Consumer Proposal

A consumer proposal is a formal, legally binding debt-relief process administered by a Licensed Insolvency Trustee. It allows an eligible individual to offer unsecured creditors a percentage of what is owed, more time to repay, or both. A proposal can provide a structured alternative to bankruptcy, with payments completed within a maximum of five years.

How a consumer proposal works

A Licensed Insolvency Trustee reviews your financial circumstances and develops an offer for your creditors. The proposal may reduce the total amount you repay, extend the repayment period, or combine both approaches. Once accepted, you make the agreed payments through the trustee and no interest is added to the proposal balance.

• One structured payment based on the accepted proposal
• A repayment term of no more than five years
• No additional interest on debts included in the proposal
• A legally binding arrangement once accepted

Protection from eligible collection action

After a consumer proposal is filed, most collection action relating to included unsecured debts must stop. This can include collection calls, wage garnishments and legal proceedings. Some obligations and enforcement actions may not be affected, so a Licensed Insolvency Trustee must review your specific debts.

• Most creditor calls on included debts stop
• Eligible wage garnishments and lawsuits are stayed
• Payments are made through the Licensed Insolvency Trustee
• You avoid filing for bankruptcy if the proposal is successfully completed

Credit Matters and Licensed Insolvency Trustees

Credit Matters is not a Licensed Insolvency Trustee and does not file or administer consumer proposals. We provide an independent review of your financial situation, explain available debt-relief paths and help you prepare for an informed discussion. If a consumer proposal appears suitable, we can introduce you to a qualified Licensed Insolvency Trustee, the only professional authorized to file and administer the proposal under Canada's Bankruptcy and Insolvency Act.

Debts that may be included

A consumer proposal commonly addresses unsecured debts. Whether a particular balance is eligible depends on its legal status and your circumstances, so it must be confirmed by the Licensed Insolvency Trustee.

• Credit cards and personal lines of credit
• Overdrafts and unsecured personal loans
• Payday loans and cash advances
• Certain income-tax, source-deduction and GST debts
• Eligible shortfalls after a vehicle or home is repossessed or sold
• Qualifying accounts transferred to collection agencies

Is a consumer proposal right for you?

The best solution depends on your income, assets, total debt, monthly affordability and long-term goals. We help you compare a consumer proposal with budgeting, debt consolidation, informal repayment arrangements and bankruptcy before you decide on the next step.