A consumer proposal is a legally binding agreement between you and your creditors. Overseen by a Licensed Insolvency Trustee, it allows you to repay only a portion of your debt, interest-free, based on what you can afford. Your remaining debt is forgiven, offering significant relief.

The consumer proposal is tailored to those who want to avoid bankruptcy while finding a structured path toward debt relief. Unlike bankruptcy, a consumer proposal lets you keep your assets, such as your home, car, and investments, as long as you continue to make payments as agreed.

Benefits of a Consumer Proposal

Opting for a consumer proposal comes with several advantages. Here are some key consumer proposal benefits that make it an attractive option:

Debt Forgiveness Program
A consumer proposal agreement can drastically reduce your debt. You might only pay back a portion of what you owe, with the rest being forgiven. For example, instead of repaying $30,000 in unsecured debt, you could negotiate to pay back $10,000, interest-free, over several years.

Protection From Creditors
Once the consumer proposal process begins, creditors must stop all collection efforts, including phone calls, wage garnishments, and legal actions.

Retain Your Assets
Unlike bankruptcy, assets do not vest with the trustee. A consumer proposal lets you keep your assets, making it a safer option if you own property, an RRSP, an RESP, or a vehicle.

Structured Payments
With a consumer proposal, you’ll agree to manageable interest-free monthly payments spread over five years or less. This predictability can help you plan your finances more effectively.

Rebuild Your Credit
While a consumer proposal does impact your credit score, it is seen as more favorable compared to bankruptcy. You can start rebuilding your credit score as soon as the consumer proposal has been approved.

Bankruptcy and Consumer Proposals Are Complex Legal Processes — We’re Here to Help

We understand that navigating debt solutions like bankruptcy or a consumer proposal involves legal, financial, and
procedural complexities that can feel overwhelming. Each situation is unique, and understanding your
rights, responsibilities, and options is essential. That’s why speaking with a Licensed Insolvency Trustee
(LIT) is your best first step. Book your free consultation now

A consumer proposal is a legally binding agreement between you and your creditors facilitated by a Licensed Insolvency Trustee. Here’s a step-by-step guide to the consumer proposal process:

Consult a Licensed Insolvency Trustee
You’ll meet with our Licensed Insolvency Trustees, who will assess your financial situation. We will review your income, debts, and expenses to recommend a practical debt proposal.

Develop the Proposal
Together, we will create a customized plan detailing how much of your debt you can realistically pay. The goal is to offer creditors a reasonable repayment that works for your budget.

Approval by Creditors
The proposal is submitted to your creditors for their approval. If accepted by the majority of the debt, the proposal becomes legally binding on all unsecured creditors after deemed court approval.

Benefits of Filing a Consumer Proposal
Immediately after filing the proposal, legal and collection actions stop. Interest freezes, and collection agencies must halt their calls and legal action, including wage garnishment and eviction.

Make Payments
Start making the agreed-upon monthly payments to the trustee, who will distribute the funds to your creditors.

Achieve Debt Relief
Once you complete the terms of the agreement, any remaining eligible debts included in the proposal are fully forgiven.

The Benefits of a Consumer Proposal

Opting for a consumer proposal provides several advantages, including:

Debt Forgiveness
You’ll only repay a portion of your debt, and the rest is forgiven once the plan is complete. For example, instead of paying $40,000, you might only pay back $15,000 ($250 x 60 months).

Creditor Protection
Legal and collection activity, such as collection calls, court proceedings, and garnishment orders, must stop upon filing a consumer proposal.

Creditor protection includes CRA:

The protection offered by the consumer proposal is also effective against the Canada Revenue Agency (“CRA”). Collection calls, bank account seizures, set-offs, and wage garnishments are stopped.

No Loss of Assets
Unlike bankruptcy, a consumer proposal allows you to keep your home, car, and other personal assets.

Affordable and Predictable Payments
Monthly payments are spread out over a maximum of five years, giving you a clear and manageable path forward.

Rebuilding Financial Health
While your credit score will be impacted, this option is less damaging than bankruptcy and allows you to begin rebuilding credit sooner.

