Is a Consumer Proposal a Good Idea?

When is a Consumer Debt Proposal Right For Me?

When it comes to resolving your financial troubles, a consumer proposal is just one of the many solutions for debt relief.

However, it’s not without its disadvantages, we’re going to dive deeper into the subject and explain if it’s a good idea or not.

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What is a consumer proposal?

A consumer proposal is a type of debt relief solution designed for people facing money problems due to their poor credit history or even bankruptcy.

It’s essentially a legally-binding agreement in which you agree to pay back a smaller percentage of what is owed to lenders.

In many cases, a debt proposal can effectively reduce debts by up to 70% or more, leading to substantial savings.

It’s not a loan either, but actually wiping your debts.

There are also a number of other advantages, such as:


  • More time to pay off your debts and interest;
  • Your debts will be consolidated;
  • An immediate freeze of your debt interest;
  • Ability to keep your assets, such as home equity;
  • Collection calls will immediately be stopped;
  • Wage garnishments are also stopped.


In short, a consumer proposal is a debt relief plan that allows you to pay back a smaller portion of your debts, effectively erasing some of the debt you’ve accumulated by up to 70%.

What debts can a consumer proposal reduce?

Consumer proposals can provide relief for the following:



It does not work for your mortgage or a secured car loan.

When seeking debt relief with a debt proposal, ensure that the majority of your debt comes from these five sources to get the most benefit.

How do consumer proposals work?

Consumer proposals are carried out in several stages.

In the beginning, your financial circumstances will be reviewed to determine how much you owe and what your current financial conditions are like.

The amount of debt you owe will be calculated and details such as who you owe will also be examined.

This will create a comprehensive picture of your current financial situation.

From this information, you’ll be able to figure out how much you can afford to repay each month and how much your creditors would expect to receive.

Discussions and negotiations will take place with your creditors.

Once an agreement has been reached, you’ll receive the full details of how much you are expected to pay and what the monthly repayments will be like.

In most cases, the final agreement will be much lower than most other debt relief solutions.

Expected fees for the consumer proposal will also be baked into your new monthly repayments.

Is a consumer proposal for me?

This is hard to determine without taking a detailed look at your financial situation.

A consumer debt proposal is typically the most effective debt relief solution available to Canadians because it actually wipes up to 70% or more of your debt during the agreements.

It also gives you a lot more time to pay off your debts and gives most people a practical chance at clearing their debt.

You’ll also be guaranteed protection from creditors, meaning all calls and collection attempts will be halted immediately, offering you peace and mind and freedom.

If your debts are under $250,000 and you want to keep your assets, then a debt proposal may be the best debt relief option available to you.

If you’re confident that you can manage future money problems by reducing expenses and focusing on your income, then a consumer proposal gives you the best chance of comfortably paying off your debts.

It’s also a good way to avoid the possibility of bankruptcy which can be a huge problem for professions that must disclose it.

To summarize, here are the benefits of a consumer proposal:


  • It’s a simple all-in-one solution to erase and pay off debts;
  • It gives you more time to pay off your debts;
  • It freezes your interest rates;
  • You pay less to creditors than what you owe;
  • Your repayments will be in line with your income.

In short, a debt proposal is usually a good idea for most people.

There are a couple of exceptions, but it’s best to speak with a licensed insolvency trustee that can offer you impartial advice on the practicality of a consumer proposal for your financial situation.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal

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