Key Benefits Of A Consumer Proposal: Advantages of a Debt Proposal

What are the Main Advantages of a Debt Proposal?

As the only government-sanctioned debt settlement program in Canada, consumer proposals have a lot going for them.

While many once failed to consider this option, it’s a debt solution that’s fast rising to the fore, with 71,567 consumer proposals filed alongside just 54,893 personal bankruptcy claims between 2018-19.

And, that’s a figure that only looks set to continue rising as insolvencies across Canada reach their highest levels in a decade.

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By proposing agreements between borrowers and creditors, this insolvency alternative offers a fantastic solution for both parties, as long as:


  • You’re a Canadian resident/own Canadian property;
  • You’re insolvent for debts above $1,000 but below $250,000 (excluding mortgage payments);
  • You can afford to meet newly agreed payment rates.


On the one hand, creditors can ensure at least some payment, meaning most are willing to reduce debts to as low as 30 cents for every owed dollar.

Then, of course, there are the multitude of benefits for the borrower, including:

# 1 – Lower monthly payments

Lower monthly payments are, by far, the most notable benefits of a consumer proposal.

With an experienced licensed trustee fighting your corner, you can expect to see reductions as high as 70-80%.

That means you could, ultimately, reduce a $1000 payment to as low as $230 every month.

Even better, perhaps, is the fact that filing a consumer proposal means freezing interest payments.

This will apply from the point of filing and ensures you stand a much better chance at not only lowering monthly rates but also clearing a debt that was otherwise set to continue escalating.

# 2 – Asset protection

The real downside of bankruptcy is the fact that it involves handing assets to a licensed trustee.

This is terrible news in the case of homeownership, etc., and can make it incredibly challenging to get back on your feet.

By comparison, consumer proposals don’t come close to touching your assets at any stage.

Instead, you’d be able to comfortably keep them close, including any tax refunds, investments, or equity on your home.

This ensures you have at least some financial footing from which you can work your way through insolvency and out the other end.

# 3 – Protection from creditors

Anyone in debt dreads the moment when a creditor makes contact, especially if they’re struggling to meet payments.

Luckily, given that a consumer proposal is a legal process under the Bankruptcy & Insolvency Act, it provides you with immediate creditor protection.

Once you’ve filed, creditors will no longer be able to make contact with you directly thanks to a ‘stay of proceedings’ legal order.

That means you’ll longer have to jump when the phone rings, or hide at every knock of the door.

Instead, you can rest easy that your trustee will deal with creditors for you, and ensure that they know the limitations now in place.

# 4 – Protection for your surplus income

While many don’t realise it, bankruptcy means putting any surplus income at risk for the duration of your discharge period, which typically lasts for around nine months.

During this time, any surplus income you earn must go directly to your trustee.

With a consumer proposal, however, your surplus income remains as protected as your assets.

As such, this is definitely a preferable option for anyone expecting a pay increase for the duration of proceedings.

# 5 – The benefit of not having to pay debts in full

Let’s not forget, either, that consumer proposals mean you no longer have to face an insurmountable amount of debt.

Instead, your trustee will work closely with you and your creditors to understand and agree on payments that you can manage without leaving your finances lacking elsewhere.

# 6 – A financial future you can control at last

Overall, these benefits each add up to a financial future that you can control at last.

No longer will you have to worry about extended interest periods and the uncontrollable weight of debt.

Instead, a consumer proposal will provide a light at the end of the tunnel, and allow you to get back on track in no time.

All these benefits and more can be yours.

All you need to do is contact a licensed insolvency trustee to get the consumer proposal ball rolling as soon as possible.

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

Gordon Sands

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