The Effect of a Consumer Proposal on your Credit

A consumer proposal is noted on your credit report as an R9 until paid in full and then will change to an R7 for 3 years after completion, showing the debt was settled and not written off. You are also able to take steps to rebuild your credit score while working to complete the proposal.

Bankruptcy and Consumer Proposals Are Complex Legal Processes — We’re Here to Help

We understand that navigating debt solutions like bankruptcy or a consumer proposal involves legal, financial, and
procedural complexities that can feel overwhelming. Each situation is unique, and understanding your
rights, responsibilities, and options is essential. That’s why speaking with a Licensed Insolvency Trustee
(LIT) is your best first step. Book your free consultation now

A consumer proposal is one of the most effective and accessible ways to manage debt in Canada. Below, we’ll answer common questions about who qualifies for this, including financial criteria, the consumer proposal steps involved, and how it compares to other debt management options.

Who is eligible to file a consumer proposal?

To qualify for a consumer debt proposal, you must meet the following criteria:

Unsecured debt limit of no more than $250,000 (excluding mortgages).
Ability to make payments as proposed in the agreement. This ensures creditors receive a portion of what they’re owed.
A steady income allows you to meet monthly payments within five years.
You have not previously had a consumer proposal annulled.
We will assess your financial situation to confirm your eligibility and design a consumer proposal tailored to your needs.

Do I need to have a specific income level?

There’s no minimum income requirement, but you must be able to make consistent payments as part of the agreement. We will calculate what’s affordable based on your income, expenses, and overall financial situation. This is one of the key consumer proposal benefits, as it ensures customized repayment terms while following the consumer proposal steps.

How is eligibility for a consumer proposal determined?

The consumer proposal process begins with a consultation:

Our Licensed Insolvency Trustee will assess your financial standing, including assets, income, and outstanding debts.
We will determine whether a consumer proposal, bankruptcy, or another debt solution is right for you.
Based on this assessment, we will craft a realistic repayment plan for creditor approval.
Bankruptcy and Consumer Proposals Are Complex Legal Processes — We’re Here to Help

We understand that navigating debt solutions like bankruptcy or a consumer proposal involves legal, financial, and
procedural complexities that can feel overwhelming. Each situation is unique, and understanding your
rights, responsibilities, and options is essential. That’s why speaking with a Licensed Insolvency Trustee
(LIT) is your best first step. Book your free consultation now

Both are legal processes governed by The Bankruptcy and Insolvency Act of Canada and offer the ability for an unfortunate debtor to get a fresh start. The difference between bankruptcy and consumer proposals lies mainly in how assets are treated and how your debts are handled.

Consumer Proposal vs Bankruptcy Ontario:

If debt is weighing you down, you’re likely considering your options. As Licensed Insolvency Trustees in Ontario, we help people choose between Bankruptcy and Consumer Proposals—two powerful tools designed to eliminate debt and give you a fresh financial start.

Option 1: Consumer Proposal – Settle Debt Without Bankruptcy

A Consumer Proposal lets you legally reduce your debt and make affordable monthly payments—with no interest. It’s a great alternative to bankruptcy and protects your assets.

Key benefits:

Pay back only a portion of what you owe
No interest or hidden fees
Keep your house, car, RRSPs, and more
Stops all collection calls and legal action
One low monthly payment, up to 60 months
✅ Avoids bankruptcy

✅ Ideal for those with income or assets they want to protect

Option 2: Bankruptcy – A Legal Reset When You Can’t Repay

Bankruptcy provides a clean slate when debt is simply unmanageable. It’s a federally regulated process that can eliminate most unsecured debts.

Key facts:

Stops all collections and garnishments
Discharges most debts after 9–21 months
May involve surrendering some non-exempt assets
Monthly payments based on your income
✅ Fastest route to debt elimination

✅ Best when you have low income or few assets

Not Sure Which is Right for You?

Let’s figure it out together. We’ll review your finances, explain your options, and help you make the best decision—free of charge and judgment.

A consumer proposal lets you keep your assets, such as your home, car, RRSP and RESP’s while consolidating and reducing your debts.

