What are the Consumer Proposal Laws in Canada?

Consumer proposals in Canada are subject to regulation through the Bankruptcy and Insolvency Act (referred to as the "BIA" or "the Act"). Part III of the BIA delineates the provisions and regulations governing proposals in general.

There are two primary types of proposals available to debtors in Canada:

i) Division I

ii) Division II (also known as a Consumer Proposal). Division II proposals, denoted as Consumer Proposals, are specifically designed for individuals with consumer debts. Subsection 66.12 of the BIA deals with proposals concerning consumer debtors.

Consumer Proposals in Canada are administered by Licensed Insolvency Trustees or Proposal Administrators.

How Does a Division I Proposal Differ?

A Division I Proposal is typically chosen by businesses or individuals who have business-related debts or substantial income and wish to retain significant assets that would otherwise be available to creditors in a bankruptcy.

In a Division I Proposal:

· There is no cap or limit on the amount of debt you can owe.

· A formal application to the court is required after creditors have voted before it receives official approval.

· A creditors' meeting is mandatory, and a Notice of the Proposal must be published in a newspaper.

· Any default or late payment must be rectified within 30 days of the outstanding payment.

· The maximum period for payments can exceed 60 months to make them more manageable.

Various factors, including the nature of your creditors, can influence which option is best suited to your situation and has the highest likelihood of acceptance by your creditors.

We are eager to meet with you, leverage our experience, and provide feedback on your specific situation. Please don't hesitate to get in touch with one of our Consumer Proposal Administrators in your area to learn more.

Feel free to get in touch with us! We are eager to elucidate the mechanics of a consumer proposal and elucidate the advantages you can anticipate from consolidating your payments into one manageable monthly installment, devoid of the exorbitant interest rates you've encountered in the past.

Frequently Asked Questions

Empowering Your Financial Future, One Proposal at a Time

What is a Consumer Proposal?

A Consumer Proposal is a formal debt settlement arrangement regulated by the government of Canada. It allows individuals to negotiate with their creditors to repay a portion of their debt over a set period, usually up to five years, in a more manageable way.

Who is eligible for a Consumer Proposal?

Most unsecured debts, such as credit card debt and personal loans, can be included in a Consumer Proposal. To be eligible, you must have a stable source of income and owe less than $250,000 (excluding your mortgage) as of the date you file.

How does a Consumer Proposal affect my creditors?

When you file a Consumer Proposal, it legally binds all your unsecured creditors. They must stop all collection activities, including calls, letters, and legal actions. Creditors then have the opportunity to vote on whether to accept your proposal.

What are the advantages of a Consumer Proposal?

Some benefits of a Consumer Proposal include lower monthly payments, a fixed repayment schedule, and protection from legal actions by creditors. It also allows you to keep your assets and avoid the stigma of bankruptcy.

Are there any disadvantages to a Consumer Proposal?

While a Consumer Proposal offers several advantages, it will appear on your credit report for three years after you complete it. This can affect your ability to obtain credit during that time.

What Does the Trustee Do?

The insolvency or bankruptcy trustees job is to:

  • Explain your options

  • Give advice and information

  • Complete all documentation

  • Deal with creditor on your behalf

  • Guide and help you through the bankruptcy process

As well, bankrupts are required to complete two financial counselling sessions, directed by the trustee.

How is the amount to be paid in a Consumer Proposal determined?

The amount you offer to pay in your Consumer Proposal is based on your income, expenses, and the value of your assets. It should be an amount that you can reasonably afford.

Can I make changes to my Consumer Proposal once it's accepted?

It is possible to modify your Consumer Proposal under certain circumstances, but any changes must be approved by your creditors and the court.

Will my Consumer Proposal be accepted by creditors?

The acceptance of your Consumer Proposal depends on your creditors' votes. If the majority in dollar value of your creditors approve it, your proposal is considered accepted.

What happens if my Consumer Proposal is not accepted?

If your Consumer Proposal is not accepted, you have the option to revise and resubmit it. Alternatively, you may explore other debt relief options, such as bankruptcy.

How long does a Consumer Proposal stay on my credit report?

A Consumer Proposal will remain on your credit report for three years after you complete it. Afterward, it will be removed from your credit history. It's crucial to consult with a licensed insolvency trustee or financial advisor to determine if a Consumer Proposal is the right solution for your specific financial situation.

Client Voices: Our Success Stories and Testimonials

"At, Consumer Proposals Hub, we don't just help with your financial challenges; we care about your journey toward a debt-free future because your well-being matters to us."

Emily Wexler

When I was drowning in debt and feeling overwhelmed, their team stepped in and guided me through the entire consumer proposal process with professionalism and empathy. From the initial consultation to the final approval, they were with me every step of the way.

John & Mary Klim

We recently used Consumer Proposals Hub to help us navigate our financial difficulties through a consumer proposal. Overall, we had a positive experience with them. Their team was knowledgeable, and they did a great job explaining the entire process to us. They also helped negotiate with our creditors and create a proposal that we could afford.

Alex Gorshkovich

I can't thank Consumer Proposals Hub enough for the incredible support they provided during one of the toughest periods of my life. From the very first meeting, they made me feel at ease and assured me that they could help me find a way out of my debt nightmare.