Consumer Proposal in Kitchener, Ontario

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Selecting the Right Debt Solutions Professional in Kitchener, Ontario

Debt is one of the most significant struggles for Canadians. Whether caused by losing your job, an unforeseen emergency or an economic downturn, debt can put an immense strain on your life and may feel like a downward spiral you can’t escape. Amidst choices like debt consolidation, which requires repayment of the total debt amount, and bankruptcy, which may jeopardize assets you would typically retain, a Kitchener consumer proposal is an appealing option to address your financial obligations.



What is a Consumer Proposal?

The Consumer Proposal is a federally regulated, legally binding process overseen by the Office of the Superintendent of Bankruptcy. It is an attractive alternative to declaring personal bankruptcy and, just like bankruptcy, is exclusively administered by a Licensed Insolvency Trustee (LIT). One of the most significant benefits of a consumer proposal is that you can reduce the debt you must repay by up to 80%.

The process begins with a Licensed Insolvency Trustee evaluating your financial situation by reviewing your debts, income and assets to determine if a consumer proposal is the best solution. They will calculate a monthly payment you can afford if they determine it is. They will then submit the proposal to your unsecured creditors for approval, and once this is received, it will become legally binding. As soon as the proposal is submitted, all legal actions against you, such as wage garnishments or collection calls, will end. A consumer proposal’s maximum repayment period is five years, but you can pay it off at any time before that. 

Beyond the considerable debt reduction, a Consumer Proposal can result in reduced monthly payments, cessation of interest charges, and the consolidation of unsecured debts into a singular monthly payment.

What Debts are Covered in a Consumer Proposal?

A consumer proposal encompasses most unsecured debts, which means that any debt secured by an asset, such as a mortgage or car loan, cannot be included in a consumer proposal in Kitchener. Typically, the following can be included in a consumer proposal:

  • Credit card debt
  • Personal loans, including lines of credit, consolidation, or renovation loans, provided no assets secure the debt.
  • Payday loans
  • Student loans, if you stopped to be a student at least seven years ago
  • Income tax debt, encompassing amounts owed for personal income tax (including penalties and interest), GST debts, Canada Child Benefits overpayments, CPP, and OAS overpayments.


Is a Consumer Proposal Right for Me?

  • A consumer proposal might be a suitable option if:
  • Your debt is less than $250,000, excluding your principal residence’s mortgage.
  • You are insolvent, meaning you cannot meet your monthly obligations.
  • You seek relief from wage garnishments, collection calls, and accruing interest.
  • You aim to retain assets that may not be safeguarded in bankruptcy.

Alternatives to Consumer Proposal

There are other debt relief options, so you must take the time to evaluate all possible solutions thoroughly. An LIT can help you determine the best situation for you.


A Licensed Insolvency Trustee also oversees bankruptcy and involves assigning a trustee to manage your case. This trustee takes control of your assets (with exceptions), oversees your affairs, and supervises your bankruptcy obligations, including mandatory credit counselling sessions and monthly income and expense reporting. Upon fulfilling these duties, you attain debt discharge after either 9 or 21 months.

Debt Management Plan (DMP)

In a DMP, a credit counsellor assesses your debts and creates a multi-year repayment plan spanning three to five years. The proposed plan is presented to your creditors, and if they accept, you make a single monthly payment to the credit counselling agency. The credit counsellor may negotiate a reduced interest on your debt, redirecting the savings toward debt repayment. Participation in a DMP is voluntary for your creditors, so it is possible you can’t unite all creditors under one plan.

It’s crucial to note that a DMP does not involve debt reduction or cancellation; you must still settle your entire debt. Importantly, this distinction sets it apart from a consumer proposal.

Consolidation Loan

A debt consolidation loan combines multiple small loans or debts into a new single loan. This service achieves various goals, such as paying off smaller debts or consolidating higher-interest debts into a single payment with a lower interest rate spread over an extended period.

However, it is essential to understand that this approach does not eliminate your debt but makes it more manageable. Moreover, eligibility for a consolidation loan requires an application and qualification process.

Ask us about bankruptcy options

See What Your Debt Repayments Might Look Like

Our debt calculator provides a comparison of what your monthly debt repayment might look like under different debt relief options including a debt consolidation loan, debt management plan and consumer proposal



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