What is a consumer proposal?
A consumer proposal is a legal agreement under the Bankruptcy and Insolvency Act where you repay a portion of your unsecured debt over a set period. Your creditors forgive the rest. Only a Licensed Insolvency Trustee can file one for you.
As of the 12-month period ending October 2025, 78.6% of Canadians who filed for insolvency chose a consumer proposal over bankruptcy. That is more than 109,000 consumer proposals filed in a single year.
Source: Office of the Superintendent of Bankruptcy Canada – Insolvency Statistics, October 2025
Once filed, creditors cannot take legal action against you. Wage garnishments and collection calls stop immediately.
How long does a consumer proposal last?
A consumer proposal lasts a maximum of five years. The five-year limit is set by Section 66.12(5) of the Bankruptcy and Insolvency Act.
Source: Government of Canada – Bankruptcy and Insolvency Act, Section 66.12
How long your consumer proposal lasts depends on how much you owe and what you can afford to pay each month. If your income increases during the consumer proposal, your payments stay the same. They are fixed from the day it is filed.
What affects the length of a consumer proposal?
Two things affect the length of your consumer proposal. The first is your total unsecured debt, and the second is your monthly payment. A higher monthly payment shortens the timeline. A lower payment stretches it toward the five-year maximum.
Here is a concrete example. If you owe $30,000 in unsecured debt and your creditors accept 50% repayment, you owe $15,000 through the consumer proposal. At $417 per month, that takes 36 months (three years). At $250 per month, that takes 60 months (five years, the maximum).
Creditor acceptance also affects the timeline. If creditors push for a higher repayment percentage, your total obligation increases. That either increases your monthly payment or extends the timeline to fit within what you can afford.
| Debt amount | Repayment % | Total owed | Monthly payment | Duration |
|---|---|---|---|---|
| $25,000 | 40% | $10,000 | $278 | 36 months |
| $40,000 | 50% | $20,000 | $400 | 50 months |
| $60,000 | 30% | $18,000 | $300 | 60 months |
These are just simplified examples. Your Licensed Insolvency Trustee calculates the actual terms based on your income, expenses, and what creditors will accept.
How long does a consumer proposal stay on your credit report?
As of 2025, both Equifax and TransUnion remove a consumer proposal from your credit report either three years after you pay off all the debts included in the consumer proposal, or six years after the filing date, whichever comes first.
If your consumer proposal takes the full five years, the six-year rule removes it just one year after your final payment. If you finish in three years, the three-year rule removes it six years after filing.
Either way, the consumer proposal is off your report within six years of the filing date at the latest.
Read more: How Long Does a Consumer Proposal Stay on Credit Report?
Can you finish a consumer proposal early?
Yes. You can make a lump sum payment at any time to cover the remaining balance. There is no penalty for paying off a consumer proposal early, and you can also increase your monthly payments by contacting your trustee.
Unfortunately, finishing a consumer proposal early does not remove it from your credit report any faster. The record stays for three years after your final payment or six years from the filing date, whichever comes first. Finishing early just starts the three-year clock sooner.
What happens if you miss payments?
If you miss one payment, your trustee contacts you to bring it current. Under Section 66.31(1)(a) of the Bankruptcy and Insolvency Act, a consumer proposal is deemed annulled once you default on an amount equal to three monthly payments. That does not mean three separate missed months. Partial shortfalls add up toward the threshold.
Source: Government of Canada – Bankruptcy and Insolvency Act, Section 66.31
Once a consumer proposal is annulled, creditors can resume collection. Wage garnishments, lawsuits, and interest charges all restart.
If your circumstances change and you cannot keep up with payments, tell your trustee immediately. The trustee can amend the consumer proposal if creditors agree, but amendments are not guaranteed.
Get help with your debt
If you want to know whether a consumer proposal is the right option, book a free consultation with a Licensed Insolvency Trustee. The consultation is confidential, and there is no obligation.
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Frequently asked questions
Can I increase my monthly payment to finish faster?
Yes. Contact your trustee to arrange higher payments. There is no penalty for paying off a consumer proposal early.
Does a consumer proposal affect my spouse’s credit?
No, unless your spouse co-signed any of the debts included in the consumer proposal. If they co-signed, they remain responsible for the full amount.
Can creditors reject my consumer proposal?
Yes. Creditors have 45 days to vote on your consumer proposal. It is accepted if creditors holding a majority of the dollar value of your debt vote in favour. If no creditors request a meeting within 45 days, the consumer proposal is deemed accepted automatically.
Can a consumer proposal be extended past five years?
No. The five-year maximum under the Bankruptcy and Insolvency Act is a hard limit. If you are approaching five years and still owe payments, you have two options: pay the remaining balance or let the consumer proposal fail.
In rare cases, a court may revive an annulled consumer proposal, but this does not extend the original term.
What debts are included in a consumer proposal?
Most unsecured debts are included, covering credit cards, personal loans, lines of credit, payday loans, income tax debt, and utility arrears.
Secured debts, such as mortgages and car loans, are not included unless you surrender the asset.
Government student loans are only included if you have been out of school for at least seven years under BIA Section 178(1)(g). A five-year hardship exception exists under Section 178(1.1), but requires a court application.
How much does it cost to file a consumer proposal?
The trustee’s fees are included in your monthly payment. You do not pay the trustee separately. The fees are regulated under the Bankruptcy and Insolvency Act and are deducted from the payments you make to creditors.
Will I lose my assets in a consumer proposal?
No. You keep all your assets. A consumer proposal does not require you to surrender property the way bankruptcy does. That is one of the main reasons people choose a consumer proposal over bankruptcy.
How do I know if a consumer proposal is right for me?
Book a free consultation with a Licensed Insolvency Trustee. They will review your debts, income, and expenses and explain whether a consumer proposal is a good fit for your situation. The consultation is confidential and does not commit you to anything.