Formal legal process
A proposal is filed under the Bankruptcy and Insolvency Act through an LIT.
Educational comparison before contacting a Licensed Insolvency Trustee
Consumer proposals in Canada
Understand a consumer proposal before you commit to a legal process.
A consumer proposal is a formal, legally binding insolvency process administered by a Licensed Insolvency Trustee. It may reduce the amount repaid or extend repayment, but it affects credit, requires creditor acceptance and must be completed under its terms. Compare it with debt management, consolidation and bankruptcy using qualified advice.
This page is general education, not legal or insolvency advice. Only a Licensed Insolvency Trustee can administer a consumer proposal in Canada.
Maximum five-year term
A consumer proposal cannot run longer than five years.
Creditors vote
Acceptance depends on the statutory process and creditor response.
Missed payments matter
A proposal can be deemed annulled when required payment defaults reach the legal threshold.
Debt-solution comparison paths
Compare qualified help and alternatives before filing
Start with a complete debt and budget review. A consumer proposal is one legal option, not a universal solution.
Verify current provider terms Approval or account opening is not guaranteed Compare complete cost and conditions
LITAuthorized processLicensed Insolvency Trustee Consultation
A regulated assessment of insolvency options, including whether a consumer proposal or bankruptcy may apply.
- Best suited to
- Formal insolvency review
- Main value
- Authorized legal process
- Key risk
- Major credit and legal consequences
What to verify
- LIT licence and office identity.
- All alternatives and expected duties.
- Payment, asset and credit consequences.
DMPInformal alternativeDebt Management Plan Review
A non-insolvency repayment arrangement commonly coordinated through a reputable credit counsellor.
- Best suited to
- Repayment with creditor cooperation
- Main value
- Structured monthly plan
- Key risk
- Not all debts or creditors included
What to verify
- Agency accreditation and fees.
- Which creditors participate.
- Interest concessions and credit reporting.
DCCredit-based pathDebt Consolidation Comparison
Combines eligible debts into one credit product when approval, rate and repayment capacity support the plan.
- Best suited to
- Borrowers who qualify
- Main value
- One payment and possible rate change
- Key risk
- Approval and longer repayment
What to verify
- New interest rate and fees.
- Total repayment and term.
- Whether old credit will be reused.
Quick answer
What is a consumer proposal in Canada?
It is a formal offer to creditors administered by an LIT to repay a percentage of unsecured debt, extend payment time or both.
The proposal is legally binding when accepted and approved through the process.
An individual generally may use the consumer-proposal provisions when total debts do not exceed $250,000, excluding a mortgage secured by the principal residence. The term cannot exceed five years. Eligibility and the appropriate solution require an LIT assessment.
Administered by an LITOnly a Licensed Insolvency Trustee can file and administer the process.
Creditors receive an offerThe proposal states what will be paid and over what period.
Stay of proceedings may applyMost unsecured creditor collection is stayed while the proposal remains effective.
Credit is affectedThe filing and completion are reported through the insolvency and credit-reporting systems.
Fit and caution
When should a consumer proposal be assessed?
The decision should follow a full review of debts, income, assets, alternatives and the ability to maintain the proposed payments.
An LIT assessment may be appropriate when:
- Unsecured debts cannot be repaid under their current terms.
- A stable payment may be possible but full repayment is not realistic.
- Consolidation or informal arrangements have been reviewed.
- You need regulated advice about proposal and bankruptcy consequences.
Do not treat a proposal as a shortcut when:
- A company is not an LIT but claims it can file the proposal for you.
- The plan depends on missing essential expenses or new high-cost borrowing.
- You have not disclosed all debts, income and assets to the LIT.
- You expect accurate credit information to disappear immediately after filing or completion.
Compare structures
Which debt-relief path should you compare?
The right path depends on insolvency, creditor participation, borrowing eligibility, assets and sustainable payment capacity.
Consumer proposal
Formal insolvency process administered by an LIT with a maximum five-year term.
Review proposal processDebt management plan
Informal repayment plan that may seek interest concessions from participating creditors.
Compare management plansDebt consolidation
New credit used to repay eligible debts when approval and total cost support the plan.
Compare consolidationBankruptcy
Formal insolvency process with different duties, asset, income and discharge consequences.
Compare formal optionsBenefits and trade-offs
Consumer proposal advantages and consequences
A proposal can provide a structured legal compromise, but the obligations and long-term effects must be understood.
Potential advantages
- May allow repayment of less than the full eligible unsecured debt.
- Can extend payments for up to five years.
- A stay of proceedings generally stops most unsecured creditor collection while effective.
- Assets may be retained subject to the proposal and individual circumstances.
Potential disadvantages
- The filing significantly affects credit and remains on credit files according to bureau rules.
- Creditors can reject the proposal or require changes.
- Missing the legal payment threshold can cause deemed annulment.
- Some debts may survive insolvency proceedings and secured debts are treated differently.
Compare debt solutions before signing
A manageable payment is necessary—but it is not the only consequence.
Use MoneyMatch to organize educational debt-relief paths and questions before speaking with a qualified professional.
Detailed guide
How the consumer-proposal process works
Understand the authorized professional, filing steps, creditor process, payment obligations and completion consequences.