Bankruptcy may result in the loss of these assets, along with a longer-lasting impact on your credit score.

With a consumer proposal, creditors agree to partial repayment over time, while bankruptcy typically results in completely liquidating your financial obligations.

Bankruptcy and Consumer Proposals Are Complex Legal Processes — We’re Here to Help

We understand that navigating debt solutions like bankruptcy or a consumer proposal involves legal, financial, and
procedural complexities that can feel overwhelming. Each situation is unique, and understanding your
rights, responsibilities, and options is essential. That’s why speaking with a Licensed Insolvency Trustee
(LIT) is your best first step. Book your free consultation now

A consumer proposal is an innovative and effective way for Canadians to tackle their financial challenges. Before starting the process, it is essential to understand which debts qualify for inclusion in the proposal. Below, we answer common questions about the types of debts that can be included in a consumer proposal and those that cannot.

Types of debts included in a consumer proposal

A consumer proposal for debt primarily addresses unsecured debts, meaning these debts are not tied to collateral, such as a home or car. Examples include:

Credit Card Debts
Struggling with unpaid credit card balances? A consumer proposal allows you to settle these debts affordably.

Lines of Credit and Personal Loans
If you owe money on unsecured lines of credit or personal loans, these can be included in your proposal.

Payday Loans
Short-term payday loans with high interest rates are also eligible.

Tax Debts
Unsecured tax debts owed to the CRA, like personal tax, GST, and CERB, can be included. This makes a consumer proposal option particularly beneficial for individuals with outstanding government obligations.

Rent Arrears
Are you behind on rent payments? Have you been served with an eviction notice? Arrears rent is considered an unsecured debt in a consumer proposal, and the Stay of Proceedings can stop an eviction and a landlord-tenant tribunal.

Student Loans
Student loans are a complicated issue and can be understood by speaking with an LIT. Generally, you need to be out of school for 7 years to have student loans discharged completely in a bankruptcy or proposal. If less than 7 years, the student loans would still be included in the proposal, but the balance would be owed once proposal payments are complete.

Talk with our expert Licensed Insolvency Trustees – Get Clarity and Real Answers

Every financial situation is unique. When you speak with us, you’re not getting a generic solution — you’re getting expert guidance tailored to your specific needs.

We’ll take the time to understand your full financial picture and clearly explain your options — whether it’s a Consumer Proposal, Bankruptcy, or another debt relief solution. No pressure, no judgment — just honest, professional advice you can trust.

What You Can Expect:

A clear explanation of your debt relief options
Answers to your specific questions — no jargon, no confusion
Support from a federally regulated professional who’s here to help
A conversation that’s 100% confidential and commitment-free
Book your free consultation now

Firstly, lets understand the difference in credit score impact between bankruptcy, a consumer proposal, and a debt
management program.

Each debt solution affects your credit differently, but all involve some short-term impact. Here’s a
breakdown:

Bankruptcy: Your credit report shows an R9 rating, the most serious level. This remains on your credit
report for 6 years after discharge (or longer for a second bankruptcy). Your credit score will drop
significantly but can be rebuilt over time.

Consumer Proposal: Starts as an R9 rating while active. Once completed, it is updated to an R7 rating.
It remains on your credit report for 3 years after completion.

Debt Management Program (DMP): Like a consumer proposal, a DMP is reported as an **R9 rating**
while in progress, and then updated to **R7** upon completion. It stays on your credit report for 2
years after you finish the program.

What do “R7” and “R9” mean on a credit report?
R9: This is the lowest credit rating and indicates a serious credit issue such as bankruptcy, a default, or
an active consumer proposal or DMP.
R7: This rating means you have made an alternative arrangement to repay your debt, such as through a
consumer proposal or credit counselling program.

How long does each option stay on my credit report?

Report Option | Initial Rating | Updated Rating after Completion | Removed from Credit Report |

Bankruptcy: R9 Initial Rating | R9 Completion Rating | Removed 6 years after Discharge

Consumer Proposal: R9 Initial Rating | R7 Completion Rating | Removed 3 years after completion or 6 from filing

Debt Management Program: R9 Initial Rating | R7 After Completion | Removed 2 years after completion

Which option is best for my credit?

