If you are considering a consumer proposal to manage your debt, the first question is usually simple: how much will I actually pay each month?
In Canada, consumer proposal payments are not based on one standard amount. Your payment is shaped by your income, your assets, your creditors, and what those creditors would likely receive if you filed bankruptcy instead.
At David Sklar & Associates, we often meet people across Ontario who want to deal with their debt while protecting what they have worked hard to build. A consumer proposal can allow you to make one fixed monthly payment, stop interest on included unsecured debts, and keep important assets such as your home, car, and retirement savings, as long as you stay current on any payments to secured creditors.
This article explains how consumer proposal payments work in Canada, what affects your monthly amount, which debts can usually be included, and how this option compares with bankruptcy.
Important This article provides general information for Ontario residents and does not replace advice from a Licensed Insolvency Trustee. Your exact proposal payment depends on your full financial situation. |
Key Takeaways: Consumer Proposal Payments in Canada
- A consumer proposal payment is based on affordability, income, assets, creditor expectations, and the bankruptcy comparison.
- A consumer proposal can last up to five years, but you can pay it off sooner if your circumstances allow.
- Once accepted, your proposal payment is generally fixed unless the proposal is formally amended.
- You usually keep your home, vehicle, and savings in a consumer proposal, but asset values can affect what creditors expect to receive.
- A consumer proposal can stop most collection calls, lawsuits, and wage garnishments from included unsecured creditors once it is filed.
- The best option depends on your income, assets, family situation, debt type, and long term goals.
What Is a Consumer Proposal?
A consumer proposal is a formal, legally binding debt solution filed with the help of a Licensed Insolvency Trustee. It is an offer to your unsecured creditors to repay part of what you owe, extend the time you have to pay, or do both.
Once your proposal is accepted and approved, you make one payment to your Licensed Insolvency Trustee. The LIT distributes the funds to your creditors according to the proposal terms.
A consumer proposal is different from an informal debt settlement plan. It is a federally regulated insolvency process under the Bankruptcy and Insolvency Act, and it can only be filed through a Licensed Insolvency Trustee.
For many people, the main benefits are predictability and protection. You know what your monthly payment will be, your included unsecured creditors must deal with the LIT, and interest on the included unsecured debts no longer keeps growing through the proposal.
Who Qualifies for a Consumer Proposal in Canada?
A consumer proposal may be available if you are an individual, you are insolvent, and your total debts do not exceed $250,000, not including a mortgage secured by your principal residence.
If your debts are above that limit, a Licensed Insolvency Trustee may discuss other formal options, such as a Division I proposal or bankruptcy.
A consumer proposal may be a good fit if you have income or access to help from family, want to avoid bankruptcy, want to keep your assets, and can afford a fixed payment over time.
The right answer is not the same for everyone. A trustee will review your income, household size, assets, secured debts, unsecured debts, creditor mix, and any urgent collection action before making a recommendation.
How Are Consumer Proposal Payments Calculated?
Your monthly proposal payment is built around one practical question: what offer is affordable for you and fair enough for creditors to accept? Several factors matter.
1. Your Income and Monthly Budget
Your trustee will review your income, household expenses, family size, and ability to make a reliable monthly payment. A consumer proposal only works if the payment is realistic.
In bankruptcy, people with income above the government guidelines may have to make surplus income payments. Creditors often look at what you might pay in bankruptcy when considering whether your consumer proposal is reasonable.
2. The Value of Your Assets
Creditors also consider what they might receive if you filed bankruptcy instead. This is sometimes called the bankruptcy comparison.
If you have significant home equity, vehicle equity, investments, or other assets, your proposal may need to offer creditors a higher recovery than a person with few assets. The goal is to make the proposal attractive enough for creditors while still keeping the payment manageable for you.
3. The Type of Creditors You Owe
Different creditors may have different expectations. A proposal involving mostly credit cards may be reviewed differently than one involving tax debt, payday loans, personal loans, or a large single creditor.
Your Licensed Insolvency Trustee communicates with creditors and helps present a proposal that reflects your situation and the legal requirements.
4. The Length of the Proposal
A consumer proposal can run for up to 60 months. Spreading the proposal over the full five years can reduce the monthly payment and make the plan easier to manage.
Some people choose a shorter proposal or make a lump sum offer if funds are available. You can usually pay a consumer proposal off early without penalty, which may help you rebuild faster.
