How to qualify for a consumer proposal

Posted on 10 April 2023

Written by Ashvin Sharma

You have likely heard of a consumer proposal, and are perhaps aware of some of its benefits if you are searching for eligibility for a consumer proposal. Consumer proposals are a great bankruptcy alternative in Canada, enabling Canadians to reduce their debts by up to 80%. It can be a very effective solution if you are struggling with unmanageable debts and bills that do not seem to ever disappear. In this article, we share what a consumer proposal is, the advantages of a consumer proposal, and how to qualify for a consumer proposal. By the end of the article, you should be aware of the main purposes of a consumer proposal, and whether or not it might be the right form of debt relief for you.

What is a consumer proposal?

In Canada, a consumer proposal is a legal form of debt relief in line with the Bankruptcy and Insolvency Act. A popular bankruptcy alternative, consumer proposals have the ability to reduce your unsecured debt by up to 80%. It is the process of putting forward an affordable monthly amount to repay your creditors, with the support of a Licensed Insolvency Trustee. Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief, and will walk you through each step of the process. Your Licensed Insolvency Trustee will negotiate with your creditors on your behalf to have your consumer proposal accepted. If your consumer proposal is accepted, you will only need to make your affordable monthly payments for a period of up to five years, and any remaining unsecured debt will be cleared. A consumer proposal can be paid off early without any penalties. At Spergel, we have a 99% acceptance rate on any consumer proposals we file, and we have been helping Canadians gain debt relief for over thirty years.

What are the advantages of a consumer proposal?

There are many advantage of a consumer proposal – in fact, it’s the #1 bankruptcy alternative in Canada. Here is our roundup of the key benefits of filing a consumer proposal in Canada:

  • Debt relief without the need to file bankruptcy and its subsequent impact on your credit score and employment
  • Legally binding debt relief
  • Reduces your unsecured debt by up to 80%
  • A countdown to debt freedom – be free of your debt in 3-5 years
  • Keep your assets with a consumer proposal, including your home, car, and equity
  • One simple, affordable monthly payment
  • Interest and penalties on your debts frozen
  • A stay of proceedings to end any legal action like wage garnishments, collection calls, placement of liens, and bank account freezes
  • Avoid surplus income should you receive salary increases or additional income
  • No upfront costs

As with any form of debt relief, a consumer proposal does have its disadvantages. If you feel it might not be the right form of debt relief for you, one of our Licensed Insolvency Trustees here at Spergel will help you to find a more appropriate alternative for you and your financial situation.

How to qualify for a consumer proposal

If you are in need of debt relief via a consumer proposal and think it sounds like a good option for you, there are some eligibility criteria that you will need to meet. Here is how to qualify for a consumer proposal:

  • You must be an individual, not a business or corporation
  • You are insolvent, and unable to pay your debts as they are owed
  • You must have debts to settle like tax debts or credit card debt
  • Your debts must not exceed $250,000
  • You must have a steady source of income to enable you to make your monthly payments
  • You cannot have a prior consumer proposal that is still open
  • You have a Licensed Insolvency Trustee to help you through the process – at Spergel, our Licensed Insolvency Trustees have been supporting Canadians with consumer proposals for over thirty years

Can you file a joint consumer proposal?

You and a spouse or common law partner may wish to file a joint consumer proposal if you both have similar debts. This can also be carried out during a bankruptcy, although the start date of the consumer proposal will be considered the same as the bankruptcy. This means that you cannot add any additional debts into your consumer proposal that might have come about during your bankruptcy. When you file a joint consumer proposal, both of you will be equally responsible by co-signing or guaranteeing a loan.

How do I file a consumer proposal?

If you think you qualify for a consumer proposal, and want to reduce your debt while keeping your assets, a consumer proposal may be a good debt relief option for you. Your first step is to speak to a Licensed Insolvency Trustee who can review your financial situation and help you to determine the best form of debt relief for you. Do note that only Licensed Insolvency Trustees can support you through the consumer proposal process. Unlike other bankruptcy firms, at Spergel, you are assigned your very own Licensed Insolvency Trustee from the beginning of the consumer proposal process to walk you through each step, instead of passing you from person to person.

If you need more information on how to qualify for a consumer proposal, or want to get started filing one, book a free consultation with Spergel. Our expert Licensed Insolvency Trustees have helped over 100,000 Canadians to gain debt relief with solutions including consumer proposals. We are here to help you, so reach out today – you owe it to yourself.


Ashvin Sharma

Ashvin Sharma is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) overseeing all of Spergel's offices in the Greater Vancouver Area and British Columbia. He is also our resident expert on homeownership debt and health debt. In his spare time, Ashvin loves to play sports, spend time with family and friends, and serves as a volunteer coordinator for "Free-Them", a Canadian organization committed to raising awareness about human trafficking.

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