What Assets Can You Keep in a Consumer Proposal?

Understanding assets in a consumer proposal

A consumer proposal is a legal agreement under Canada’s Bankruptcy and Insolvency Act (BIA) in which you repay part of your unsecured debt over up to five years, and your creditors forgive the rest.

The process is supervised by the Office of the Superintendent of Bankruptcy (OSB) and administered by a Licensed Insolvency Trustee.

Source: Government of Canada – Bankruptcy and Insolvency Act, Part III, Division II

Your assets are protected due to the way the offer is structured. Your creditors agree to the consumer proposal because you’re paying them more than they’d get if you declared bankruptcy. As long as that condition is met, you keep everything you own.

Once you file your consumer proposal, all collection activity stops and interest is frozen. You make fixed monthly payments for the duration, with no surprises.

What assets can you keep?

In bankruptcy, provincial exemptions protect some assets from seizure but not all.

A consumer proposal works differently. It protects all your assets, including the equity in your home, your vehicle, savings, investments, pensions, tax refunds, and any inheritance or lump sum received during the proposal.

Here’s how asset protection compares between the two options.

Asset	Bankruptcy	Consumer proposal
Home equity	Protected up to provincial exemption limit only	Fully protected
Vehicle	Protected up to provincial exemption limit only	Fully protected
RRSP	Protected, except contributions made in last 12 months	Fully protected
RRIF	Protected, except contributions made in last 12 months	Fully protected
RPP (workplace pension)	Fully protected	Fully protected
LIRA	Fully protected	Fully protected
TFSA	Not protected. Seized by trustee	Kept, but value included in offer
RESP	Not protected. Can be seized	Kept, but value included in offer
Tax refunds	Seized during bankruptcy	Kept
Inheritance during filing	Seized if received before discharge	Kept

Secured loans, such as mortgages or car loans, aren’t included in a consumer proposal and aren’t affected by it. Section 66.34 of the BIA prevents a secured creditor from changing the terms of a secured loan simply because you filed a consumer proposal.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 66.34

Your home in a consumer proposal

A consumer proposal is a strong option for homeowners who want to clear their debts without selling their home.

If you have equity in your home, your trustee calculates the offer amount so your creditors receive at least as much as they’d get in a bankruptcy. Some provinces have home equity exemptions, which can reduce that figure.

As long as you keep making your mortgage payments and property taxes on time, your home is safe in a consumer proposal.

Will a consumer proposal affect my mortgage?

A consumer proposal only covers unsecured debts. It doesn’t touch your mortgage as long as payments continue.

Your lender can’t change your mortgage terms or foreclose because of a consumer proposal.

By clearing your unsecured debts through the consumer proposal, you’re more likely to stay on top of mortgage payments, not less.

What if I can’t afford the mortgage?

If the mortgage payments aren’t manageable, selling the property before you file is one option.

You can also hand the property back to the lender before filing, and any shortfall will be treated as an unsecured debt included in your consumer proposal.

Will a consumer proposal affect my mortgage renewal?

If your payments are up to date, most lenders renew a mortgage even while a consumer proposal is active. Some people use a remortgage to pay off part or all of their consumer proposal.

Switching lenders or getting a lower rate is harder during this period, as a consumer proposal can affect your credit score. That gets easier once it’s complete.

Can I keep my car in a consumer proposal?

Yes. A consumer proposal protects your vehicle. If you own your car outright, it stays with you. If the car is financed or leased, you can keep it as long as the loan payments are current.

Your Licensed Insolvency Trustee factors the vehicle’s value into the offer calculation.

Tax refunds

Unlike bankruptcy, where tax refunds are seized, a consumer proposal lets you keep them. That’s extra cash while you work your way out of debt.

In bankruptcy, any tax refund owed for the calendar year in which you filed becomes part of your estate under section 67(1)(c) of the BIA. That includes your GST/HST credits, climate action incentive payments, and any income tax refund for the year of filing.

A consumer proposal has no such requirement. Your refunds stay yours for the full duration of the consumer proposal.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 67(1)(c)

Savings and investments in a consumer proposal

Registered retirement savings are protected in a consumer proposal. This includes Registered Retirement Savings Plans (RRSPs), Registered Pension Plans (RPPs), Registered Retirement Income Funds (RRIFs), Locked-In Retirement Accounts (LIRAs), and Deferred Profit Sharing Plans (DPSPs).

RESPs and TFSAs aren’t automatically exempt. You can still keep them, but their value needs to be included in your offer to creditors.

The principle is the same for all of them. Your creditors must receive more through the consumer proposal than they’d get in a bankruptcy. If your offer doesn’t account for the value of your assets, they’ll reject it.

RRSPs

Your RRSP is protected in a consumer proposal. In bankruptcy, RRSPs are exempt from seizure except for contributions made in the 12 months before filing. But a consumer proposal avoids this issue entirely because you don’t surrender any assets.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 67(1)(b.3)

Your trustee still considers the value of your RRSP when calculating the offer.

If your RRSP is attached to a life insurance policy, the full amount is exempt from seizure in bankruptcy under provincial insurance legislation, provided the beneficiary is a spouse, child, grandchild, or parent. That can affect the offer calculation.

