Consumer Proposal in Pickering, Ontario

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Selecting the Right Debt Solutions Professional in Pickering, Ontario

Debt is a mounting problem that many Canadians struggle with, often not due to their fault. If you feel the burden has become too heavy, there are options. There is debt consolidation, which requires you to repay the total amount of your debt, or bankruptcy, where you may have to surrender assets you would typically keep. There is the consumer proposal, which is an appealing option to address your financial obligations.



What is a Consumer Proposal?

A consumer proposal is a legally binding agreement between you and your creditors to repay a percentage of what you owe in exchange for complete debt forgiveness. A consumer proposal is a proceeding under the Bankruptcy and Insolvency Act administered by a Licensed Insolvency Trustee. If you struggle with monthly debt payments, a consumer proposal plan relieves debt while avoiding bankruptcy.

A Consumer Proposal is a legally binding agreement between you and your creditors, federally regulated and overseen by the Office of the Superintendent of Bankruptcy. It provides an alternative to declaring personal bankruptcy and is exclusively administered by a Licensed Insolvency Trustee (LIT) under the Bankruptcy and Insolvency Act. In the consumer proposal, you agree to repay a percentage of what you owe to your creditors in exchange for complete debt forgiveness, allowing you to alleviate unsecured debt by up to 80%.

In your meeting, the LIT will thoroughly review your financial situation and determine if a consumer proposal is the best option. They will calculate the monthly payment you can afford and present the proposal to your unsecured creditors. If they accept the proposal, it will make the agreement legally binding. While the Consumer Proposal allows a maximum repayment period of five years, you retain the flexibility to settle it earlier. Another benefit is that it will immediately stop all legal actions against you, including wage garnishments or intrusive calls from collection agencies.

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

What Debts are Covered in a Consumer Proposal?

A consumer proposal includes most unsecured debts, which include various debt types not secured by assets like a house or car, so you cannot include a mortgage or car loan. 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 ceased 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 alternatives to a consumer proposal, so it is critical to explore all possible solutions to ensure you find the best solution. A Licensed Insolvency Trustee can advise you on the benefits and drawbacks of the different available options.


Bankruptcy is a legal process also overseen by a Licensed Insolvency Trustee. It is designed to help debtors who can no longer afford to repay their debts to find debt relief. Debtors assign the rights to non-exempt assets to help pay for part of the debt in exchange for a legal discharge from unsecured debts included in the bankruptcy. Bankruptcy duties include credit counselling sessions and monthly income and expense reporting. Your debt will be discharged after either 9 or 21 months after fulfilling these duties.

Debt Management Plan (DMP)

In a DMP, a credit counselling agency will assess your debts and create a multi-year repayment plan that can last anywhere from three to five years. The proposed plan is then presented to your creditors, and if they accept, you make a single monthly payment to the credit counselling agency. The credit counsellor might be able to negotiate a reduced interest on your debt so you can redirect the savings toward debt repayment.

It’s crucial to note that a DMP does not involve debt reduction or cancellation; you must still settle your entire debt. It is also voluntary, so your creditors are not bound to participate and can cancel their participation at any time. These distinctions set 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 process you might not qualify for if your credit has been negatively impacted.

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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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