How to File a Consumer Proposal in Canada: Step-by-Step Guide

Short Answer: How Do You File a Consumer Proposal in Canada?

To file a consumer proposal in Canada, you must work with a Licensed Insolvency Trustee. The process typically involves:

1. A free, confidential consultation with a LIT.
2. Gathering your financial information and preparing your proposal.
3. Filing the proposal and related documents with the government.
4. Sending the proposal to your creditors and waiting for their vote.
5. Once accepted, making your monthly payments and completing your duties.

Consumer proposals are governed by Canada’s Bankruptcy and Insolvency Act and overseen by the Office of the Superintendent of Bankruptcy (OSB). The OSB’s page on proposals is here: You Owe Money – Consumer Proposals.

What Is a Consumer Proposal and Who Can File?

A consumer proposal is a legally binding agreement between you and your unsecured creditors. You offer to repay only a portion of what you owe, usually in fixed monthly payments over a period of up to five years. Once accepted, interest stops, collection actions are stayed, and you follow a structured plan to become debt free.

Only a Licensed Insolvency Trustee can file a consumer proposal on your behalf in Canada. You cannot file one directly with your creditors or through a debt consultant.

For a broader overview, see:

• Our main guide: Consumer Proposal in Canada
• OSB overview: Consumer Proposals – OSB
• External explanation: Filing a Consumer Proposal – Hoyes Michalos

Step-by-Step: How to File a Consumer Proposal in Canada

Here is the full process to file a consumer proposal in Canada, from first contact to acceptance.

Step 1: Book a Free Consultation with a Licensed Insolvency Trustee

Your first step is to speak with a Licensed Insolvency Trustee. The consultation is confidential and typically free. During this meeting, the LIT will:

• Review your income, expenses, assets, and debts.
• Explain all your options (budget changes, debt consolidation, credit counselling, consumer proposal, bankruptcy).
• Estimate what a realistic proposal payment might be for you.

What to bring:

• Recent pay stubs or proof of income.
• List of monthly expenses (housing, food, transportation, etc.).
• Recent statements for all debts (credit cards, lines of credit, loans, tax debt, etc.).
• Information about assets (home, vehicle, savings, RRSPs).

Step 2: Prepare Your Consumer Proposal and Financial Documents

If a consumer proposal is the best option, your LIT will prepare the required documents, including:

• Your Statement of Affairs (complete list of assets, debts, income, expenses).
• The actual proposal document that sets out what you are offering your creditors.
• Supporting forms required by the OSB and the Bankruptcy and Insolvency Act.

Together, you and your LIT will decide:

• How much you can pay each month or as a lump sum.
• How long the proposal will last (up to 60 months in most cases).
• Which debts will be included (most unsecured debts; some exceptions apply).

Step 3: File the Consumer Proposal and Trigger a Stay of Proceedings

Once the documents are ready, your LIT files your consumer proposal electronically with the OSB and sends official notice to your creditors. At this point:

• A stay of proceedings usually comes into effect, which stops most collection actions and wage garnishments on unsecured debts.
• Interest on included debts generally stops as of the filing date.
• Creditors must deal with your LIT, not directly with you.

For official information about submitting proposals to creditors, see: Submitting a Consumer Proposal to Your Creditors – OSB.

Step 4: Creditor Review and Voting Period

After filing, your creditors have a set period (usually up to 45 days) to review your proposal and decide whether to accept it.

• Each creditor’s vote is weighted by the amount you owe them.
• If creditors holding more than 50% of the dollar value of your proven claims vote in favour, the proposal is accepted by all unsecured creditors included.
• Sometimes creditors request a meeting of creditors or ask for small changes to your proposal (for example, slightly higher payments or a longer term).

If changes are needed, your LIT will discuss them with you before anything is agreed. Once creditors and the court approve the proposal, it becomes legally binding.

Step 5: Make Your Payments and Complete Required Duties

Once accepted, you begin (or continue) making your regular proposal payments to the LIT. You must also:

• Attend two financial counselling sessions.
• Keep your contact information up to date with your LIT.
• Make payments on time according to the proposal terms.

After you make all required payments and complete your duties, you receive a Certificate of Full Performance. Your included unsecured debts are then considered settled as per the terms of the proposal.

Eligibility Requirements to File a Consumer Proposal

You may be eligible to file a consumer proposal if:

• You are an individual who is insolvent (you cannot pay your debts as they come due).
• Your total unsecured debt is generally between $1,000 and $250,000, not including the mortgage on your principal residence (higher limits apply for joint proposals).
• You have enough income to make a reasonable proposal payment each month.

These guidelines are consistent with what many firms and the OSB describe for standard consumer proposals in Canada. See, for example: Consumer Proposal Overview – BDO Debt Solutions.

If your debts are higher than the standard limit, you may still have options such as a Division I proposal or bankruptcy. A Licensed Insolvency Trustee will explain the differences.

What Happens When You File a Consumer Proposal?

Once your proposal is officially filed:

• Collection calls usually stop for debts included in the proposal.
• You are protected by a stay of proceedings, which can stop wage garnishments and most lawsuits for unsecured debts.
• Interest and ongoing charges on included debts typically stop accruing.
• Your credit report will show that you have filed a consumer proposal (generally an R7 rating).

Many people find that the biggest immediate benefit of filing is the relief from constant creditor pressure and the ability to follow one clear plan.

For a full explanation of the advantages, see our page on the Benefits of a Consumer Proposal.

Timeline: How Long Does It Take to File and Complete a Consumer Proposal?

While every case is different, a typical timeline looks like this:

• Day 1–14: Initial consultation, gathering documents, preparing and filing your proposal.
• Day 1 onward: Stay of proceedings starts, collection actions generally stop.
• Within 45 days: Creditors vote to accept or reject your proposal; a meeting may be held if requested.
• After acceptance: You make monthly payments (up to 60 months) and attend two counselling sessions.
• End of term: Once all payments and duties are complete, you receive your Certificate of Full Performance.

External overviews of the process and timeline include:

• Filing a Consumer Proposal – Process Overview (Hoyes Michalos)
• Understanding the Consumer Proposal Process – RBC

Why File a Consumer Proposal Instead of Other Options?

Choosing to file a consumer proposal can make sense if you:

• Have significant unsecured debt (credit cards, lines of credit, tax debt, etc.).
• Can afford some payment toward your debts each month, but not enough to repay everything in full.
• Want to avoid bankruptcy and keep most or all of your assets.
• Prefer a structured, predictable plan with no interest on included debts.

If you are still exploring alternatives, compare:

• Benefits of a Consumer Proposal
• Bankruptcy Cost in Canada
• Debt Relief in Canada – Options Overview