Share on facebook
Share on twitter
Share on linkedin

Consumer Proposal: Should you consider it?

If you are researching ways to deal with your debts, you might want to consider a consumer proposal. Consumer Proposals have gained popularity recently, but they are still unknown to many Canadians. 

What exactly is this? Will a consumer proposal pay off my debt? Will I be able to live in my house, or do I need to sell it? How do I qualify for a Consumer proposal? A credit counseling company via consumer proposal calculator will be able to assess whether you are ready for the same or not. 

Some of the questions above may be crossing your mind. We have covered these and more of its aspects in the blog below that will help you make an informed decision. 

What is a Consumer Credit Proposal?

It is a legal proceeding administered under and governed by Canada’s Bankruptcy and Insolvency Act. In layman’s terms, it is a government-approved debt settlement program where the debtor will repay a portion of their debt, and in turn, creditors will write off the remainder. 

For example, if you owe $50,000 and can no longer make your minimum payments of $1500 per month, it may be possible to file a Consumer Proposal and pay $500 per month over a period of up to 5 years. Moving forward, you would pay no interest, and at the end of the Consumer Proposal, your creditors would write off the remaining balance.

Join Our Small Business Community

Get the latest news, resources and tips to help you and your small business succeed.

Important Aspect

One important thing to note here is that only a licensed insolvency trustee can administer consumer proposals; thus, it is imperative to have a credible insolvency trustee by your side. Most credit counselor companies provide the said program.

They will negotiate with the creditors and work towards reducing your overall debt. They will also help you create a debt repayment plan to which you and your creditors agree.

Benefits Of Choosing Consumer Proposal 

Just like you went over several things before signing the contract similarly, it is essential to weigh the consumer proposal with other debt settlement programs. For those who qualify, a consumer proposal has several key advantages:


These will allow you to keep all your assets, like your house and investments, whereas in Bankruptcy, you must surrender all non-exempt assets.


When you file a Consumer Proposal, your income is yours. If your salary goes up, you get a work bonus; your money stays in your pocket. Bankruptcy comes with a surplus income element where you will be required to pay more money if you make more, whereas consumer proposals come with a fixed payment plan that never increases. Consumer proposals can help you avoid the surplus income penalty if you expect your income to increase. 

Credit Rating

A Consumer proposal will change your credit rating to an R7 and stay on your credit bureau for 3 years, whereas a Bankruptcy will change your credit rating to an R9 (the lowest rating).

Early Payoff

If you are able to pay down your debt earlier, no penalties and interest will be levied. There is no early discharge with bankruptcy. 


As you have read, consumer proposals are a great alternative to Bankruptcy and let you enjoy the benefits above. Its purpose is to ensure you get out of debt sooner. The licensed insolvency trustee negotiates with your creditors and lets you settle your debts for less than what you owe.

They will also review the pros and cons of all debt solutions to help you make an informed decision. Choosing a Consumer Proposal will stop collection attempts from creditors, and best of all, payments under this program are based on what you can afford to pay rather than what you owe. 

Join Our Small Business Community

Get the latest news, resources and tips to help you and your small business succeed.