A consumer proposal is a legally binding agreement under the federal Bankruptcy and Insolvency Act. A Licensed Insolvency Trustee files and administers it. You repay a portion of what you owe to your unsecured creditors, usually over a term of up to five years. Once your creditors accept the proposal, the agreed payment settles the included debts. DACL does not file proposals. We assess your situation and refer you to a trustee.
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A consumer proposal is filed and administered by a Licensed Insolvency Trustee under the federal Bankruptcy and Insolvency Act. DACL is not a Licensed Insolvency Trustee. We assess your situation, explain your options, and refer you to a trustee where one may fit.
Put simply, a consumer proposal is a formal deal with the people you owe. A Licensed Insolvency Trustee, who is the only professional able to file one, puts a single offer to your unsecured creditors. The offer is to repay part of what you owe over a set period. If enough creditors accept, the proposal becomes binding on all of them, and you make the agreed payments to the trustee instead of to each creditor.
It is a Division II proposal under the Bankruptcy and Insolvency Act. That is the federal law that governs it, which is why only a Licensed Insolvency Trustee can file and administer it, and why the rules are the same across the provinces where it applies.
Here is the process at a high level. The detail sits with the trustee who files it, but the shape is consistent.
A consumer proposal tends to suit people who have more unsecured debt than they can realistically repay in full, but who have steady enough income to make smaller regular payments. It is for unsecured debt, like credit cards, lines of credit, and personal loans.
There is an eligibility limit. To file an individual consumer proposal, your total unsecured debts cannot exceed $250,000, not counting a mortgage secured by your principal residence. Two people filing together can each file up to that limit. The trustee confirms whether you qualify and whether a proposal is the right route for you.
It helps to see both sides before you decide.
Where it can help:
The real downsides:
A consumer proposal is a serious step, and you should go in with a clear picture of both sides.
A consumer proposal is reported on your credit report as an R7 rating. According to the Financial Consumer Agency of Canada, Equifax and TransUnion both remove a consumer proposal from your report three years after you pay off all the debts in the proposal, or six years after you sign it, whichever comes sooner.
On assets, a proposal addresses your unsecured debt, so it generally does not require you to give up your home or car as long as you keep up the secured payments on them. Your specific situation is confirmed by the trustee, since the details depend on what you owe and how it is secured.
The key difference between the main options is what happens to what you owe and what it does to your credit. We keep the full head-to-head on the dedicated comparison pages rather than repeating it here.
Consumer proposal vs bankruptcy · Consumer proposal vs a debt management plan · Debt consolidation vs consumer proposal
If you want a rough sense of the numbers, our calculator gives an estimate, though only a trustee can confirm an actual proposal.
DACL assesses your situation, explains your options, and refers you to the right professional. We are not a Licensed Insolvency Trustee, a law firm, or a government program. A consumer proposal can only be filed and administered by a Licensed Insolvency Trustee under the Bankruptcy and Insolvency Act.
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We review your situation and explain all your debt-relief options in plain language, including whether a consumer proposal may be worth exploring.
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Where a proposal may fit, we explain it in plain language and connect you with a Licensed Insolvency Trustee. Where something simpler fits, we tell you that too.
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DACL is not a Licensed Insolvency Trustee, a lender, a law firm, or a government program. A consumer proposal must be filed by a trustee — we refer you to one.
We've been helping Canadians since 2009. Here is what people ask most:
A consumer proposal is a legally binding agreement under the Bankruptcy and Insolvency Act, filed and administered by a Licensed Insolvency Trustee. You repay a portion of your unsecured debt over a term of up to five years. Once accepted by your creditors, it settles the included debts.
Only a Licensed Insolvency Trustee can file and administer a consumer proposal. DACL assesses your situation and refers you to a trustee.
Up to five years, or 60 months. Under the Bankruptcy and Insolvency Act, the term of a consumer proposal cannot exceed five years. Source: Office of the Superintendent of Bankruptcy.
Generally yes. A proposal addresses unsecured debt, and you continue your secured payments on a mortgage or car loan as normal. A Licensed Insolvency Trustee confirms what applies to your specific situation.
A consumer proposal is reported as an R7 rating. According to the Financial Consumer Agency of Canada, both Equifax and TransUnion remove it three years after you pay off all the debts in the proposal, or six years after you sign it, whichever comes sooner.
The trustee's fees are set federally under the Bankruptcy and Insolvency Act, not quoted by DACL. The cost is built into the proposal payments rather than charged separately. A Licensed Insolvency Trustee explains the figures for your situation.
A short, free, confidential assessment is the simplest way to understand whether a consumer proposal, or a different option, may apply to your situation. There is no cost and no pressure.
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By Ishank · Debt Education & Content · Debt Advisors Canada
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General information, not legal, financial, or professional advice. Confirm your situation with a licensed professional. Debt Advisors Canada is not a Licensed Insolvency Trustee, a lender, or a government program.