Who Can File A Consumer Proposal? Everything You Need To Know

Facing financial challenges can feel overwhelming and isolating, but if you’re struggling with debt, you’re not alone. A consumer proposal offers a structured, legal way to take back control of your finances.
Here’s a breakdown of what a consumer proposal is, who can qualify, and how it could help you find the relief you need.

Key Points

1. What is a consumer proposal?
2. Who’s eligible for consumer proposals?
3. What debts are covered in a consumer proposal?
4. How does a consumer proposal affect your credit rating?
5. What’s involved in the consumer proposal process? 
6. Are there alternatives to a consumer proposal?

What is a consumer proposal?

A consumer proposal is a formal, legally binding process that lets you settle unsecured debts for less than you owe. It’s a common alternative to bankruptcy, allowing you to make manageable monthly payments over a set period, without some of the harsh consequences that come with bankruptcy.

Who’s eligible for consumer proposals?

There are a few factors that play into whether you’re eligible for a consumer proposal:

Individuals, not corporations

Consumer proposals are designed for individuals, not businesses. This means it’s specifically focused on personal debts, such as credit card debts, personal loans and medical bills, providing a clear path for anyone facing financial strain.

Debt ceiling

To qualify, your total debt (excluding secured debts, like the mortgage on your primary home) must be $250,000 or less. This limit is to make sure only those with more manageable debts can take advantage of the process.

Insolvency

You must be insolvent to qualify—meaning you’re either unable to keep up with debt payments as they come due, or your total debt outweighs your total assets. Not sure where to start? Give us a call and we’ll help you find your way back to financial stability!

Help from a Licensed Insolvency Trustee

A Licensed Insolvency Trustee (LIT) must file the consumer proposal for you. Your LIT guides you through the process, double-checking that everything is done correctly and protecting you from collection calls, wage garnishments, and other creditor actions.

What debts are covered in a consumer proposal?

Consumer proposals address many types of unsecured debt, such as credit card debt, lines of credit, personal loans, and certain student loans. This makes it a versatile debt relief solution that can apply to various debt types.

How does a consumer proposal affect your credit rating?

Filing a consumer proposal does impact your credit score, but it’s generally seen as less severe than bankruptcy. You’ll typically receive an R7 rating on your credit report for six years from the date you file or three years after completing the proposal, whichever is sooner.
So while it’s a mark on your report, it also offers a path to rebuilding your financial future more quickly.

What’s involved in the consumer proposal process?

Here’s a quick overview of the key steps:

1. Consultation with a Licensed Insolvency Trustee (LIT)

We’ll assess your financial situation to figure out if a consumer proposal is the right debt solution for you. Our team of LITs will look through your debts, income, and assets to create a plan that fits your specific circumstances.

2. Preparing your proposal

With our help, you’ll prepare an offer to your creditors, proposing a reduced amount that you can pay over time, usually up to five years.

3. Filing your proposal

Your LIT will then file the proposal with the Office of the Superintendent of Bankruptcy. Once filed, you’re protected from creditors—that means no more collection calls, wage garnishments, or legal actions against you.

4. Creditor voting

Your creditors will have 45 days to accept or reject your proposal. Approval requires a majority of votes from the unsecured creditors who choose to vote. Your LIT will negotiate on your behalf to secure their agreement.

5. Proposal approval

Once approved, the proposal becomes legally binding on all unsecured creditors, even those who didn’t vote. This finalizes your new payment plan and sets you on the path to financial freedom!

6. Making payments

You’ll make monthly payments to your LIT, who distributes them to your creditors. Interest stops accruing during this period, making it easier to pay down your debt.

7. Completion

When you’ve made all the agreed payments, you’ll be released from the debts included in the proposal.

Are there alternatives to a consumer proposal?

If you’re not sure a consumer proposal is right for you, there are other debt relief options available. These can include:

• Debt consolidation loans
• Debt settlement
• Creating a debt management plan
• Filing Bankruptcy

Regain financial control with Harris & Partners

At Harris & Partners, we know the weight of unmanageable debt can feel all-consuming. A consumer proposal offers a practical, structured way to help you regain control. You can count on us at every turn, as we walk you through the process and protect you from creditor actions, helping you get on a path to financial stability.

Remember, you’re not alone. We’ve helped thousands of Canadians find relief, and we’re ready to help you, too. Reach out today to start your journey toward financial freedom