5. Secured Debt Payments You Want to Keep
A consumer proposal deals mainly with unsecured debt. If you want to keep your home or financed vehicle, you must continue making the mortgage, car loan, or lease payments directly to the secured lender.
Your trustee will consider those payments when reviewing whether your proposal payment is affordable.
What Is the Average Consumer Proposal Payment in Canada?
There is no reliable single average payment that applies to everyone. Two people can owe the same amount and still have very different proposal payments because their income, assets, creditors, and family situations are different.
The examples below are for illustration only. They are not quotes, guarantees, or recommendations. They simply show how a proposal amount could translate into a monthly payment over different terms.
Total unsecured debt | Possible proposal offer | Monthly payment over 60 months | Monthly payment over 48 months |
$25,000 | $8,000 | About $133 | About $167 |
$40,000 | $14,000 | About $233 | About $292 |
$60,000 | $21,000 | About $350 | About $438 |
$80,000 | $30,000 | About $500 | About $625 |
$100,000 | $35,000 | About $583 | About $729 |
Example note A lower monthly payment is not always the best offer, and a higher debt balance does not automatically mean a higher proposal percentage. The final amount depends on the bankruptcy comparison, creditor expectations, and what you can afford. |
What Debts Can Be Included in a Consumer Proposal?
A consumer proposal usually deals with unsecured debts. Common examples include:
- Credit cards
- Unsecured lines of credit
- Personal loans
- Payday loans
- Collection accounts
- Unsecured overdrafts
- Personal income tax debt
- Some self employment tax debts, depending on the circumstances
Some debts require special review because they may not be fully released by a consumer proposal, or they may need specific treatment in the proposal terms. These can include child or spousal support obligations, court fines, some debts involving fraud or misrepresentation, and some student loans.
Secured debts, such as a mortgage or car loan, are treated differently. If you keep the secured asset, you must keep paying the secured lender. If you surrender the asset and there is a shortfall, the shortfall may become an unsecured claim that can be included as part of the proposal.
Can You Keep Your Home in a Consumer Proposal?
In most cases, yes. A consumer proposal allows you to keep your home as long as you continue making your mortgage payments and any other required secured payments.
The proposal itself deals with your unsecured creditors. Your mortgage lender is normally not paid through the proposal if you are keeping the home and staying current on the mortgage.
However, home equity still matters. If you have significant equity in your home, creditors may expect your proposal to reflect what they could have received if you filed bankruptcy. That does not mean you lose the home, but it can affect the proposal payment amount.
Can You Keep Your Car?
You can usually keep your vehicle in a consumer proposal if you stay current on your car loan or lease payments.
If your vehicle is paid off or has equity, that value may be considered when the trustee calculates what creditors would likely receive in bankruptcy. The trustee will also review and advise on whether keeping the vehicle is affordable within your monthly budget.
What About RRSPs, RESPs, TFSAs, and Other Savings?
One of the reasons people consider a consumer proposal is that they can usually keep their savings and investments while dealing with unsecured debt.
That said, registered and non-registered assets should always be reviewed carefully. Their value can affect what creditors expect, and the treatment of certain assets can be different in bankruptcy. For example, RRSP contributions made in the 12 months before bankruptcy can require special review.
If protecting retirement savings or education savings is important to you, raise this with your Licensed Insolvency Trustee during the first consultation.
What Happens When You File a Consumer Proposal?
Step 1: You meet with a Licensed Insolvency Trustee
The LITreviews your income, expenses, debts, assets, creditor activity, and goals. You should leave the meeting understanding your options, not feeling pressured into one path.
Step 2: Your proposal is prepared and filed
If a consumer proposal is appropriate, your trustee prepares the required documents and files the proposal with the Office of the Superintendent of Bankruptcy. Once filed, a legal stay of proceedings takes effect for included unsecured creditors.
Step 3: Collection activity stops
Most collection calls, lawsuits, and wage garnishments from included unsecured creditors must stop. This protection can give you breathing room while the proposal is reviewed.
Step 4: Creditors review the proposal
Creditors generally have 45 days to review the proposal. They may accept it, request a meeting, ask for changes, or vote against it. If no meeting is requested within the required period, the proposal can be deemed accepted.
