Do You Lose Assets in a Consumer Proposal?

What Happens to My Assets in a Consumer Proposal?

When it comes to debt relief strategies, Consumer Proposals can be a viable option for many individuals. A common concern, however, is whether one has to forfeit their assets when filing a consumer proposal. In this comprehensive guide, we will delve into this aspect, elucidating the potential implications on your assets and how to navigate this process.

Understanding Consumer Proposals

Before we delve into the specifics, it’s essential to understand precisely what a consumer proposal entails. Essentially, it’s a formal, legally binding process that’s administered by a Licensed Insolvency Trustee (LIT). It entails negotiating with your creditors to pay back a percentage of what you owe or extend the time you have to pay off the debts, or sometimes both.

Asset Safety with Consumer Proposals

Contrary to popular belief, the beauty of a consumer proposal is that it allows you to retain your assets while you work towards debt relief. This advantage is especially significant if you have substantial equity in your property, own a new vehicle, or have savings and investment accounts that you’d prefer to hold onto.

Can I Retain My House in a Consumer Proposal?

The prospect of losing your home is undoubtedly daunting. However, the good news is that with a consumer proposal, you can retain your property as long as you continue to make your monthly mortgage payments.

Mortgage and Consumer Proposals

Your mortgage, being a secured debt, is treated differently from unsecured debts. This distinction means that a mortgage lender cannot alter your mortgage terms or take action against you simply because you’ve filed a consumer proposal, unless you default on your agreed monthly mortgage payments.

In the event you need to renew your mortgage during a consumer proposal, this should not pose a problem as long as you’ve been making your payments on time.

Can I Purchase a House Post Filing a Consumer Proposal?

It’s a common misconception that filing a consumer proposal bars you from purchasing a home in the future. In reality, it is quite possible to buy a home and secure a mortgage after filing a consumer proposal in Canada.

Building Credit Post Consumer Proposal

The key to securing a mortgage post-consumer proposal lies in rebuilding your credit. This process becomes much simpler once you have a fixed, affordable monthly consumer proposal payment in place, allowing you to start saving money.

Can I Retain My Car in a Consumer Proposal?

Just as with your home, you can also keep your vehicle when filing a consumer proposal. This holds true regardless of the vehicle’s value and whether or not you have car loans or financed vehicles.

How Investments are Affected by a Consumer Proposal

In Canada, when you file a consumer proposal, you are entitled to retain any contributions you’ve made towards an RRSP. This is a stark contrast to filing for bankruptcy, where any contributions made in the past twelve months would need to be surrendered.


The bottom line is that filing a consumer proposal in Canada allows you to retain your assets while you work towards achieving debt relief. This advantage makes it a desirable alternative for many individuals, particularly those with substantial investments or equity in their assets.

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