Consumer Proposal Resource Centre
You are reading: The one-page comparison, printable.
Guides and tools
THE GUIDES
Written guides, article-length, every consumer proposal question answered one guide at a time. The heart of this site.
What a consumer proposal is Versus bankruptcy, line by line How the payment is calculated The real consequences, fear by fear Your credit: R7, R9, and rebuilding Cancel, get out, or change it Tax refunds and taxes The process, month by month NEW Mortgages: renewing, refinancing, buying NEW The one-page comparison, printable Second and subsequent proposals NEW Self-employed and small business NEW Division 1 proposals NEW Debt and immigration NEW All consumer proposal guides
Enter your balances: see how many years minimum payments really take.
Your consumer proposal payment, worked out on your own figures.
Two different things, always labelled: a tool is something you use; a guide is something you read.
The decision, in one view
Consumer proposal pros and cons
| Pros | Cons |
|---|---|
| stopped interest | a temporary credit notation |
| halted collection | the cards you owe (and possibly even a zero balance credit card) closing |
| a fixed payment | the payment discipline |
| keeping your assets |
Each is walked through, fear by fear, in the real-consequences guide slides open
VERIFY ANY TRUSTEE
The federal registry, searchable here. Check anyone, including me. Open the LIT Checker
insolvencyreport.ca
Consumer proposal versus bankruptcy
The one-page comparison. The full guide, worked line by line, lives at insolvencyreport.ca/consumer-proposals/vs-bankruptcy/
| Consumer proposal | Bankruptcy | |
|---|---|---|
| What it is | A legal offer to your unsecured creditors to repay part of what you owe, over time, filed through a Licensed Insolvency Trustee acting as administrator. | A legal process that hands the property the law does not protect to a Licensed Insolvency Trustee to be sold for your creditors, in exchange for a release from most debts. |
| What happens to your property | Nothing transfers. You keep your assets and keep paying any secured loans (mortgage, car) as normal. | Your property passes to the trustee to be sold for creditors, but the law lets you keep basic things (household goods, work tools, a vehicle up to a limit, most retirement savings); only the unprotected part is sold. |
| Who has to agree | Your creditors, by a majority in dollar value of those who vote, or by silence (explained below). The court then approves. | No creditor vote. The process begins on filing. |
| How long it lasts | Payments run up to five years. Many are shorter. | A first bankruptcy is often discharged in nine to twenty-one months, depending on income. |
| What it costs you | Fixed monthly payments you can afford, set by comparison to the bankruptcy alternative. No interest. Fees are regulated and paid from your payments, not billed on top. | Payments driven by your income (surplus income, below), plus the value of any assets the law does not let you keep. Fees are regulated and paid out of the money collected for creditors. |
| What happens if your income rises during the process | Nothing to your payment. A proposal payment is fixed at the amount you agreed; a raise does not increase it. | A raise can create a surplus-income obligation where there was none, which extends a first bankruptcy from nine months to twenty-one; if you are already paying surplus income, a further raise increases the payment. |
| What happens to a tax refund | You keep it, with one qualifier: the Canada Revenue Agency may hold a refund for a pre-filing tax year against pre-filing tax debt (see the tax page). Otherwise nothing vests in a proposal, so refunds stay yours. | The refund for the whole year you go bankrupt, the part after your filing date included, goes to the estate for your creditors (BIA section 67(1)(c)), as do refunds for earlier years (or they go to the Canada Revenue Agency by set-off). Refunds for years after the year you filed stay yours in the ordinary case. |
| What shows on your credit | Proposal: Accounts in the proposal are commonly reported with an R7 rating. A Consumer Proposal comes off your credit file no later than three years after you complete it, and sooner where the bureau’s six-year outside clock ends first, measured from the filing date at Equifax and from the account’s default date at TransUnion. See the credit guide for the bureau-by-bureau rules. | Affected accounts are commonly reported with an R9 rating. Equifax removes a first bankruptcy six years after your discharge; TransUnion does the same in most provinces but keeps it seven years in Ontario, Quebec, Prince Edward Island and Newfoundland and Labrador. A second bankruptcy remains fourteen years. These are bureau policies, not legal time limits. |
| What your creditors receive | Usually more than a bankruptcy would return, which is the main reason creditors accept. The offer is measured against that benchmark, not against a fixed bar. | Whatever the sale of the assets you cannot keep, plus your required income payments, produces after the regulated fees are taken out. Sometimes that is very little. |
No fees for advice. No referrals for sale. The light is on.
Paul Franchi, JD, MBA, CIRP, LIT—Founder
Speak with Paul: 647-492-9283 (calls go to voicemail and reach me directly).
Mortgage in trouble? The Mortgage Trouble centre sets out the guides for Ontario homeowners whose mortgage has become the problem, in the order to read them.
How to start
If you think a consumer proposal may help, the next step is to meet with a Licensed Insolvency Trustee for an assessment.
There is nothing to prepare to a professional standard first, no perfect set of records, and no fee to walk in the door. You bring what you have and the Trustee builds the picture with you. If your real question is whether this is better for you than the alternative, the answer turns on numbers specific to you, which is what the comparison page and the cost page work through.
Weighing the two paths? A proposal means "Nothing transfers. You keep your assets and keep paying any secured loans (mortgage, car) as normal."
Consumer proposal versus bankruptcy, worked line by line slides open Compare your options on one printable page opens in a new window · print-ready
Owe the Canada Revenue Agency? Tax debt is generally settled in a proposal like any other unsecured debt, and you generally keep your tax refunds. The tax page carries the refund answers, and the CRA guide walks the agency's collection powers step by step.
