Debt Solutions

The debt industry can be scary and confusing when you’re genuinely in need and just want to be sure you’re getting the best advice. That’s where we come in! Our experts can help to identify the best debt solution tailored to your specific situation.

There are several options available when you are in debt and many different providers trying to offer you those solutions – each claiming to be better and more official than the rest. Let’s start with some of the main options:


Consumer Proposal

A consumer proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). In this process, the LIT will work with you to develop a “proposal” — an offer to pay creditors a percentage of what is owed to them, or extend the time you have to pay off the debts, or both. The negotiated debt reduction can be up to 80% of the original debt owed, providing the majority of creditors agree. The term length of a consumer proposal cannot exceed five years. This means you’ll end up with a small monthly payment, interest free, paid over 5 years or less.

If the proposal is accepted, you will make monthly payments to the LIT, who will then periodically pay creditors accordingly. As soon as the proposal has been officially filed, you will have protection from creditors and debt collectors that might be chasing you.

The biggest advantage of a Consumer Proposal is that it avoids Bankruptcy and protects your assets that might otherwise be seized in a bankruptcy situation.


Why would you choose a Consumer Proposal?

If your debt is out of control, interest is stacking up and you don’t have the means to get out of it – a consumer proposal might be right for you. With a consumer proposal, debt collectors have to stop calling you and your outstanding debts are negotiated through the Licensed Insolvency Trustee, who will try to get you the best deal possible. Your payments will be interest free, fixed and set at a rate you can afford to pay. You’ll also be able to keep your secured assets like your home and your car, which you may have lost in a bankruptcy.  

The main benefits of a consumer proposal are:

  • You get to keep your assets
  • Lower, affordable monthly payments
  • Get creditor protection
  • Avoid bankruptcy

The main disadvantage of a consumer proposal is that it damages your credit score and you may be unable to access credit. The consumer proposal remains on your credit report for a certain number of years depending on the type of consumer proposal.

Many people mistake Consumer Proposals for some kind of government bail out, which they are not. Whilst the process is administered through the courts and therefore regulated, the government has no further input. The trustee negotiates with your creditors, so the “debt reduction” comes from creditors accepting a fraction of the debt you owe them. Why would creditors accept this? Put simply, creditors would generally prefer to get some of their money back, rather than watch you declare bankruptcy, where they will likely walk away with nothing.


Which debts qualify for a Consumer Proposal?

Generally, most unsecured debts qualify. This means debts that are secured on an asset – such as a vehicle or home – are not eligible (because the value of the asset can be used to pay off debts). There are exceptions – like if you have very little equity in your home (i.e. your mortgage value is close to your property value) – in this case you may still be able to write off your other debts like credit cards, CRA debts, etc.


Speaking to a trustee is the best way to figure out if you could potentially file a proposal or not. Trustees do not charge for a consultation so it is free to find out and you have no obligation to proceed either way.