score will drop from filing a consumer proposal. It’s impossible to say how much, as everyone’s situation is different, but it can be significant.
It’s important to note that it’s better to have a low credit score and be on the path to becoming debt-free than to have a high credit score and fall further into debt.
There are ways for you to recover your credit score as you complete the consumer proposal, such as a secured credit card.
A consumer proposal can help you reduce your payments on unsecured debt.
Unsecured debt is debt that isn’t linked to a physical asset.
Examples of debts you can include in a consumer proposal are:
Secured debts, such as car loans and mortgages, cannot be included because the lender can repossess the asset if payments aren’t made.
A consumer proposal may be able to help if you are struggling with your mortgage or a car loan. Reducing your other debts can make it easier to keep up with your mortgage or car payments.
Consumer proposals can reduce your total debt by significant amounts, with reductions reaching up to 80% in some cases.
However, each person’s situation is unique, so everyone’s proposal is different. They’re tailored to suit your needs.
Some people have their debt reduced by 30%, others by 50%. The exact percentage will depend on the amount you can afford to pay based on your income, debt level, and living expenses.
There are other benefits besides having the amount you owe reduced.
When you file a consumer proposal, interest is no longer added to your debts as part of the agreement. This makes it easier to stay on top of the debt and can save you thousands of dollars.
The Licensed Insolvency Trustee who handles your case will not ask you to pay more than you can afford to. They thoroughly assess your income, debt, and necessary expenses to help them determine how much they should reduce your debt by.
This can all be done in one short meeting with a Trustee.
The Licensed Insolvency Trustee’s role is to help you become debt-free while maintaining a reasonable standard of living. They also work to ensure that your creditors are compensated, but they do not work for your creditors.
Licensed Insolvency Trustees work as fair, impartial mediators between you and your creditors.
It’s best to speak with a Licensed Insolvency Trustee to see how they can help and if a consumer proposal could help your situation.
A consumer proposal provides immediate legal protections that help you regain control of your finances. Once you file, a “stay of proceedings” comes into effect.
This legally stops most collection actions against you, including calls from debt collectors.
Creditors can also no longer pursue wage garnishments while the proposal is in place, giving you peace of mind and time to focus on repaying your debt under manageable terms.
Yes, creditors can reject your consumer proposal, but this happens very rarely.
There is a voting process for your creditors to accept your proposal.
Your Licensed Insolvency Trustee sends your proposal to all your creditors, who then have 45 days to vote.
Each creditor votes based on how much money you owe them.
For example, if you owe $10,000 and one creditor holds $6,000 of that debt, they control 60% of the vote.
The proposal needs approval from creditors holding the majority of your debt. So, if the creditor holding 60% of your debt votes in favour of the proposal, then it is automatically accepted, regardless of how any other creditors vote.
Creditors rarely reject consumer proposals because they would rather get some money back than nothing.
It’s possible for your creditors to submit some modifications to your proposal, but again, this is rare.
If your proposal is rejected, all is not lost. You can work with your Licensed Insolvency Trustee to submit another proposal with different terms. You can also explore other solutions, such as bankruptcy. Your Licensed Insolvency Trustee can help you see what might be best for you.
If debt is overwhelming your finances and you want to explore how a consumer proposal can help reduce what you owe, contact one of our Licensed Insolvency Trustees.
Our Trustees provide completely judgment-free consultations. We know financial difficulties can affect anyone and many fall into debt through no fault of their own. Our Licensed Insolvency Trustees focus on finding practical solutions rather than dwelling on how the debt situation developed.
Wednesday, May 13, 2026
Learn how a consumer proposal can lower monthly debt payments, freeze interest, and reduce the amount you owe while helping you become debt-free.
