Consumer Proposal in Canada: The Best Bankruptcy Alternative

A consumer proposal is one of the best ways to gain debt relief in Canada, and a great bankruptcy alternative. If you are struggling with overwhelming debts and bills that never seem to go away, a consumer proposal can reduce your debt by up to 80%. We explain exactly what a consumer proposal is, the advantages, and how to get started.

Book a free consultation with Spergel to discuss filing a consumer proposal

When filing a consumer proposal, you work with a Licensed Insolvency Trustee to determine how much you can reasonably afford to pay back each month. Your trustee will then negotiate with your creditors on your behalf to strike a deal as to how much this monthly payment should be. Immediate protection from your creditors including an end to any collection calls and wage garnishments is triggered as soon as you file. Spergel is highly experienced in filing consumer proposals, helping over 100,000 Canadians gain debt relief. We receive a 99% acceptance rate on any consumer proposals we file.

What is a consumer proposal?

A consumer proposal is a legal form of debt settlement, in line with the Bankruptcy and Insolvency Act. It is a deal that is put in place with your creditors to repay a percentage of your total amount of debt, in exchange for debt forgiveness for the remainder. For most Canadians, it can reduce your debt by up to 80% while enabling you to keep your assets. Consumer proposals must be filed with the support of a Licensed Insolvency Trustee who will support you through each step of the process.

Discover more about consumer proposals

Advantages of a consumer proposal

The #1 bankruptcy alternative in Canada, a consumer proposal offers a huge reduction in your debt without the consequences faced in bankruptcy. Here are some of the key benefits:

If you want to explore alternative debt relief options, a Licensed Insolvency Trustee will support you in finding a more appropriate option for your circumstances.

Discover the advantages of consumer proposals

Which debts are included in a consumer proposal?

Most unsecured debts can be reduced in a consumer proposal, including the following:

Secured debts (like mortgages and car loans) cannot be included as part of a consumer proposal. Despite this, filing a consumer proposal can make paying off your secured debts much more manageable by substantially reducing your other debts. Provided you continue to make your payments on your secured debts, you can keep your associated assets, like your home or car. If you are struggling to make your secured debt payments, speak to a Licensed Insolvency Trustee who will help you to explore your options.

How does a consumer proposal work?

The first step in filing a consumer proposal is to find an experienced Licensed Insolvency Trustee to support you on your debt relief journey. This is the typical process for filing a consumer proposal:

  • Your trustee will review your financial circumstances and debts with you to determine if a consumer proposal is the best option for you.
  • Once you file, you will work together to determine how much you should offer to pay your creditors, based on what you can realistically afford.
  • Your trustee will negotiate with your creditors on your behalf to have your proposal accepted. At Spergel, we have a 99% acceptance rate on any consumer proposals we file. 
  • As a consumer proposal is a legal debt settlement, it offers full protection from your creditors via a stay of proceedings. This means creditors can no longer chase you for debt via collection calls or threaten legal action.
  • There is much less you need to do with a consumer proposal than a bankruptcy – you simply need to make your agreed monthly payments on time, and attend two credit counselling sessions.
  • Once you have made your consumer proposal payments, you will receive a Certificate of Full Performance, which indicates completion. From this point, you are free of your debts and can enjoy life after a consumer proposal
Learn more about how consumer proposals work

Who can file for a consumer proposal?

In Canada, you can file a consumer proposal if you meet the following eligibility criteria:

  • You can afford to repay at least some of your debts;
  • You are insolvent
  • Your unsecured debt is no greater than $250,000 (excluding your mortgage);
  •  You are a Canadian resident or own property in Canada.

A consumer proposal is a particularly good debt relief option if your income is sufficient enough that you may need to make surplus income payments – or you foresee an increase in your income – and you would like to avoid bankruptcy.

Consumer proposal examples

Take a look at some of our consumer proposal examples to get an idea of how your debt reduction could look when filing a consumer proposal. To learn more about other Canadians’ experiences of filing a consumer proposal with Spergel, check out our consumer proposal reviews.

Speak to a Licensed Insolvency Trustee at Spergel

In order to file a consumer proposal, you first need to appoint a Licensed Insolvency Trustee. They are the only professionals in Canada legally able to file all forms of debt relief. You should be very wary of anyone else claiming to be a debt consultant, or who may be unlicensed, as they will not be able to legally reduce or eliminate your debts. Initial consultations with any reputable Licensed Insolvency Trustee will be free – you should not need to pay for these. At Spergel, our experienced Licensed Insolvency Trustees offer the following:

  • Free consultations
  • Meetings with you as often as you need
  • A review of your financial situation and an explanation of all your debt relief options
  • Affordable debt relief solutions
  • A 99% acceptance rate on any consumer proposals we file
Book a free consultation with a Licensed Insolvency Trustee at Spergel today

Learn more about how to file a consumer proposal in Canada, and discover what life after a consumer proposal could look like for you. Book a free consultation with an experienced Licensed Insolvency Trustee today.

Debt Repayment Calculator

Reduce your debt by up to 80%

At Spergel, we have helped Canadians begin a fresh financial future for over 30 years, and we are here to help you too.

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Book your free phone consultation with our caring team to discuss your options and start your journey towards financial freedom.

Find debt help near you

Spergel offers bankruptcy services in the following locations, as well as offering phone and video conferencing services in other areas too. Use the map below to find your closest Spergel office:

    Book a free consultation

    For easy to understand debt solutions including consumer proposals, contact Spergel to begin rebuilding your financial future. With locations across Canada, our experienced Licensed Insolvency Trustees will help you choose the best debt relief solution for your circumstances.

    Eli’s Path to Debt Freedom

    After cashing out an RRSP to pay for his wedding. Eli received an unexpected tax bill. With his other debts he could not afford to pay and eventually the debt grew. CRA decided to initiate a wage garnishment. We helped Eli avoid bankruptcy with a Consumer Proposal. Debt consolidation saved Eli’s pay cheque and his Consumer Proposal taught him to plan for unexpected expenses in the future.

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    Frequently Asked Questions


    Is a consumer proposal worth it?


    As you can negotiate the amount of debt you pay back with a consumer proposal, you can reduce your debts by up to 80%. Consumer proposals are one of the safest forms of debt consolidation, and generally creditors will accept your consumer proposal as they will receive more than they would in a bankruptcy. Consumer proposals also offer a number of advantages including protection from creditors and a freeze on interest and penalties. For these reasons, for many Canadians a consumer proposal is well worth it.


    How long does a consumer proposal last?


    Generally, consumer proposals in Canada last between 3 to 5 years. You may pay off your consumer proposal sooner or even make a lump sum offer. The maximum amount of time you have to pay off your consumer proposal is 5 years.