RPPs and LIRAs

A consumer proposal protects both Registered Pension Plans (RPPs) and Locked-In Retirement Accounts (LIRAs) in full. They’re also fully protected in bankruptcy, so they don’t change the offer calculation much.

An RPP is an employer-sponsored retirement plan. A LIRA holds pension funds from a previous employer. Provincial pension legislation prevents these funds from being seized in either scenario.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 67(1)(b.3)

RRIFs

A Registered Retirement Income Fund (RRIF) converts your RRSP savings into retirement income. It is protected in a consumer proposal.

In bankruptcy, RRIFs receive the same protection as RRSPs under the Bankruptcy and Insolvency Act, with the same 12-month contribution exception. A consumer proposal sidesteps that exception because no assets are surrendered.

DPSPs

A consumer proposal protects your Deferred Profit Sharing Plan (DPSP). It’s an employer-funded plan where your employer shares company profits with you.

In bankruptcy, DPSPs are subject to the same rules as RRSPs. The trustee can claim contributions made within the 12 months before filing.

In a consumer proposal, your trustee includes the DPSP’s value in the offer calculation to make sure creditors receive more than they would in a bankruptcy. No contributions are seized.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 67(1)(b.3)

RESPs

An RESP lets you save for a child’s post-secondary education and receive government contributions over time. In a consumer proposal, you can keep an RESP, but its value must be included in your offer so creditors receive at least as much as they’d get in a bankruptcy.

Here’s a concrete example. You have $20,000 in debt and offer $8,000 in your consumer proposal. But you also have an RESP worth $10,000.

In most provinces, an RESP can be seized in bankruptcy, so your creditors are better off rejecting your offer and pushing for bankruptcy. You’d need to offer more than $10,000 for the consumer proposal to be accepted.

TFSAs

A Tax-Free Savings Account (TFSA) isn’t exempt from either bankruptcy or a consumer proposal. In bankruptcy, the full balance is seized. In a consumer proposal, you keep it, but you need to include its value in the offer.

Talk to a Licensed Insolvency Trustee to make sure your TFSA is properly accounted for.

Why do you get to keep your assets?

You can keep your assets in a consumer proposal because your offer is always higher than what creditors would receive in bankruptcy. That means they have no reason to push for a bankruptcy.

Creditors get more money spread over a longer period, making the payments manageable for you.

Bankruptcy means creditors recover less, and it’s a harder process for you. A consumer proposal is the better deal for everyone, and the stats tell that story.

In the 12 months ending November 2025, 139,097 Canadians filed for consumer insolvency. That means they either filed a consumer proposal or declared bankruptcy. 78.6% chose a consumer proposal. The remaining 21.4% declared bankruptcy.

Source: Office of the Superintendent of Bankruptcy Canada – Insolvency Statistics, November 2025

Frequently asked questions

Does a consumer proposal protect all my assets?

Yes. A consumer proposal protects all your assets, including your home, car, savings, and investments, as long as you offer creditors more than they’d receive if you declared bankruptcy. The offer calculation accounts for the value of your assets and varies by province.

Can I keep my home in a consumer proposal?

Yes. Your home is protected as long as your mortgage payments are up to date and your offer to creditors reflects what they’d receive in a bankruptcy. If your province has a home equity exemption, it can reduce how much you need to offer.

Are RRSPs protected in a consumer proposal?

Yes. RRSPs are fully protected. In bankruptcy, RRSPs are exempt from contributions made in the last 12 months. A consumer proposal avoids this issue because you don’t surrender assets. Your trustee does factor RRSP value into the offer calculation.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 67(1)(b.3)

What happens to my TFSA and RESP in a consumer proposal?

Neither is automatically exempt. You can keep both, but their value must be included in the offer to creditors. If the offer doesn’t account for them, creditors can reject the consumer proposal.

Does a consumer proposal affect my mortgage?

No, as long as payments continue. A consumer proposal only covers unsecured debt. The Bankruptcy and Insolvency Act legislation prevents your lender from changing your mortgage terms or taking action because of a consumer proposal.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 66.34

What happens to tax refunds in a consumer proposal?

You keep them. In bankruptcy, tax refunds are seized as part of your estate. A consumer proposal has no such requirement.

Source: Government of Canada – Bankruptcy and Insolvency Act, s. 67(1)(c)

Can I keep a financed or leased vehicle?

Yes, as long as loan or lease payments are current. Your trustee factors the vehicle’s value into the creditor offer. The consumer proposal doesn’t affect your car loan or lease agreement.

What’s the difference between asset protection in a consumer proposal versus bankruptcy?

In bankruptcy, provincial exemptions protect some assets but not all of them. Your TFSA, RESP, tax refunds, and equity above provincial limits can be seized.

In a consumer proposal, everything is protected because the offer to creditors is always higher than what they’d receive in a bankruptcy. That’s the fundamental difference.

Do I need to disclose all my assets to the trustee?

Yes, you must disclose all debts and assets when meeting with a trustee, including savings, investments, and pension accounts. Accurately disclosing this information allows your trustee to calculate the appropriate offer amount.

Is there any cost to finding out whether a consumer proposal protects my assets?

No. The initial consultation with a Licensed Insolvency Trustee is free. You’ll get a clear picture of what you own, what the offer needs to be, and whether a consumer proposal makes sense for your situation.