How to File a Consumer Proposal in Canada

The filing process at a glance

Filing a consumer proposal follows six steps. The whole thing moves faster than most people expect.

1. Meet with a Licensed Insolvency Trustee for a free consultation.
2. Gather your financial documents, including debts, income, expenses, and assets.
3. Your trustee prepares and files the consumer proposal with the OSB.
4. A stay of proceedings takes effect immediately, stopping collections.
5. Your creditors have 45 days to vote. If more than 50% of the total dollar value accepts, it will apply to everyone.
6. You make fixed monthly payments for up to five years and receive a Certificate of Full Performance upon completion.

What is a consumer proposal?

A consumer proposal is a formal debt settlement under Division II of the Bankruptcy and Insolvency Act (BIA). You offer your unsecured creditors a percentage of what you owe, paid through fixed monthly payments over a maximum of five years. Your creditors forgive the rest.

Your Licensed Insolvency Trustee manages the entire process. The trustee files the consumer proposal with the Office of the Superintendent of Bankruptcy (OSB) and distributes your payments to creditors.

A consumer proposal isn’t bankruptcy. You keep your assets, pay no interest, and your payments never change regardless of what happens to your income.

It’s also not the same as an informal debt settlement arranged through a private company. A consumer proposal is a federal legal process with court backing and binding creditor protection. Private debt settlement has none of that.

In 2025, there were 140,457 consumer insolvency filings in Canada, up 2.3% from 2024. That’s the second-highest annual volume since the OSB began tracking in 1987 and the highest since 2009. Consumer proposals accounted for roughly four out of every five filings.

Source: Canadian Association of Insolvency and Restructuring Professionals – Q4 2025 Canadian Insolvency Statistics

Consumer proposal vs bankruptcy

A consumer proposal and bankruptcy are both federal insolvency processes under the BIA. Both stop collection calls and freeze lawsuits. Both require a Licensed Insolvency Trustee, but they work differently and have different consequences.

	Consumer proposal	Bankruptcy
You keep your assets	Yes	Non-exempt assets are surrendered
Payments change if income rises	No	Yes (surplus income rules apply)
Maximum length	60 months	9 to 21 months (first-time)
Credit report rating	R7	R9
Record removal from credit report	3 years after completion	6 years after discharge, first-time (varies by province for TransUnion)
Creditors must approve	Yes (50%+ by dollar value)	No vote required

As of 2025, Equifax Canada removes a first-time bankruptcy after 6 years in all provinces. TransUnion Canada uses 7 years in New Brunswick, Newfoundland, Ontario, Prince Edward Island, and Quebec.

A consumer proposal costs more overall but lets you keep your house, car, and other assets. You can learn some of the pros and cons here.

Bankruptcy is faster but has more restrictions on your income, assets, and credit history.

Your Licensed Insolvency Trustee will explain which option fits your situation. The right choice depends on how much you owe, what you own, and what you earn. Most people choose a consumer proposal as an alternative to bankruptcy.

Who qualifies for a consumer proposal?

A consumer proposal is available to individuals, not corporations. To qualify, you must owe between $1,000 and $250,000 in unsecured debt. That limit excludes the mortgage on your principal residence.

You must be insolvent. In plain English, you can’t pay your debts as they come due.

What does that look like? The OSB’s 2024 debtor profile found that the typical filer earned $3,089 a month and spent $3,264. That’s a $175 shortfall before a single debt payment.

Source: Office of the Superintendent of Bankruptcy Canada – Canadian Consumer Debtor Profile 2024

If you and a spouse or partner have substantially similar debts, you can file a joint consumer proposal. The debt limit for a joint filing is $500,000, excluding mortgages on your principal residence.

If your unsecured debts exceed $250,000, you aren’t eligible for a consumer proposal. You can file a Division I proposal instead, which has no debt ceiling.

Source: Bankruptcy and Insolvency Act, Division II – Consumer Proposals

Preparing to file

There are two things to sort out before your trustee can put a consumer proposal together: your documents and finding a Licensed Insolvency Trustee.

Gather your financial information

Before you meet with a Licensed Insolvency Trustee to file a consumer proposal, pull together the details of your debts, income, and what you own. You need a full list of your creditors and how much you owe each one.

