Consumer Proposal London

Yes. In most cases, income tax debt owed to the CRA can be included in a consumer proposal, just like credit card debt.

The CRA is treated as an unsecured creditor, so it’s grouped with your other debts and votes on your proposal like any bank would. This matters because CRA debt racks up interest and penalties fast, and the CRA can garnish wages or freeze bank accounts — filing a proposal stops that immediately.

Personal income tax, GST/HST owed personally, and CPP/EI overpayments are generally eligible. Payroll source deductions and GST/HST a business collected in trust are treated differently, since they’re trust funds, not personal debt.

You can only file through a Licensed Insolvency Trustee (LIT) — not on your own or through a debt consultant.

1. Book a free LIT consultation to review your finances.
2. The trustee assesses your debt, income, assets, and expenses to confirm it’s the right fit.
3. They draft your proposal—an offer to repay part of what you owe, often over up to 5 years.
4. It’s filed with the Office of the Superintendent of Bankruptcy, triggering an immediate stay on collections and garnishments.
5. Creditors vote within 45 days; most proposals are accepted.
6. You make fixed monthly payments to the trustee, who pays your creditors.
7. You complete two mandatory credit counselling sessions.
8. After your final payment, you’re debt-free on all included debts.

A first consultation with a Licensed Insolvency Trustee is almost always free, with no obligation to proceed. This is standard practice across Ontario, including London.

At that meeting, the trustee will review your total debt, income, and assets, walk you through every option (not just a consumer proposal; also debt management plans, bankruptcy, or budgeting changes), and give you a realistic sense of what monthly payments could look like.

LITs are federally regulated and required to explain all your options, not push one solution. If someone charges an upfront fee just to “assess” your debt or pressures you to decide quickly, treat that as a warning sign. The Government of Canada specifically cautions against unlicensed debt consultants charging for advice that a real LIT gives for free.

There’s typically no large upfront fee. Costs are built into your monthly payments, set based on what you can actually afford.

Your payment amount is calculated from your income, essential expenses, household size, and the assets you’d otherwise risk losing in bankruptcy. That payment already includes the trustee’s fee, which is regulated by law rather than negotiated—you won’t get a separate bill.

Yes, but the impact is smaller and shorter-lived than most people expect and far less damaging than bankruptcy.

While active, your proposal shows as an “R7” on your credit report, signalling a formal repayment arrangement. Bankruptcy shows as an “R9″—the lowest rating—and can stay on file up to 7 years.

Once you make your final payment, the R7 notation is removed 3 years later, no matter how long the proposal lasted. Your score may dip at first (often it’s already affected by missed payments before filing), but many Londoners see it recover once payments become consistent and collection calls stop.

In short: it’s a temporary mark, not a permanent one, and a real path back to good credit.