What is a Registered Consumer Proposal?

What is a registered consumer proposal in Canada?

This may seem like a confusing topic, but it’s more straightforward thank you think.

A basic definition of a consumer proposal is that it’s an offering you make to creditors with the aim of paying your debts.

Typically, it includes proposing a percentage of your debts that you’re willing to pay.

They can either accept or deny your proposal, depending on how they view the offer.

So, where does the term ‘registered’ factor into things?

Effectively, it’s all to do with the legality of a consumer proposal.

Many other debt-relief methods may claim to be similar to consumer proposals but aren’t technically a legitimate one.

Don’t worry if you’re confused, it shall all make sense in this guide.

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What is a registered consumer proposal?

In Canada, consumer proposals have to be registered.

This means they are submitted to the courts, and you have signed all of the documents sent out.

The federal government files your proposal, and this triggers the beginning of proceedings.

From this point on, you no longer have to pay your debts until the consumer proposal has been either officially approved or denied.

At this stage, you can say that your consumer proposal has been registered as it is now recorded in government records.

What sets a registered proposal apart from other debt-relief options?

You will easily encounter lots of other options to be rid of your debts.

Many credit counselling agencies in Canada will offer services like debt settlements, debt restructuring, or they might even call them a debt proposal.

The difference between a registered consumer proposal and other methods is that it is a legally binding process.

You have to go through the courts to have your proposal approved, which can be both an advantage and a disadvantage.

The advantage is you only need a majority of votes from your creditors to succeed, the disadvantage is that it can take a long time, and you also need court approval.

Another key difference is that a consumer proposal in Canada can only be filed by a Licensed Insolvency Trustee.

This is one of the most important things to remember as you will not have a consumer proposal of any kind without a trustee.

If any company offers you a consumer proposal (or anything that sounds similar), but they aren’t licensed, then one of two things will happen:


  1. They outsource the services to an LIT, and will charge you a lot for the process. This costs far more than if you find a trustee directly.
  2. They will provide you with an informal proposal, which is basically a debt-relief service that isn’t registered or legally-binding. It can still be effective, but if you are actively looking for a formal consumer proposal, then the service won’t benefit you.


Finally, there are more rules and regulations involved in a registered/formal consumer proposal compared to other methods.

Again, these can be both to your advantage and disadvantage:


  • Your consumer proposal will put you on a debt repayment plan that lasts up to 5 years max. This can be good as it means you have 5 years to clear your debts.
  • Once your proposal is registered, you get protection from credit collectors and no longer have to make payments until the consumer proposal has been sorted out.
  • You are given the lowest credit rating, and this stays on your file for 3 years following the completion of your consumer proposal.
  • The length of your proposal can be extended, or you can have it cancelled if you miss your agreed payments to creditors.


Hopefully, this has helped clear up a few of the key questions you had regarding registered consumer proposal.

As a short summary, they are consumer proposals carried out by an LIT and registered by the federal government.

These proposals are legally-binding and require court approval, anything that doesn’t go through this process is not considered a registered proposal.

You may also hear them referred to as formal debt proposals or formal consumer proposals.

How do you get one?

We touched upon it above, and the only way you can get a proposal is to find a Licensed Insolvency Trustee (LIT).

As it happens, we can help you with your consumer proposal as we are a Licensed Insolvency Trustee in Canada.

Feel free to call us today to learn more about what we do and how we will help.

Once you have approached your LIT, they will work alongside you to formulate the proposal.

This includes looking at your financial data and working out how much you can afford to pay your creditors.

When a percentage of your debts has been agreed upon, they will collect all the essential paperwork and file it online.

Now, the proposal is formally registered and your protection kicks in.

From here, the rest of the process will take you to a point where your proposal is either accepted or denied.

Do I need a formal consumer proposal?

This question is hard to answer as it varies from person to person.

A formal or registered consumer proposal is ideal if you have tried other ideas and seen no relief.

It’s a legally-binding way to get your creditors to reduce your debt payments and make life more manageable.

It is also a great step to take to avoid bankruptcy.

However, informal debt proposals do have a place.

They usually come in the form of a debt management plan where you contact creditors and try to arrange new terms.

This works well if you have a couple of creditors on your back, and you can sort it all out quickly.

Plus, if you have the ability to pay all of your debts by altering the terms slightly, this is a great method.

Still, if you want the extra protection from a consumer proposal that is registered – and it’s impossible to repay all of your debts – then the informal approach may not work.

Speak to a Licensed Insolvency Trustee today!

Give us a call to learn more about consumer proposal and if one is a viable option for you.

We’re also licensed credit counsellors, so we can provide plenty of advice on how to be debt-free.

Call us now or fill in our evaluation form to book your first consultation!

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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