What Assets Can You Keep in a Consumer Proposal?

What Assets Can You Keep in a Consumer Proposal?

Understanding Asset Protection in Consumer Proposals

As an individual fighting against financial troubles, it’s critical to know about the various debt relief options available, and how they can impact your assets. Among the many debt relief options, a consumer proposal stands out as a popular choice for many Canadians. One of the most asked questions regarding consumer proposals is, “What assets can you keep in a consumer proposal?” This article aims to shed light on this topic to help you make an informed decision.

What Exactly is a Consumer Proposal?

Before diving into the specifics of asset protection in consumer proposals, it’s crucial to understand the basics. A consumer proposal is a legally binding arrangement negotiated with your creditors through a Licensed Insolvency Trustee (LIT). This agreement involves making regular payments over a specific period, usually up to five years, to repay a portion of your unsecured debt.

Asset Protection: The Core Advantage of a Consumer Proposal

One of the main reasons why many individuals opt for a consumer proposal over bankruptcy is the aspect of asset protection. In a consumer proposal, your assets – including your home, vehicle, investments, and other significant possessions – are generally protected. This means you won’t need to surrender these assets as part of the proposal process.

Keeping Your House in a Consumer Proposal

A common concern among individuals considering a consumer proposal is whether they’ll be able to retain their home. The good news is that as long as you can maintain your regular mortgage payments, you can keep your house while filing a consumer proposal. Your mortgage lender cannot change your mortgage terms or act against you just because you’ve filed a consumer proposal, provided you’re up-to-date on your payments.

Vehicle Ownership and Consumer Proposals

Like your home, your vehicle(s) also remain protected under a consumer proposal. This holds true regardless of the value of the vehicle or whether it’s financed. As long as you continue to make any agreed monthly payments on time, filing a consumer proposal should not impact your vehicle ownership.

Investments, RRSPs, and RESPs in a Consumer Proposal

When filing a consumer proposal in Canada, you’re allowed to retain any contributions made towards an RRSP. This differs from bankruptcy, where contributions made in the past twelve months may need to be surrendered. Similarly, a consumer proposal allows you to keep Registered Education Savings Plans (RESPs) and other investments, making it an attractive alternative for those with significant investment portfolios.

The Impact of a Consumer Proposal on Your Mortgage

While a consumer proposal generally doesn’t affect your mortgage, there are certain situations where complications may arise. For instance, if you need to renew your mortgage during a consumer proposal, it should not be an issue with your current lender as long as you’re making your payments on time. However, switching lenders could be more challenging, as a new application will be required and the consumer proposal could impact your approval or result in a higher interest rate.

Buying a Home After Filing a Consumer Proposal

While a consumer proposal will appear on your credit report, it doesn’t necessarily prevent you from buying a home or getting a mortgage after you’ve completed the proposal. To strengthen your mortgage application, it’s essential to start rebuilding your credit as soon as possible. Having a substantial down payment and a steady income can also increase your chances of securing a mortgage.

The Treatment of Exempt Assets in Bankruptcy

It’s worth noting that the rules for asset protection in bankruptcy are different from those in a consumer proposal. In bankruptcy, you’re allowed to keep certain exempt assets, which are defined by federal and provincial laws. These usually include necessary clothing, household items, specific types of vehicles, and tools required for work, among others.

The Experience of a Licensed Insolvency Trustee

When considering a consumer proposal, it’s advisable to consult with a Licensed Insolvency Trustee (LIT). They can provide you with personalized advice based on your financial situation, assets, and debts. With their expertise, they can guide you through the process and help you understand what assets you can keep in a consumer proposal.


A consumer proposal can provide a feasible way out of debt while still allowing you to keep your assets. However, each individual’s situation is unique, and the process can involve many complexities. Therefore, it’s always best to seek advice from a professional, such as a Licensed Insolvency Trustee, before making a decision.

If you’re contemplating a consumer proposal, remember to ask the right questions, understand the implications, and ensure you’re fully aware of “what assets can you keep in a consumer proposal.” With the right guidance and careful planning, you can navigate through your financial difficulties while keeping your valuable assets intact.

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