Meet with a Licensed Insolvency Trustee
The LIT reviews debts, income, assets and alternatives. Consumer proposals and bankruptcies can only be administered by an LIT.
Develop and file the proposal
The proposal may offer to pay a percentage of what is owed, extend payment time or both. The maximum term is five years.
Creditors review and vote
Creditors have statutory rights to request a meeting and vote. The proposal becomes binding when accepted and approved through the legal process.
Make every required payment
For monthly or more frequent payments, missing an amount equal to three payments can result in deemed annulment unless the legal situation is corrected.
Complete counselling and obtain the certificate
Required counselling and all proposal obligations must be completed. The LIT issues a certificate of full performance when the proposal is successfully completed.
Decision framework
How does a consumer proposal differ from other debt paths?
Compare legal status, administrator, payment structure and major risks.
| Comparison point | Consumer proposal | Debt management | Consolidation | Bankruptcy |
|---|---|---|---|---|
| Legal structure | Formal insolvency under BIA | Informal arrangement | New credit agreement | Formal insolvency under BIA |
| Administrator | Licensed Insolvency Trustee | Credit counsellor or agency | Lender | Licensed Insolvency Trustee |
| Payment structure | Agreed proposal, maximum five years | Usually full principal over plan | Loan or line-of-credit terms | Depends on income, duties and discharge |
| Major risk | Rejection or annulment | Creditor non-participation | Higher total cost or re-borrowing | Asset, income and discharge consequences |
This framework cannot determine which solution is appropriate. An LIT must assess formal insolvency options, and independent legal advice may be appropriate.
Interactive planning tool
Test a proposed-payment budget
Check whether a hypothetical monthly proposal payment fits after essential and required expenses.
Payment-feasibility planner
Model cash flow—not a legal proposal quote
Enter monthly net income, essential and required expenses, and a hypothetical proposal payment.
Primary estimate
Room after proposed payment$350.00 CADRoom before proposal payment$800.00 CAD
60-month payment total$27,000.00 CAD
This is not a proposal estimate, eligibility test or legal advice. Actual proposal terms depend on debts, assets, income, creditor response and the LIT’s assessment. The legal maximum term is five years, but a proposal may be shorter.
Important scope clarification
MoneyMatch does not administer consumer proposals
Only a Licensed Insolvency Trustee can administer a consumer proposal in Canada.
Use MoneyMatch for education and comparison—not to replace an LIT assessment.
MoneyMatch may organize debt-relief information and provider paths, but it does not file proposals, provide legal advice or promise a debt reduction or credit outcome. Cash Back does not apply to filing a consumer proposal or LIT services.
How MoneyMatch evaluates fit
Our comparison methodology
We organize debt paths around legal status, authorized administrator, sustainable payment capacity, creditor treatment and long-term consequences.
Fit with your situation
We consider debt type, repayment capacity, borrowing eligibility, assets and the need for regulated insolvency advice.
Cost and requirements
We distinguish proposal payments, counselling fees, borrowing costs and the consequences of missed obligations.
Benefits and trade-offs
We explain that payment reduction, legal protection, credit impact and completion duties must be evaluated together.
Last reviewed: July 31, 2026 · Editorial owner: MoneyMatch Canada · Consumer guidance checked against Office of the Superintendent of Bankruptcy consumer-proposal guidance.
Legal and advertising disclosure: This page is general information and not legal, financial or insolvency advice. MoneyMatch may receive compensation from some non-LIT provider links, but compensation does not determine whether a consumer proposal is appropriate. Only an LIT can administer a proposal, and creditors and courts have statutory roles.
Frequently asked questions
Consumer Proposal Canada questions
General answers about eligibility, process, payments, credit and authorized professionals.
Who can file a consumer proposal in Canada?
An individual consumer debtor generally may qualify when debts do not exceed $250,000, excluding a mortgage secured by the principal residence. An LIT must assess eligibility and suitability.
How long can a consumer proposal last?
The term cannot exceed five years. The actual term depends on the proposal accepted through the legal process.
Who can administer a consumer proposal?
Only a Licensed Insolvency Trustee can file and administer a consumer proposal under the Bankruptcy and Insolvency Act.
What happens if I miss consumer-proposal payments?
For monthly or more frequent schedules, a proposal is generally deemed annulled when the default equals three payments. Contact the LIT immediately if a payment problem develops.
Does a consumer proposal include every debt?
Not necessarily. Secured debts are treated differently, and some debts may survive insolvency proceedings. The LIT must explain how each debt is treated.
How does a consumer proposal affect credit?
The filing and completion are reported to credit bureaus, and the record remains according to bureau retention rules. Rebuilding takes time and no product guarantees a result.
Is a consumer proposal the same as debt consolidation?
No. A proposal is a formal insolvency process. Consolidation is new credit used to repay debts and requires lender approval.
Does MoneyMatch file consumer proposals?
No. MoneyMatch provides general education and comparison paths. Only an LIT can administer the process.
Get qualified advice before filing
Compare the legal process, the payment and the long-term consequences.
Use this guide to prepare questions, then discuss your complete financial situation with a Licensed Insolvency Trustee.
General information only. No debt reduction, creditor acceptance, credit outcome or legal result is guaranteed.