Your questions answered.

A consumer proposal is a legal repayment agreement negotiated with your creditors to settle your unsecured debt (credit cards, income tax, etc.). Your trustee will work with you to offer creditors a percentage of what is owed, and/or modify repayment terms based on what you can afford.

A consumer proposal’s payment period is a maximum of five years. If you’re able to, you can make larger payments to finish the proposal faster.

If you don't have joint debt, your spouse won't be affected by your consumer proposal. If your spouse has co-signed or endorsed your debt, they’ll be equally responsible or solely responsible after you file. Children aren’t affected by a consumer proposal, and you’ll continue to receive child benefit payments (if applicable).

Yes, once a consumer proposal is filed, debt collection on all included debt stops. A stay of proceedings will be issued upon filing, which legally prohibits debt collectors from continuing any collection activity on the debt. This includes wage garnishment. It can sometimes take upwards of 6-8 weeks for creditors to cease calls. Your trustee also takes over communicating with your creditors on your behalf. If a creditor continues to make collection attempts, advise your trustee and they will contact them directly.

While both bankruptcy and consumer proposals offer a solution to alleviate your debt, they differ in terms of the assets you can keep, repayment structure, duration, filing process, and impact on your credit rating.

A consumer proposal is a great option for those who can afford payments but need a modified arrangement and/or have assets to keep and want a lesser impact on their credit rating. On the other hand, bankruptcy can eliminate overwhelming debt for people struggling to meet their financial obligations in as little as nine months. Our blog explains the differences between bankruptcy and consumer proposals.

Debt consolidation and consumer proposals are both ways to simplify debt payments. Consolidation loans combine debts into one monthly payment, but they may have high interest rates and fees, and you’ll repay 100% of the debt.

Consumer proposals are administered by Licensed Insolvency Trustees and offer lower monthly payments with 0% interest and the possibility of reducing your unsecured debt by up to 80%.

Credit counselling is a service that helps individuals manage their debt and improve their financial situation. Credit counsellors can provide advice on budgeting, debt repayment strategies, and financial planning. They can also negotiate with creditors on behalf of clients to reduce interest rates or create manageable payment plans. They can't administer formal debt solutions like consumer proposals.

Yes. If you can continue to make payments and repay any equity owed, assets like your home and car won’t be affected by a consumer proposal.

A consumer proposal will settle all unsecured debt such as (but not limited to):

• credit cards

• personal lines of credit

• personal loans

• payday loans

• income taxes

A consumer proposal doesn’t cover secured debt, such as your mortgage or car loan. Student loans and apprenticeship loans can only be included in your proposal if you have been out of school or completed your apprenticeship 7 or more years priors to the time of filing.

When you file a consumer proposal, you are generally required to surrender your credit cards to your trustee. These cards are then closed, and the debts are included in your proposal. You won’t be able to use your credit cards during your proposal, but you can explore options for rebuilding your credit after completion, such as a secured credit card.

Equifax and TransUnion remove a consumer proposal from your credit report either 3 years after you pay off all the debts included in the proposal, or 6 years after your sign the proposal—whichever is sooner.

You may have too much debt if you're struggling to make minimum payments, relying on credit to cover basic expenses, or feeling overwhelmed by your financial obligations. Warning signs include missed payments, maxed-out credit cards, or borrowing from one source to pay another.

Technically—yes—you can pay off your proposal early. The payment terms are designed to fit within your budget, but you still have the option of increasing the amounts or frequency of your payments. The sooner it’s paid off, the sooner you can start rebuilding your credit. But it’s important not to overextend your finances just to pay it off early.

The fees for your consumer proposal are regulated by the federal government and are a percentage of the payments you make into the proposal. You won’t be billed directly for any services. All costs associated with filing—such as the filing fee, counselling fee, and proposal administration fee—are paid from the proposal funds. Some of these costs are payable to the Office of the Superintendent of Bankruptcy (OSB) and some are payable to the trustee.

If you stop making payments on your consumer proposal, it can be annulled. This means that your creditors can resume collection efforts against you.

The “statute of limitations” refers to the time limit for creditors to collect debts. If no payments are made or the debt isn’t acknowledged within this period, creditors can’t take legal action to collect it. This time limit varies by province. In Alberta and Ontario, the statute of limitations is two years, and in Quebec it’s three. In Manitoba, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and the three territories it’s 6 years. Some debts—including secured debts, student loans and government debts—aren’t affected by these limitations.

A Licensed Insolvency Trustee (LIT) is a professional authorized by the Canadian government to administer formal debt solutions, like consumer proposals. LITs are paid through the fees regulated by the government, which are included in the payments you make during your filing.

No, a consumer proposal must be administered by a Licensed Insolvency Trustee (LIT). They are the only regulated professionals who are authorized to administer formal debt solutions like consumer proposals.

Yes, Licensed Insolvency Trustees (LITs) are regulated in Canada. They are licensed by the Office of the Superintendent of Bankruptcy (OSB), which is a federal agency responsible for overseeing the insolvency system. The OSB ensures that LITs adhere to strict standards and guidelines to protect the interests of both debtors and creditors.

A debt consultant provides advice and strategies to manage and reduce debt, but unlike a Licensed Insolvency Trustee (LIT), they are not regulated by the government. An LIT is a regulated professional authorized to administer formal debt solutions like consumer proposals.

LITs are paid through the fees regulated by the government, which are included in the payments you make during your filing.

For a consumer proposal, you must complete all the payments as agreed to in the proposal, attend two financial counselling sessions, avoid falling behind on more than three payments, and meet any other conditions set by your trustee. Upon successful completion, you’ll receive a Certificate of Full Performance as proof of discharge.

When you're discharged from your consumer proposal, you are released from the legal obligation to repay the debts included in the proposal. This means you aren’t responsible for those debts, and creditors can’t take legal action against you to collect them. Your credit score will be affected, and it will take time to rebuild.

Rebuilding your credit after a consumer proposal takes time. Start by getting a secured credit card, which requires a deposit. This will help you establish a positive payment history. Make sure to pay all your bills on time and pay off balances in full each month. Keep your credit utilization low by not maxing out your credit card. Regularly check your credit report for errors and dispute them.