Why would a consumer proposal be rejected?

Posted on 23 June 2023

Written by Samantha Galea

Now we have established that a consumer proposal can be rejected, you are likely wanting to know more about the reasons why. Perhaps you have recently filed a consumer proposal and are waiting to find out whether or not it has been accepted by your creditors. Generally speaking, there are a few key reasons why. Typically, it is because your creditors want more money from you. If you refuse to go back with a counter offer, the consumer proposal will more often than not be rejected. In this article, we share the key reasons why a consumer proposal could be rejected, and what to do if you find yourself in this situation. When filing a consumer proposal, it is crucial to gain proper support from an experienced Licensed Insolvency Trustee. At Spergel, our Licensed Insolvency Trustees have been helping Canadians gain debt relief for over thirty years. We also have a 99% acceptance rate on any consumer proposals that we file, and we are considered industry experts.

Why would a consumer proposal be rejected?

It can be stressful awaiting an answer on your consumer proposal acceptance. There is always a risk that it could be rejected. It is important to note that even if it is rejected, there are always other pathways to debt relief that you can take. Here are the key reasons a consumer proposal might get rejected:

  • You are offering insufficient funds
  • You are offering an unsuitable repayment schedule for your creditors
  • You contributed to your financial situation by an unjustifiable extravagance in living expenses or by neglecting business matters
  • You have been guilty of fraud
  • You have committed an offence under the Bankruptcy and Insolvency Act

In these instances, your creditors will ask for changes to be made in the proposal you have offered. If your consumer proposal is rejected, there is no need to panic. Often, you and your Licensed Insolvency Trustee will simply need to adjust the terms and payment offering before your creditors accept it. Your creditors may even wish to regroup to see if collectively they can find a resolution to your situation.

How do you get your consumer proposal accepted?

If your consumer proposal is rejected at first, your Licensed Insolvency Trustee is there to help you find a resolution. They will work with you to negotiate another offering to take forward to your creditors. Once it has been submitted, your creditors will have 45 days to make a decision on your revised proposal. Most creditors will need to accept the consumer proposal in order for it to proceed. If there is a minority of creditors that reject the consumer proposal, they will need to go along with the terms.

How do you negotiate a rejected consumer proposal?

If your consumer proposal has been rejected, it is because your creditors will want some kind of changes to the terms. Often, these required amendments will be along the lines of the following:

  • The amount you agree to pay each month. This is dependent on your income and what you can realistically afford each month
  • The total amount you will repay. Your creditors will then agree based on how much debt they are prepared to forgive
  • The length of repayment. Your creditors will likely want their payments made faster, so that they are reunited with their money sooner

What are my alternative options if I cannot get a consumer proposal accepted?

If – for whatever reason – your consumer proposal continues to be rejected, you may wish to look at your other debt relief options. As Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief, they are well placed to help you look at your alternatives. Here are some of the most popular options:

A debt consolidation loan

A debt consolidation loan is a new loan that is taken out to combine multiple other debts into one. Often, debt consolidation loans have a lower interest rate than that associated with debts. The advantages of a debt consolidation loan therefore are that it is often cheaper and simplifies multiple debts into one straightforward monthly payment.


Bankruptcy is often a last resort when it comes to debt relief, but it is a surefire way to gaining a fresh financial future. Bankruptcy is the process of assigning any non-exempt assets you may have over to a Licensed Insolvency Trustee in exchange for clearance of any unsecured debts you have. The assets are then sold with any proceeds going towards the repayment of your creditors. At Spergel, we have been helping Canadians to file bankruptcy for over thirty years, and we are here to help you too.

Even if your consumer proposal is rejected, there are plenty of options for gaining debt relief. At Spergel, our experienced Licensed Insolvency Trustees have helped over 100,000 Canadians begin a fresh financial future, and we are here to help you too. Book a free consultation today – you owe it to yourself.


Samantha Galea

Samantha Galea is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) who started working with Spergel as a summer student in 2010. With her socio-political background, Samantha is committed to breaking the stigma associated with bankruptcy so that individuals and families can properly understand all of their options on their path to debt freedom. She is also our resident expert on student debt and collection agencies, as well as the manager of our Brampton office. Outside of work, Samantha is an avid reader of historical non-fiction and world traveler.

Schedule a Free Consultation with Samantha Galea (or your local Spergel LIT) by:

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