Why a Consumer Proposal May Be Your Best Option

Understanding Consumer Proposals: A Practical Option for Debt Relief

In the world of finance, bankruptcy often carries a stigma. It can lead to embarrassment, the loss of personal assets, and can be a costly method to solve one’s financial issues. This is why many individuals in financial distress are searching for alternative solutions to manage their debt. Enter the Consumer Proposal.

What is a Consumer Proposal?

A Consumer Proposal is a formal, legally binding process administered by a Licensed Insolvency Trustee (LIT). Governed by the Bankruptcy and Insolvency Act, this process ensures that the debtor is protected from legal actions from creditors and paves the way for a systematic, monitored debt repayment process.

The Process

The LIT negotiates a settlement between the debtor and their creditors. The debtor will make one monthly payment over a five-year period, allowing them to repay a portion of what they owe, thus avoiding bankruptcy. Additionally, a Consumer Proposal can handle various unsecured debts, including credit cards, personal loans, payday loans, and income taxes. Once the final payment is made, the debts will be eliminated.

Consumer Proposal: A Popular Choice

Recent data on Ontario debtors reveal that over 60% of them opted for a Consumer Proposal. This trend is understandable given the numerous advantages of this debt relief option.

Why a Consumer Proposal May Be Your Best Option: The Advantages

Cost Efficiency

Firstly, a Consumer Proposal can be up to 85% less expensive than repaying your debts independently. If one were to continue making minimum monthly payments on their debts or take out a debt consolidation loan, they would end up repaying the full debt amount, plus interest. With a Consumer Proposal, however, you’ll make one reasonable monthly payment, repaying only a portion of your total debt.

Asset Retention

Three out of four debtors who own a home choose to file a Consumer Proposal rather than declare bankruptcy. This is because, unlike bankruptcy, a Consumer Proposal does not require you to surrender your assets, such as your home or your investments, to repay your creditors.

Eligibility Threshold

Recent amendments to the Bankruptcy and Insolvency Act have increased the eligibility threshold for filing a Consumer Proposal. Previously, one could only file if they owed $75,000 in unsecured debts. Now, that limit has been raised to $250,000. This change has made the Consumer Proposal an increasingly appealing option for Canadians seeking a financial fresh start.

Avoiding Surplus Income Payments

If you declare bankruptcy, you may be required to make surplus income payments. These are additional monthly payments you must make, and the amount increases with your income. This is not the case with a Consumer Proposal.

Retention of Tax Refunds and Credits

When you declare bankruptcy, you forfeit all tax refunds and credits to your creditors. With a Consumer Proposal, you retain these benefits.

Consumer Proposals: The Hidden Gem in Debt Relief

If you believe that a Consumer Proposal might be the right debt relief option for you, consult with a Licensed Insolvency Trustee today.


In conclusion, a Consumer Proposal can be a practical, cost-effective, and less damaging alternative to bankruptcy. It allows you to repay your debts over a longer period, retain your assets, and avoid surplus income payments. Most importantly, it offers you a chance at a fresh financial start. Remember, understanding your options is the first step towards debt relief and financial freedom.

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