What is a consumer proposal?
A consumer proposal is a process under Canada's Bankruptcy and Insolvency Act. A Licensed Insolvency Trustee (LIT) helps prepare an offer to creditors that can change how much you repay, how long repayment takes, or both. The maximum term is five years. It is a serious financial decision, with legal duties and a credit-report impact.
The Office of the Superintendent of Bankruptcy explains the process. Reading about it does not commit you to filing. A useful first step is understanding your complete financial picture, including debts that would remain outside an arrangement.
Who can qualify?
The consumer-proposal debt limit is $250,000, excluding debts secured by your principal residence. The legal definition covers an individual who is insolvent or bankrupt; the debt limit alone does not establish eligibility. An LIT needs to assess your circumstances. See section 66.11 of the Act.
What happens from assessment to completion?
- Review your situation. Bring income, expenses, assets and debts to an LIT, and compare the alternatives.
- Prepare and file an offer. Discuss the payment schedule, any other conditions and what happens if your income changes.
- Allow for the creditor process. Creditors have an opportunity to respond. Acceptance is not guaranteed, and proposed terms can change.
- Fulfil the arrangement. Make the required payments, complete counselling and meet the other agreed duties.
- Keep the completion documents. Your certificate of full performance is an important record after you finish.
Ask your LIT to explain which collection actions are affected by filing and which obligations continue. Do not assume that contacting a website, requesting a consultation or making a draft budget creates legal protection.
Which debts and assets need a closer look?
| Item | Question to take to an LIT |
|---|---|
| Credit cards and unsecured loans | Which balances and creditor claims will be included? |
| Mortgage or vehicle financing | What payments must continue if I want to keep the asset? |
| Student loans or support obligations | Does an exception prevent release of this debt? |
| Joint or guaranteed debt | What responsibility remains for the other borrower? |
| Home equity and other assets | How do their values affect a reasonable offer? |
Not every debt is released by completing a proposal. The Act contains special treatment for certain liabilities, and another person's responsibility is not automatically removed by your filing. Section 66.28 sets out these limits. Our guide to debts included in a proposal explains the main categories.
What would it cost each month?
A debt balance is only the starting point. An affordable offer must fit your household after housing, food, transport, ongoing secured payments and irregular expenses. Ask for a written explanation of the total you would pay, the payment dates, the fees within that total and any amounts outside it.
Use the consumer proposal calculator to divide a total you choose over a repayment period. It is a planning tool. It cannot tell you what creditors will accept or the reduction you would receive.
Benefits come with responsibilities
A proposal may offer a manageable repayment structure and an alternative to bankruptcy. It also affects your credit record and requires you to complete the agreed terms. Falling behind can lead to annulment; contact your LIT promptly if a payment becomes difficult. Read our missed-payment guide for the different payment-frequency rules.
Compare bankruptcy, credit counselling and debt consolidation before choosing a route. ConsumerProposal.ca provides educational information and is not an LIT. You can contact a professional directly through the official LIT directory.
Sources and further reading
Sources checked October 29, 2026. Guidance can change; confirm how it applies with a qualified professional.