There’s no one-size-fits-all answer. While debt management programs may disappear from your credit report
faster, consumer proposals offer legal protection from creditors and often a lower monthly payment. Bankruptcy is best for those with unmanageable debt or no ability to repay. Our Licensed Insolvency Trustees can explain your options clearly and help you choose the right path.

Need Help Deciding?
You’re not alone if you’re worried about how your debt affects your credit. We’re here to provide trusted, judgment-free guidance. Speak with a Licensed Insolvency Trustee today and get a plan tailored to your needs.

Book your free consultation now

A consumer proposal is one of the most effective and affordable debt relief solutions available in
Canada. It allows you to settle your unsecured debts for less than the full amount owing while
avoiding bankruptcy.
Below, we answer some of the most common questions about consumer proposal eligibility, the
qualification requirements, and how the process works.
Who Can File a Consumer Proposal?
To qualify for a consumer proposal, you must meet the following requirements:
•You are an individual who is unable to repay your debts as they become due.
•Your total unsecured debts do not exceed $250,000 (excluding any mortgage on your
principal residence).
•You have sufficient income to make the proposed monthly payments.
•You have not previously had a consumer proposal annulled and remain in default.
A consumer proposal provides creditors with a reasonable repayment of a portion of the debt
while allowing you to repay what you can realistically afford over a period of up to five years.
Our Licensed Insolvency Trustees will review your financial circumstances and determine
whether a consumer proposal is the right solution for your situation.
Do I Need a Minimum Income to Qualify?
There is no specific minimum income requirement to file a consumer proposal.
However, you must have enough income to make regular payments under the proposal. During
your consultation, we will review your income, expenses, assets, and overall financial situation
to determine an affordable payment amount.
One of the key advantages of a consumer proposal is that the repayment terms are customized to
fit your budget, making it a practical and manageable debt solution for many Canadians.
How Is Eligibility Determined?
The consumer proposal process begins with a free consultation with a Licensed Insolvency
Trustee.
During this meeting, we will:
•Review your debts, income, expenses, and assets.
•Assess your overall financial situation.
•Explain all available debt relief options, including a consumer proposal and bankruptcy.
•Recommend the solution that best meets your needs and financial goals.
•Develop a realistic repayment proposal for your creditors if a consumer proposal is
appropriate.

Every financial situation is unique, and professional advice is essential to ensure you choose the
right path forward.
Consumer Proposals and Bankruptcy Are Legal Processes
— We’re Here to Help
Debt problems can feel overwhelming, but you do not have to face them alone.
Consumer proposals and bankruptcies are federally regulated legal processes with important
rights, obligations, and deadlines. Understanding your options is the first step toward regaining
financial stability.
Our experienced Licensed Insolvency Trustees will explain your options clearly, answer your
questions, and help you find the best solution for your circumstances.
Book your free, confidential consultation today and take the first step toward becoming
debt-free.

A consumer proposal primarily deals with unsecured debts, meaning debts that are not secured
against assets such as a home or vehicle.
Credit Card Debt
If you are struggling with credit card balances, a consumer proposal can significantly reduce the
amount you are required to repay while eliminating future interest charges.
Lines of Credit and Personal Loans
Unsecured lines of credit and personal loans can be included in a consumer proposal, allowing
you to consolidate these debts into one affordable monthly payment.
Payday Loans
High-interest payday loans are fully eligible for inclusion and can be settled through a consumer
proposal.
Tax Debt
Many people are surprised to learn that unsecured debts owed to the Canada Revenue Agency
(CRA), including personal income tax, GST/HST obligations, and CERB overpayments, can be
included in a consumer proposal. This can provide significant relief for individuals facing
government debt.
Rent Arrears
If you have fallen behind on rent payments, rent arrears can be included in a consumer proposal.
In many cases, the filing of a consumer proposal triggers a Stay of Proceedings, which may
temporarily stop collection efforts and provide protection while your proposal is being
considered.
Student Loans
Student loans require special consideration. Generally, government student loans are only
discharged through a consumer proposal or bankruptcy if you have been out of school for at least
seven years.
If you have been out of school for less than seven years:
•The student loan debt can still be included in the consumer proposal.
•Collection activity may stop while the proposal is active.
•However, any remaining student loan balance will generally survive the proposal and
remain payable once the proposal is completed.
Because student loan rules can be complex, it is important to speak with a Licensed Insolvency
Trustee to understand how they apply to your specific situation.

