Top 6 Things to Learn During a Consumer Proposal

When seeking financial advice, it’s common to speak to a trustee.

It costs nothing to work with these specialists and they can offer excellent advice in dealing with serious levels of debt.

Unfortunately, they’ll often use terms and phrases that can be difficult to understand.

So here are six of the most important things you should learn during a consumer proposal.

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“Consumer proposals differ from bankruptcy”

People often confuse bankruptcy and consumer proposals as they’re both effective ways to deal with severe levels of debt.

However, the two differ in many different ways.

Consumer proposals can help you relieve up to 80% of your debts (in most cases) and the remaining 20% is paid off over several years with no interest.

On the other hand, bankruptcy forgives all of your unsecured debt, but some of your assets will be seized depending on the province that you live in.

“I need to speak with an impartial professional”

You’ll often be told to speak with credit counselling non-profits when you want advice for clearing your debt.

Unfortunately, many of these services are funded by banks, meaning they’ll gently steer you to a solution that is beneficial to those banks, such as a debt consolidation loan.

In comparison, speaking with a licensed insolvency trustee is completely free and they can offer you real impartial advice.

“There are different types of debt”

There’s good debt, bad debt, unsecured debt and secured debt.


  • Good debt refers to any loan you take out that pays for an important investment such as a car, mortgage or student loan.
  • Bad debt refers to a loan that you take out for leisure purposes, such as a payday loan for a holiday.
  • Unsecured debts don’t involve collateral. This includes most credit cards.
  • Secured debts have collateral such as a mortgage or car financing loan.


“Not all assets are equal”

Depending on your province, your assets might be worth different amounts when filing for bankruptcy.

Luckily, this isn’t something you need to care about when filing a consumer proposal as you get to keep all of your assets.

“Debt consolidation and forgiveness are different things”

Debt consolidation essential means taking out a loan to pay existing debts, thus consolidating them into a single repayment with low or no interest.

Debt forgiveness completely wipes the debt and you don’t need to pay it back.

A consumer proposal involves both of these; it can forgive up to 80% of your debt and the remaining 20% is consolidated.

“Consumer proposals don’t affect your surplus income”

Lastly, it’s worth understanding that a consumer proposal won’t penalize you for surplus income.

If your circumstances change and you suddenly make more money due to a promotion or new job, you can keep it and it won’t affect your repayment amounts.

If you’d like to learn more about consumer proposals, don’t hesitate to get in touch with us today for more information.

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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