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100% Confidential & Federally Regulated under the BIA.

Official BIA Statutory Procedure

How to File a Consumer Proposal in Canada

A step-by-step roadmap to negotiating up to a 70% debt reduction, freezing CRA interest, and legally protecting your assets under federal law.

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Calculate Your Estimated Monthly Offer First

Run your numbers using our free financial utilities before starting the filing process:

Consumer Proposal Savings Calculator → Check Garnishment Protections → Compare vs. Bankruptcy Cost →

Eligibility Requirements to File a Consumer Proposal

Under Division I and Division II of the Bankruptcy and Insolvency Act (BIA), a Canadian resident must meet specific legal criteria to qualify for a Consumer Proposal:

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Total Unsecured Debt Limits

Your total unsecured debt must be between $1,000 and $250,000 (excluding the primary mortgage on your principal residence).

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Canadian Residency & Insolvency

You must reside or carry on business in Canada and be unable to pay your debts as they fall due (insolvent).

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Steady Monthly Income

You must have sufficient stable cash flow to afford a single, fixed monthly payment over a 12 to 60-month repayment window.

The 5 Steps of the Consumer Proposal Process

1

Free Consultation with a Licensed Insolvency Trustee

An LIT is the only professional in Canada legally authorized by the federal government to file a Consumer Proposal. You will review your household budget, debts, income, and asset equity to confirm a proposal is your best option.

2

Drafting & Formal Filing with the OSB

Your LIT prepares your formal offer and files it with the Office of the Superintendent of Bankruptcy (OSB).

Immediate Legal Injunction (Stay of Proceedings): The moment your proposal is filed, Section 69 of the BIA legally freezes all collection calls, interest accrual, bank account freezes, and CRA wage garnishments instantly.
3

The 45-Day Creditor Voting Period

Your LIT sends the proposal offer to all your unsecured creditors. Creditors have 45 days to submit voting letters:

  • Voting Weight: Each dollar owed equals one vote.
  • Acceptance Rule: If a simple majority (50% + $1 of voting debt value) approves the proposal, it becomes legally binding on 100% of unsecured creditors—even those who voted no.
  • 15-Day Court Delay: Once accepted, there is a mandatory 15-day waiting period for official court approval.
4

Fulfill Monthly Payments & Financial Counseling

Once approved, you make one single 0% interest monthly payment to your LIT. During this time, you must complete two mandatory financial counseling sessions covering budgeting, money management, and rebuilding credit.

5

Certificate of Full Performance & Debt Discharge

Once all payments and counseling duties are complete, your Trustee issues a formal Certificate of Full Performance. Your included unsecured debts are permanently erased, and the 3-year credit bureau purge countdown begins.

Why Choose a Consumer Proposal Over Bankruptcy?

While both proceedings are governed by the BIA, a Consumer Proposal provides significant advantages for homeowners and steady earners:

Feature Consumer Proposal Personal Bankruptcy
Asset Ownership 100% Retained (No asset surrender) Non-exempt equity surrendered or bought back
Monthly Payments Fixed amount (Never increases if income goes up) Increases if your earnings exceed Surplus Income limits
Credit Rating Impact R7 Rating (Purged 3 yrs post-completion) R9 Rating (Remains 6–7 yrs post-discharge)
Tax Refunds & Windfalls You keep all tax refunds and future inheritances Tax refunds and windfalls go to bankruptcy estate

Frequently Asked Questions

Only a federally Licensed Insolvency Trustee (LIT) authorized by the Office of the Superintendent of Bankruptcy (OSB) can legally file and administer a Consumer Proposal in Canada.

If creditors holding more than 50% of your debt value vote no, your LIT will schedule a meeting of creditors to negotiate modified terms (such as a slight increase in monthly payment). You are never forced into bankruptcy automatically if an initial proposal offer is rejected.

Instantly. As soon as your LIT officially registers your filing with the OSB, Section 69 of the BIA imposes an automatic Stay of Proceedings that forces employers and payroll departments to stop wage garnishments immediately.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

What Happens When You File:
  • ✓ 100% Interest Freeze: Interest stops compounding immediately upon filing.
  • ✓ Keep Your Assets: Protect your home, vehicle, and RRSPs from liquidations.
  • ✓ Legal Protection: Halts wage garnishments and collection calls instantly.
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✓ Verified Client

"I was overwhelmed with credit cards and CRA debt. Filing a Consumer Proposal consolidated everything into one low monthly payment and stopped all collection calls."

Original Debt: $54,000 Settled For: $12,800
LIT
Government-Regulated Service Administered under the Bankruptcy and Insolvency Act by Licensed Insolvency Trustees.