Check recent statements, log into creditor websites, or request a copy of your credit report from Equifax Canada or TransUnion Canada if you’re unsure of balances.

You also need proof of your income and a breakdown of your monthly expenses. Bring details of your assets, including the equity in your home, the value of your car, and any savings or investments.

Your trustee uses this information to complete the Statement of Affairs (Form 79), which is filed with the OSB as part of the consumer proposal.

Find a Licensed Insolvency Trustee

A Licensed Insolvency Trustee is the only professional in Canada authorized to file a consumer proposal. Nobody else can do it.

The OSB maintains a public registry where you can search for a Licensed Insolvency Trustee by name or location.

Source: Office of the Superintendent of Bankruptcy Canada – Find a Licensed Insolvency Trustee

Watch out for debt settlement companies that charge upfront fees to “prepare your documents” or “refer you to a trustee.” You don’t need a middleman. The first consultation with a Licensed Insolvency Trustee is free, and you can contact any trustee directly.

The consultation and filing

This is where things actually get moving. The consultation and the filing itself can happen within days.

What happens at the consultation

At the first meeting, your Licensed Insolvency Trustee reviews your debts, income, expenses, and assets. If a consumer proposal is a good fit, the trustee calculates what you can afford to pay each month and structures an offer to your creditors.

Your consumer proposal must offer creditors more than they’d receive if you filed for bankruptcy. That’s the baseline.

If your creditors would get nothing in a bankruptcy, there’s more flexibility in what you offer. If you have assets with equity or surplus income, the offer needs to reflect that.

The trustee knows how each major creditor typically votes and structures the consumer proposal accordingly. If something else makes more sense for your situation, like a debt consolidation loan or bankruptcy, the trustee will let you know. A Licensed Insolvency Trustee has a legal duty to act in the interests of both you and your creditors.

Filing the consumer proposal and the stay of proceedings

Once you agree on the terms, your Licensed Insolvency Trustee prepares the consumer proposal documents. Read everything before you sign. This is a legally binding commitment for up to five years, so take the time to understand every line.

You must file all outstanding tax returns before filing a consumer proposal. If you don’t, the Canada Revenue Agency will vote against it.

Your Licensed Insolvency Trustee files the consumer proposal electronically with the OSB and notifies your creditors. A stay of proceedings takes effect immediately under Section 69.2 of the BIA.

Collection calls stop. Wage garnishments are lifted. Lawsuits from unsecured creditors are frozen. Interest stops accruing on the debts included in the consumer proposal.

Source: Bankruptcy and Insolvency Act, Section 69.2 – Stay of Proceedings, Consumer Proposals

During the consumer proposal, you must declare all of your assets and liabilities, attend any required meetings, and complete two mandatory financial counselling sessions. If you move, change your phone number, or change jobs, let your trustee know.

How creditors vote on a consumer proposal

Your creditors have 45 days from the filing date to review your consumer proposal and respond. You don’t make any payments during this period, and no interest is charged.

A consumer proposal is accepted if creditors holding more than 50% of your unsecured debt by dollar value vote in favour.

Source: Bankruptcy and Insolvency Act, Division II, Section 66.18 – Creditor Acceptance of Consumer Proposals

If a creditor doesn’t respond within 45 days, that counts as acceptance. If no creditor holding at least 25% of your debt requests a meeting, the consumer proposal is deemed accepted automatically. This is how most consumer proposals get approved.

After acceptance, the court approves the consumer proposal 15 days later unless someone requests a hearing. Once approved, the consumer proposal is legally binding on all of your unsecured creditors, including any who voted against it.

What if creditors reject your consumer proposal?

If your creditors reject the consumer proposal, your trustee can negotiate amended terms. This usually means increasing the monthly payment or extending the repayment period.

If no agreement is reached, you’re back where you started. Unlike a Division I proposal, a rejected consumer proposal doesn’t trigger automatic bankruptcy. You can look at other options with your trustee.

Payments and completion

Once your consumer proposal is accepted, you make fixed monthly payments to your Licensed Insolvency Trustee for up to 60 months. You can also pay a lump sum or a combination of both.

There’s no interest and no extra fees. Your payments never change, regardless of changes in your income. Get a raise, inherit money, win the lottery? Same payment.