Get Clarity and Real Answers from a Licensed Insolvency Trustee

Every financial situation is unique. When you meet with one of our Licensed Insolvency
Trustees, you will receive personalized advice based on your specific circumstances—not a one-
size-fits-all solution.
We will carefully review your financial situation and explain all available options, including a
Consumer Proposal, Bankruptcy, or other debt relief solutions. Our goal is to help you make an
informed decision with confidence.
What You Can Expect:
•A clear explanation of all available debt relief options
•Straightforward answers to your questions—without confusing jargon
•Guidance from a federally regulated professional
•A confidential, no-obligation consultation
•Compassionate, judgment-free support throughout the process
Book your free consultation today and take the first step toward financial freedom.

A consumer proposal is a legally binding agreement between you and your unsecured creditors
that is administered by a Licensed Insolvency Trustee (LIT). It allows you to settle your debts by
repaying a portion of what you owe through affordable, interest-free payments.
Step 1: Meet with a Licensed Insolvency Trustee
The process begins with a free consultation with one of our Licensed Insolvency Trustees. We
will review your financial situation, including your income, expenses, assets, and debts, and
explain all available debt relief options.
Step 2: Develop a Customized Proposal
If a consumer proposal is the right solution, we will work with you to prepare a proposal that
reflects what you can realistically afford to repay. The objective is to offer creditors a fair
settlement while ensuring the payments fit comfortably within your budget.
Step 3: File the Proposal and Obtain Immediate Protection
Once the proposal is filed, a legal stay of proceedings takes effect immediately. This means
creditors must stop collection activity, including:
•Collection calls and letters
•Wage garnishments
•Lawsuits and legal actions
•Bank account seizures
•Other enforcement proceedings
Interest on your unsecured debts also stops accumulating.
Step 4: Creditor Review and Approval
Your creditors have the opportunity to review and vote on the proposal. If creditors representing
the majority in dollar value of the proven claims vote in favour, the proposal is accepted and
becomes legally binding on all unsecured creditors following deemed court approval.
Step 5: Make Your Payments
You will make one affordable monthly payment to the Trustee, who will distribute the funds to
your creditors in accordance with the terms of the proposal.
Step 6: Complete the Proposal and Eliminate Your Debt
Once you have completed all required payments and obligations, you will receive a Certificate of
Full Performance. Any remaining eligible debt included in the proposal is legally forgiven,
allowing you to move forward debt-free.

Benefits of a Consumer Proposal

Significant Debt Reduction
A consumer proposal allows you to repay only a portion of your debt. The remaining balance is
legally forgiven upon successful completion of the proposal.
For example, instead of repaying $40,000 in unsecured debt, you may be able to settle the debt
for $15,000 through payments of $250 per month over 60 months.
Protection from Creditors
As soon as the proposal is filed, creditors must stop collection efforts. This includes collection
agencies, legal proceedings, wage garnishments, and other enforcement actions.
Protection from CRA Collections
The legal protection provided by a consumer proposal also applies to the Canada Revenue
Agency (CRA). Filing a proposal can stop:
•CRA collection calls
•Wage garnishments
•Bank account freezes and seizures
•Tax refund set-offs
•Other CRA enforcement measures
Keep Your Assets
Unlike bankruptcy, a consumer proposal allows you to retain your assets. Your home, vehicle,
RRSPs, investments, and personal belongings remain yours, provided you comply with the terms
of the proposal.
Affordable, Interest-Free Payments
Consumer proposal payments are fixed, predictable, and interest-free. Payments can be spread
over a period of up to five years, making it easier to manage your finances and plan for the
future.
Opportunity to Rebuild Your Financial Health
Although a consumer proposal affects your credit rating, it is generally considered less severe
than bankruptcy. Many individuals begin rebuilding their credit while still completing their
proposal through responsible financial management and the use of new credit products.