Step 5: You make the agreed payments
Once accepted and approved, you make the agreed payments to your trustee. You also complete two required financial counselling sessions.
Step 6: You receive a Certificate of Full Performance
After you complete all proposal terms, you receive a Certificate of Full Performance. At that point, you are legally released from the included unsecured debts, subject to any exceptions that apply by law.
What If Creditors Ask for More Money?
A creditor may ask for a higher payment, a larger lump sum, or different terms. This does not automatically mean the proposal is over.
Your Licensed Insolvency Trustee can explain the request, review whether it is realistic, and help you decide whether to amend the proposal. If the proposal cannot be accepted, the trustee can explain other options, including a different proposal structure or bankruptcy.
Can Your Consumer Proposal Payment Increase Later?
One of the biggest advantages of a consumer proposal is predictability. Once accepted, your payment is generally fixed for the proposal term.
If your income increases after your proposal is accepted, your payment does not automatically increase the way it might in bankruptcy. If your income drops and you cannot maintain the payments, speak with your trustee as early as possible. In some cases, amended terms may be possible.
What Happens If You Miss a Consumer Proposal Payment?
Missing one payment is serious, but it does not automatically cancel a monthly consumer proposal. Missing two payments is also serious and should be addressed immediately.
A consumer proposal can be deemed annulled if you are in default for an amount equal to or more than three monthly payments. If that happens, creditors may regain the right to collect the unpaid balance, minus any dividends they received through the proposal.
If you think you may miss a payment, contact your trustee before the problem grows. It may be possible to review options before the proposal reaches the annulment stage.
How Does a Consumer Proposal Affect Your Credit?
A consumer proposal will appear on your credit report and can lower your credit score. Included debts are commonly reported with an R7 rating, which is different from the R9 rating associated with bankruptcy.
According to the Financial Consumer Agency of Canada, Equifax and TransUnion remove a consumer proposal from your credit report three years after you have paid the proposal in full, or six years after you sign the proposal, whichever comes first.
The good news is that rebuilding can begin before the proposal disappears from your report. Many people start by making every proposal payment on time, keeping new credit use low, and eventually using a secured credit card responsibly after discussing the timing with their trustee.
Consumer Proposal vs Bankruptcy: Which Option Makes More Sense?
Both a consumer proposal and bankruptcy are legal debt solutions. The better fit depends on your financial picture.
Comparison point | Consumer proposal | Bankruptcy |
Payment structure | One fixed payment based on accepted proposal terms | Payments can depend on income, surplus income rules, assets, and duties |
Length | Up to five years, often payable early | A first bankruptcy can be shorter, but timing depends on income, duties, and prior bankruptcies |
Assets | You usually keep assets, but values can affect the offer | Nonexempt assets may vest in the trustee |
Creditor approval | Creditors review and may vote on the proposal | Creditor approval is not required to file bankruptcy |
Credit report impact | Usually reported as an R7 on included debts | Usually reported as an R9 |
Best suited for | People who can afford a fixed payment and want to avoid bankruptcy or protect assets | People who cannot realistically repay even a reduced amount, or where bankruptcy is the more practical legal option |
Why Work With David Sklar & Associates?
Debt problems are stressful enough without confusing advice. David Sklar & Associates is a Licensed Insolvency Trustee firm serving people across Ontario. Our role is to explain your legal debt relief options clearly, review the full picture, and help you understand whether a consumer proposal, bankruptcy, or another option makes sense.
We will review your budget, creditor situation, assets, income, and goals. If a consumer proposal is appropriate, we help prepare and file the proposal, communicate with creditors, and guide you through the required steps until completion.
The goal is not just to reduce debt. The goal is to create a plan you can live with, protect what matters where possible, and help you move forward with more stability.
In Conclusion: Understanding Your Consumer Proposal Payment
Consumer proposal payments are based on your real financial situation. Your income, assets, creditor expectations, family budget, and bankruptcy comparison all play a role.
For many people, the result is one affordable monthly payment, no further interest on included unsecured debts, protection from most collection action, and a clear path to becoming debt free.
If you are struggling with debt in Ontario, David Sklar & Associates can help you understand your options in a confidential consultation. Speak with a Licensed Insolvency Trustee and find out whether a consumer proposal is the right fit for you.
FAQs About Consumer Proposal Payments in Canada
How much will I pay in a consumer proposal?