Consumer proposal payment details (2026)
Maximum term	60 months (five years)
Interest rate	0%
Payment changes if income rises	No
LIT fees (set by federal tariff, as of 2025)	$750 on filing + $750 on approval + 20% of distributions + ~$170 for two counselling sessions + ~$100 government filing fee
Who pays the LIT fees	Fees are included in your monthly payment, not charged on top

Source: Bankruptcy and Insolvency Act, General Rules, Rule 129 – Consumer Proposal Tariff

What happens if you miss payments

If you miss three payments, your consumer proposal is automatically annulled. Your creditors can then resume collection activity, including calls, wage garnishments, and lawsuits.

If you’re struggling with payments, talk to your trustee before you hit three missed payments. There are options to avoid annulment if you act early.

Completing your consumer proposal

When you make all your payments and complete two mandatory counselling sessions, your Licensed Insolvency Trustee issues a Certificate of Full Performance. The remaining balance on every unsecured debt included in the consumer proposal is legally forgiven.

A consumer proposal appears on your credit report as an R7 rating. Both Equifax Canada and TransUnion Canada remove the consumer proposal from your credit report three years after you complete it, or six years after you filed it. Whichever comes first.

Source: Financial Consumer Agency of Canada – How Long Information Stays on Your Credit Report

If you complete a five-year consumer proposal on schedule, the record is gone one year later. You can start rebuilding your credit during the consumer proposal with a secured credit card.

Frequently asked questions

How long does it take to file a consumer proposal?

You can file a consumer proposal within a few days of your first meeting with a Licensed Insolvency Trustee. The stay of proceedings takes effect the moment the trustee files the consumer proposal with the OSB. Your creditors then have 45 days to vote.

How long does a consumer proposal last?

A consumer proposal lasts a maximum of five years (60 months). You can finish it earlier by making larger or extra payments. The sooner you finish, the sooner the record disappears from your credit report.

How much does a consumer proposal cost?

A consumer proposal has no upfront costs. All Licensed Insolvency Trustee fees are set by federal tariff and paid from your monthly consumer proposal payments. They aren’t charged on top of your payments.

The tariff is $750 on filing, $750 on court approval, 20% of funds distributed to creditors, approximately $170 for two mandatory counselling sessions, and a government filing fee of approximately $100. Every trustee in Canada charges the same fees.

Can I keep my house and car?

Yes. You keep all of your assets in a consumer proposal. The value of your home equity, car, and other property is factored into the offer to your creditors. As long as you continue making your mortgage and car loan payments, those assets are yours.

What debts aren’t included in a consumer proposal?

A consumer proposal covers most unsecured debts, including credit cards, personal loans, lines of credit, payday loans, and tax debt owed to the CRA.

Debts listed under Section 178(1) of the BIA can’t be discharged. These include alimony and child support obligations, court fines, and student loans if you’ve been out of school for fewer than seven years.

Source: Bankruptcy and Insolvency Act, Section 178 – Debts Not Released by Discharge

Secured debts, like your mortgage or car loan, aren’t included unless you choose to surrender the asset.

Can I pay off a consumer proposal early?

Yes. You can pay off your consumer proposal early at any time with no penalty. Paying early means the R7 rating is removed from your credit report sooner. The three-year clock starts from the date you complete your payments, not the date you filed.

How does a consumer proposal affect my credit score?

Filing a consumer proposal results in an R7 rating on your credit report. That’s lower than a perfect R1 but better than the R9 assigned in bankruptcy.

The consumer proposal is removed from your credit report three years after completion or six years from filing, whichever is earlier. You can begin rebuilding your credit during the consumer proposal with a secured credit card.

What happens if creditors reject my consumer proposal?

If creditors reject your consumer proposal, your Licensed Insolvency Trustee can negotiate amended terms or propose a counteroffer. This often involves increasing the monthly payment or extending the repayment period.

If no agreement is reached, you aren’t forced into bankruptcy. You return to your pre-filing position and can look at other options with your trustee.

Talk to a Licensed Insolvency Trustee

If you’re behind on your debts and the numbers aren’t adding up, a Licensed Insolvency Trustee can tell you whether a consumer proposal makes sense. The first consultation is free.