Navigating debt solutions in Canada can be complex. Whether you are struggling with credit card debt, payday loans, or tax debt, understanding your legal options is the first step toward financial freedom. Below, our experts answer the most pressing questions asked by Canadians.
Consumer Proposals
What exactly is a Consumer Proposal?
A Consumer Proposal is a federally regulated program under the Bankruptcy and Insolvency Act. It is a formal, legally binding offer made to your creditors to pay a percentage of what you owe (often reducing debt by up to 80%), or to extend the time you have to pay off the debts, or both.
Unlike a consolidation loan, it does not require you to borrow more money. Once accepted by the majority of your creditors, it freezes all interest and stops collection actions immediately.
How does a Consumer Proposal affect my assets (House/Car)?
This is the most common concern we hear. You generally keep your assets in a Consumer Proposal.
- Home: As long as you continue to make your mortgage payments and property taxes, your home is safe. The proposal deals with your unsecured debt (credit cards, loans), not your secured mortgage.
- Car: Similar to your home, if you have a car loan or lease, you can keep the vehicle by continuing your payments.
- RRSPs: Most RRSP contributions (except those made in the last 12 months) are protected by law.
Will it stop wage garnishment and collection calls?
Yes, immediately. When a Licensed Insolvency Trustee files your proposal, a legal "Stay of Proceedings" is issued. This order legally forbids creditors from contacting you, suing you, or garnishing your wages. Even if a garnishment is currently active, filing a proposal will stop it and lift the hold on your paycheck.
Consumer Proposal vs. Bankruptcy
| Feature | Consumer Proposal | Bankruptcy |
|---|---|---|
| Assets (House/Car) | You keep them | May be seized |
| Cost | Fixed monthly payment | Variable (based on income) |
| Credit Impact | R7 Rating (3 years) | R9 Rating (6-7 years) |
| Tax Refunds | You keep future refunds | Lost for bankruptcy year |
General Questions
How much does the initial consultation charge?
The initial consultation is 100% Free. You do not pay anything to speak with us and review your options.
If you proceed with a Consumer Proposal, the fees are federally regulated by the government. There are no surprise upfront fees. All administration fees are taken directly from the monthly payment you negotiate with your creditors.
What debts can be included?
Most unsecured debts can be eliminated, including:
- Credit cards (Visa, Mastercard, Amex)
- Lines of credit and overdrafts
- Personal loans and payday loans
- Income tax debt (CRA)
- Student loans (if out of school for 7+ years)
Still have questions?
Every financial situation is unique. Book a free, no-obligation consultation with our team.
Get a Free Assessment