A consumer proposal is reported on your credit file and will impact your credit rating.
During the proposal, your debts are typically reported with an R9 rating. Upon successful
completion, the proposal is reported as an R7 and generally remains on your credit report for
three years after completion or six years from the filing date, whichever occurs first.
While your credit rating is affected, a consumer proposal provides a structured opportunity to
eliminate debt and begin rebuilding your credit profile sooner than many people expect.

Bankruptcy and Consumer Proposals Are Legal Processes
— We’re Here to Help
Understanding your debt relief options can be overwhelming. Consumer proposals and
bankruptcies involve important legal, financial, and procedural considerations, and every
situation is unique.
A Licensed Insolvency Trustee is the only professional authorized by the Government of Canada
to administer consumer proposals and bankruptcies. We will explain your options, answer your
questions, and help you determine the solution that best fits your circumstances.
Contact The Oakman Group Inc. today for a free, confidential consultation and take the
first step toward financial freedom.

One of the most common concerns people have when considering debt relief is how it will affect
their credit score. To understand the impact, it’s helpful to compare the three most common debt
solutions: bankruptcy, a consumer proposal, and a debt management program (DMP).
Each option affects your credit rating differently, but all can provide a path toward financial
recovery and rebuilding your credit over time.
Credit Score Impact: Bankruptcy vs. Consumer Proposal vs.
Debt Management Program
Bankruptcy
A bankruptcy is reported as an R9 rating, which is the most severe credit rating available. This
rating remains on your credit report for six years after your discharge for a first bankruptcy
(and longer for a second bankruptcy).
While bankruptcy will significantly affect your credit score, many people begin rebuilding their
credit shortly after discharge through responsible borrowing and repayment habits.
Consumer Proposal
A consumer proposal is initially reported as an R9 rating while the proposal is active. Once you
successfully complete the proposal, the rating is updated to R7, indicating that you have settled
your debts through a formal repayment arrangement.
A consumer proposal remains on your credit report for three years after completion..
Debt Management Program (DMP)
A debt management program through a credit counselling agency is generally reported as an R7
rating, as it represents a special repayment arrangement with your creditors.
A completed DMP typically remains on your credit report for two years after completion.

R9 Rating
An R9 rating indicates a serious credit issue, such as:
•Bankruptcy
•Debt written off by a creditor
•Accounts sent to collections
•Certain insolvency proceedings
This is the lowest credit rating available.
R7 Rating
An R7 rating indicates that you have entered into a special arrangement to repay your debts,
including:

•A completed consumer proposal
•A debt management program through a credit counselling agency
An R7 rating is generally viewed more favourably than an R9 rating because it demonstrates that
a repayment arrangement was completed.

Debt Solution
Initial
Rating
Rating After
Completion
Removed From Credit Report
Bankruptcy
R9
R9
6 years after discharge (first
bankruptcy)
Consumer Proposal
R9
R7
3 years after completion
Debt Management
Program
R7
R7
2 years after completion

There is no one-size-fits-all answer.
While a debt management program may disappear from your credit report sooner, it typically
requires repayment of 100% of your debt and does not provide the same legal protection
available through a consumer proposal.
A consumer proposal often allows you to:
•Reduce the amount you must repay
•Stop interest charges
•Eliminate collection calls
•Stop wage garnishments and legal actions
•Keep your assets
Bankruptcy may be the best solution when debt has become unmanageable and there is no
realistic ability to repay creditors.
The most important factor is choosing the solution that allows you to regain financial stability
and move forward with confidence.

Need Help Deciding?

If you’re concerned about how debt relief will affect your credit, you’re not alone. Our Licensed
Insolvency Trustees will explain all of your options, answer your questions, and help you choose
the solution that best fits your financial situation.

Contact The Oakman Group today for a free, confidential consultation and take the first
step toward becoming debt-free.