Your payment depends on your income, assets, household budget, creditor expectations, and what creditors would likely receive in bankruptcy. There is no fixed amount that applies to everyone.
What is the average consumer proposal payment?
There is no reliable average that applies to all Canadians. Some proposals are a few hundred dollars per month, while others are higher or lower depending on the person’s situation.
Can I pay off a consumer proposal early?
Usually, yes. Many people pay a proposal off early if their income improves, they receive help from family, or they come into extra funds. Paying early can help you move toward completion sooner.
Are trustee fees extra?
In most consumer proposals, trustee fees are paid from the proposal funds according to regulated rules. You normally make the agreed proposal payment, and the trustee distributes funds according to the process.
Does a consumer proposal stop interest?
A consumer proposal stops interest from continuing to grow on included unsecured debts through the proposal. If the proposal is annulled, creditors may regain collection rights for amounts still owing, subject to the law.
Can I keep my house if I file a consumer proposal?
Yes, in most cases, as long as you continue making your mortgage payments. If you have significant home equity, that value may affect the proposal amount offered to creditors.
Can I keep my car in a consumer proposal?
Usually, yes, if you keep making required car loan or lease payments. Vehicle equity and affordability should be reviewed by your trustee.
Will I lose my RRSP or savings?
You usually keep your savings and registered accounts in a consumer proposal, but their value can affect what creditors expect. Ask your trustee to review each asset before you decide.
Can tax debt be included in a consumer proposal?
Many Canada Revenue Agency debts can be included, including personal income tax debt. Tax debts involving liens, secured claims, director liability, or other special issues require a closer review.
Can a consumer proposal stop a wage garnishment?
A consumer proposal can stop most wage garnishments related to included unsecured debts once it is filed. Your trustee can confirm how this applies to your specific creditor and garnishment.
What happens if I miss payments?
If you miss one or two monthly payments, contact your trustee immediately. If you are in default for an amount equal to or more than three monthly payments, the proposal can be deemed annulled.
Will my spouse be affected by my consumer proposal?
Your spouse is not automatically responsible for your consumer proposal. However, joint debts, co signed loans, supplementary credit cards, and shared assets should be reviewed carefully.
Is a consumer proposal better than debt consolidation?
It depends. Debt consolidation usually requires a new loan and enough credit strength to qualify. A consumer proposal is a legal process that can reduce unsecured debt, stop interest, and protect you from most collection action.
Can I get a mortgage after a consumer proposal?
It may be possible to qualify for a mortgage after a consumer proposal, but timing, credit rebuilding, income, down payment, and lender rules all matter. A mortgage broker can provide lending guidance once your financial situation is stable.
Is bankruptcy ever better than a consumer proposal?
Yes. Bankruptcy may be more appropriate if your income is very low, your assets are limited, and even a reduced proposal payment is not realistic. A Licensed Insolvency Trustee can compare both options with you.
Source Notes for Trustee Review
These references are included to support legal and procedural review. They are not intended to replace trustee judgment or firm compliance review before publication.
- OSB: You Owe Money, Consumer Proposals: Supports the formal nature of consumer proposals, the role of the Licensed Insolvency Trustee, the five year maximum term, payments through the trustee, asset retention when secured payments are maintained, the 45 day review period, and required counselling sessions.
- OSB: Information for Consumers on the Insolvency Process: Supports creditor review timing, legal protection from lawsuits and wage garnishments, asset retention wording, counselling requirements, and legal release after completion.
- FCAC: How Long Information Stays on Your Credit Report: Supports the consumer proposal credit report removal timing for Equifax and TransUnion.
- Bankruptcy and Insolvency Act: Section 66.28: Supports binding effect of accepted and approved consumer proposals and treatment of debts referred to in section 178.
- Bankruptcy and Insolvency Act: Section 66.31: Supports deemed annulment for payment default equal to or more than three monthly payments.
- Bankruptcy and Insolvency Act: Section 178: Supports categories of debts not released by a bankruptcy discharge, which are relevant for proposal review under section 66.28.
- OSB Directive No. 11R2 2026: Surplus Income: Supports surplus income context used in the bankruptcy comparison.
- OSB Directive No. 1R8: Counselling in Insolvency Matters: Supports the two session insolvency counselling requirement and timing context.
