Consumer Proposal

What is a consumer proposal?'s your proposal to creditors.

For many people, this is the option of choice. A consumer proposal can reduce a person’s debt load by up to 80% without declaring bankruptcy or losing their homes. Are you eligible? Read on…

What is a Consumer Proposal?

Coming to terms with insolvency is emotionally draining for people and the stress can be overwhelming. Constant calls from creditors/collectors at home and even at work can cause sleepless nights. It can harm relationships and affect a person’s performance at work.

The final solution to insolvency, is to apply for protection under the federal Bankruptcy and Insolvency Act, either by filing a proposal or by making an assignment in bankruptcy.

A consumer proposal is a way to make a deal with your creditors to repay your debts. Unlike an informal debt settlement plan, a consumer proposal is a legally binding agreement that you and your Debt Masters Consumer Advocate negotiate with your creditors. Under the Bankruptcy and Insolvency Act, a trustee or an administrator files a proposal or an arrangement between you and your creditors to have you pay off only a portion of your debts, and your creditors agree to write off the rest of your debt.

It’s a “win-win” for both of you.

These agreements can also extend the time you have to pay off the debt. As well, they may provide some combination of both — paying off a portion of your debts while extending the duration to finish them off. To be acceptable, your creditors must be better off financially under a proposal than if you go bankrupt.

There are two types of proposals you can file:

  • Consumer proposals – A person is eligible if their total debt, excluding debts secured by a principal residence and do not exceed $250,000. A consumer proposal cannot last for more than five years, if the creditors do not accept the proposal, the debtor is not automatically bankrupt. Insolvency counseling is required.
  • Other proposals – For non-consumer proposals, there is no restriction on the amount of money a person owes. However, if the creditors do not accept the proposal, the person is automatically bankrupt (effective the date of the creditors meeting). Insolvency counseling is not required.

Retirement Savings Plan Loans

Money can be borrowed from your Registered Retirement Savings Plan without attracting tax to the withdrawal of funds if the funds are used to purchase your first home – the maximum withdrawal is $20,000 and must be repaid within 15 years even if the person files for bankruptcy. That said, we do  not recommend the withdrawal of RRSP funds for any reason other than retirement or a home purchase.


You have options when it comes to getting debt relief.  Which option is best for you and your situation can be difficult to figure out.  Click this button to find out which option best fits your needs and WHY.

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