How to apply for a Consumer Proposal (Toronto)

How to apply for a Consumer Proposal in Toronto?


Maxine McCreadie

January 19, 2023 6:48 am GMT

If you have debts that you are struggling to repay, a Consumer Proposal can help you settle your debts for less than you owe by coming to an agreement with your creditors to consolidate your debts into a single monthly payment.

In this article, we’ll explain everything you need to know about the Consumer Proposal process in Toronto including what a Consumer Proposal is, whether a Consumer Proposal is right for you, how much a Consumer Proposal costs, how to apply for a Consumer Proposal and, lastly, the effect of a Consumer Proposal on your credit rating.

What is a Consumer Proposal?

A Consumer Proposal is a formal debt solution governed by the Bankruptcy and Insolvency Act (BIA) that consolidates your total unsecured debt into manageable monthly payments that you can comfortably afford. Because it is a legally binding process, only a Licensed Insolvency Trustee (LIT) can file a Consumer Proposal.

Whilst the thought of entering into a formal debt solution can be daunting, Consumer Proposals are an extremely popular debt solution in Canada and can be a last resort to fix your finances before filing for bankruptcy.

Here’s an example of how we can help.

Example debts

Capital One




Canadian Tire


Money Mart


Scotia Bank


Easy Financial


Total amount owed:


Your monthly repayments

Reduced by 88%

Monthly payments are based on individual financial circumstances

Is a Consumer Proposal right for me?

Before you apply for a Consumer Proposal (Toronto), you must explore all available options to ensure you have chosen the right debt solution for you and, more importantly, compare your financial situation against the eligibility criteria.

For example, the total debt you owe must be less than $250,000 and unsecured. Examples of unsecured debts include credit cards, lines of credit, personal and payday loans and income taxes owed to the Canada Revenue Agency (CRA). It is still possible to apply for a Consumer Proposal with debts over $250,000 but this is called a Division 1 Proposal.

You must also be able to prove you have a stable source of income to reassure your creditors that, after bills, you can make your monthly payments in full and on time for the duration of your agreement.

How much does a Consumer Proposal cost?

How much a Consumer Proposal costs depends on the terms of the agreement you come to with your creditors. This is calculated based on a number of factors:

  • The total amount of debt you owe
  • The creditors you owe money to
  • Your total income (including any surplus income payments)
  • Your total assets
With a Consumer Proposal, there are also no upfront fees or hidden charges to worry about so the total amount to pay will be clearly outlined in your agreement before you make your first payment.

What’s more, the cost of administering a Consumer Proposal as well as any fees paid to your Licensed Insolvency Trustee are factored into your monthly payments. Over time, this will include:

  • A $100 administration fee to the Office of the Superintendent of Bankruptcy
  • Two $85 credit counselling sessions
  • A $1,500 fee to the Licensed Insolvency Trustee (plus 20% of creditor distributions)
  • A 5% levy of creditor distributions to the Office of the Superintendent of Bankruptcy

We have a wide range of debt management solutions that could help you write off up to 80% of your debts

How do I apply for a Consumer Proposal?

The Consumer Proposal process in Canada is largely the same in each province. Here is what you can expect when you apply for a Consumer Proposal in Toronto:

Contact a Licensed Insolvency Trustee

The first step in applying for a Consumer Proposal in Toronto is contacting a Licensed Insolvency Trustee.

A Licensed Insolvency Trustee is a debt professional licensed by the Superintendent of Bankruptcy to administer and oversee a number of debt solutions in Canada including Consumer Proposal services. They will act as a mediator between you and your unsecured creditors.

Schedule a free consultation

During your first meeting with a Licensed Insolvency Trustee, they will discuss the various options available to you and determine whether a Consumer Proposal is the right option for you.

You will be expected to disclose details of your current financial situation including your total income, debts, creditors and monthly expenses.

Draw up your agreement

If a Licensed Insolvency Trustee believes a Consumer Proposal is the right option for you, the terms of your agreement will be drawn up.

This will include the total amount of debt you owe, the total amount you intend to repay, how you will make your monthly repayments and how your repayment term was calculated.

Send the agreement to your creditors

Once the terms of your agreement have been drawn up, they will be sent to your creditors for approval within 45 days. During this time, a creditor that holds a minimum of 25% of your debt can schedule a meeting to discuss the proposed terms further but this must be done within the first 21 days of it being filed.

Your creditors will then vote on whether or not to accept your proposal with 51% of your creditors required to be in agreement before it can go ahead.

After it has been officially filed with the court, any interest on your debts will cease and you will be protected from further contact, legal action or harassment from creditors and debt collectors.

Attend credit counselling sessions

Legally, you must attend two credit counselling sessions when you enter into a Consumer Proposal. These sessions are designed to help you better manage your finances so you never find yourself in a similar situation again down the line.

Failure to attend credit counselling sessions will prevent your debts from being discharged.

Complete your term

When you have fulfilled the obligations set out in your agreement, your Licensed Insolvency Trustee will file the final paperwork to officially release you from your debts.

They may also provide you with additional information to help you rebuild your credit and, most importantly, stay debt-free.

Will a Consumer Proposal affect my credit rating?

One of the biggest concerns amongst debtors considering a Consumer Proposal is whether it will affect their credit rating. Like most debt solutions, such as a debt consolidation loan, a Consumer Proposal will also appear on your credit report and lower your credit rating.

However, it is worth remembering that this is only for a limited period of time and any evidence of a Consumer Proposal will be removed from your Equifax credit report three years after your final monthly payment has been made. TransUnion, on the other hand, will remove a Consumer Proposal from your credit report three years after your final payment or six years after you sign the agreement (whichever happens first).

Maxine McCreadie

Maxine is an accomplished financial writer, known for her expertise in the field of personal insolvency. Having worked in the international insolvency community for a number of years, she has gained a deep understanding of the intricacies of personal finance and the complexities of insolvency processes.

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We will then run through all of the options available to you and advise you on which is the best option for you

We will then help you put the debt solution in place that will help you get back on track

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