Can I Keep My Car in a Consumer Proposal?

Keeping Your Vehicle in a Consumer Debt Proposal?

Yes, It's Possible!

Consumer proposals are a popular alternative to bankruptcy for individuals struggling with debt. They allow debtors to make a formal offer to their creditors to repay a portion of their debts over a specified period of time. One common concern for individuals considering a consumer proposal is whether they can keep their car. In this article, we will explore the benefits of consumer proposals, how car payments work in a consumer proposal, and the options for leasing or financing a car during the process.


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Understanding Consumer Proposals

A consumer proposal is a legal agreement between a debtor and their creditors, facilitated by a Licensed Insolvency Trustee (LIT). The LIT assists the debtor in creating a proposal that outlines how much the creditors will be paid over a period of up to five years. The goal is to provide debt relief while allowing the debtor to retain certain assets.

Protecting Your Car in a Consumer Proposal

One of the key benefits of a consumer proposal is that it protects the debtor’s assets from being seized by creditors. This means that if a consumer proposal is filed on your behalf by a licensed insolvency trustee, your car will typically remain in your possession, regardless of its value. This protection extends to both owned and financed or leased vehicles.

Car Payments in a Consumer Proposal

When it comes to car payments in a consumer proposal, the focus is on the monthly payments rather than the vehicle itself. Banks and financial institutions are primarily interested in receiving the agreed-upon monthly payments. If you do not owe any money on your car, you only need to disclose its value in your list of assets. In Ontario, cars are exempt up to a value of $7,117.

If you still have outstanding car loan payments, the bank or finance company does not want to repossess your car. They want to continue receiving your monthly payments. As long as your payment history has been good, your licensed insolvency trustee can work with you to ensure that you can keep your car while making the necessary payments.

Leasing or Financing a Car in a Consumer Proposal

Even if you are currently in a consumer proposal, you can still lease a car or obtain a car loan. It is important to inform your trustee about any lease terms or monthly payments associated with the vehicle. If you are seeking a loan for a vehicle, your trustee can help reassure finance companies that you are a responsible payer.

In some cases, it may be necessary to cancel an existing lease or finance agreement as part of the consumer proposal. Any remaining amount owed after the sale of the vehicle by the secured creditor will be classified as unsecured debt. It is advisable to consult with your trustee to navigate these situations effectively.

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Benefits of Consumer Proposals

Consumer proposals offer several benefits compared to declaring bankruptcy. One significant advantage is that filing a consumer proposal does not have as severe an impact on your credit report. This means that you can begin to rebuild your credit sooner. Additionally, consumer proposals allow you to repay your debts through manageable monthly payments without accruing any further interest fees.

Another advantage of consumer proposals is the legal protection they provide from creditors. With the assistance of a licensed insolvency trustee, you can navigate the process while ensuring that your rights are protected. Consumer proposals also provide a faster path to debt recovery, allowing you to become debt-free within a specified time frame.

How Consumer Proposals Work

Consumer proposals consolidate your debts into a single settlement to be paid over a period of up to five years. Before filing a consumer proposal, a licensed insolvency trustee will evaluate your financial situation and discuss your options with you. They will then assist you in creating a proposal that is feasible and acceptable to your creditors.

When to Consider a Consumer Proposal

Filing a consumer proposal is an excellent option for individuals struggling to manage their debts or experiencing a damaged credit score. If you find it challenging to keep up with multiple payments, a consumer proposal allows you to consolidate your debts into a single manageable payment. This can relieve the stress of dealing with constant creditor demands and give you the opportunity to regain control of your finances.

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Seeking Professional Assistance

Navigating the process of a consumer proposal can be complex, and it is crucial to have the guidance of a licensed insolvency trustee. These professionals have extensive experience in helping individuals overcome debt and can provide tailored advice based on your specific circumstances. If you are considering a consumer proposal or need assistance in managing your debt, reach out to a reputable trustee for personalized support.


In conclusion, individuals filing a consumer proposal can typically keep their cars, regardless of their value. Car payments can continue as long as the debtor has a good payment history, and options for leasing or financing a car are available during the process. Consumer proposals offer numerous benefits, including protection from creditors and faster debt recovery. Seeking professional assistance from a licensed insolvency trustee is essential to navigate the process effectively and achieve financial freedom.

If you have questions about consumer proposals or need assistance in managing your debt, contact a trusted licensed insolvency trustee today. Take control of your finances and start your journey towards a debt-free future.

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During our initial meeting, they took the time to understand my debt and financial circumstances. They explained the various options available to me and helped create a personalized plan that would be most beneficial for my situation. With their assistance, I was able to avoid declaring bankruptcy by presenting a consumer proposal to my creditors. Fortunately, my proposal was accepted, and I am extremely relieved to finally be free of debt, all thanks to BankruptcyCanada. The burden on my shoulders feels significantly lighter now, and I truly believe that Bankruptcy Canada has the most skilled specialists in debt relief.