Consumer Proposal in Ontario
A Legal Alternative to Bankruptcy
What Is a Consumer Proposal in Ontario?
A consumer proposal is a legal debt solution filed through a Licensed Insolvency Trustee. It can help you reduce debt, stop interest on debts, and make one affordable monthly payment based on what you can afford.
For many people, a consumer proposal is a powerful alternative to bankruptcy. It allows you to make a formal offer to your creditors to settle debts through a manageable repayment plan.
Only a Licensed Insolvency Trustee can file and administer a consumer proposal. At David Sklar & Associates, our team will review your situation, explain your options, and help you understand whether a consumer proposal may be the right fit.
Consumer Proposal Benefits
In this video Richard Sklar, Licensed Insolvency Trustee explains the advantages of a Consumer Proposal.
With the help of a Licensed Insolvency Trustee, you can reach an agreement with your creditors to repay a fraction of the debt you owe.
A consumer proposal is the #1 alternative to personal bankruptcy
Consumer Proposals Are a Leading Debt Relief Choice in Ontario
Consumer proposals are one of the most commonly used legal debt relief options in Ontario. In 2025, Ontario consumers filed 42,694 consumer proposals, making up about 81 percent of all consumer insolvency filings in the province.
Source: Office of the Superintendent of Bankruptcy Canada, Insolvency Statistics in Canada, December 2025.
How a Consumer Proposal Works in 3 Steps
Imagine you owe $100,000 and your debts include the following:
- A line of credit of $50,000
- An old student loan with $20,000 remaining
- Two credit cards hovering around $20,000
- And a payday loan of $10,000
Determine how much debt you can repay
During your first consultation with one of our Licensed Insolvency Trustee (LIT), we’ll determine how much of your total unsecured debt you can repay based on your current financial situation. In this scenario, let’s assume the calculations show you can repay $25,000 while covering your rent, mortgage, and other living expenses.
Present your new payment plan to your creditors
Our Licensed Insolvency Trustee (LIT) will file your $25,000 proposal and present it to creditors. Once accepted, it becomes legally binding. Collection calls stop, lawsuits are blocked, and wage garnishments end.
Why would creditors agree? They’d rather recover part of the debt than risk getting nothing in a bankruptcy. A consumer proposal is often a win-win.
Start paying down your debt
Your $100,000 debt reduced to $25,000. Make one low monthly payment to David Sklar & Associates—no interest, no penalties. We’ll handle payments to your creditors. You’ll have up to 5 years to repay, or you can pay it off anytime with a lump sum to finish early.
Consumer Proposal - Cost, Process, FAQs
A consumer proposal is the most popular alternative to bankruptcy in Ontario. We’ve made it easy to understand how it works, what it costs, and whether it’s the right debt solution for you.
Calculate savings
Consumer Proposal - 0% Interest
Debt Consolidation Loan - 30% Interest
Do Nothing - 19% Interest
* Calculations above are made over a 5 year period at a rate of 80% savings. This calculator provides an estimate of the total savings you may receive when filing a consumer proposal. Actual results may vary. Your payments will depend on your income, assets, and debts.
8 Advantages of a Consumer Proposal in Ontario
- You can avoid filing for bankruptcy
- Your debt can be reduced by up to 70-80%
- Make just one affordable monthly payment
- Interest charges stop as soon as you file
- Keep belongings, including car & home equity
- Collection calls & lawsuits are stopped
- Wage garnishments are stopped
- Agreement is legally binding for all creditors
Do You Qualify for a Consumer Proposal?
Here are the requirements to file a consumer proposal in Ontario:
- You must be at least 18 years old
- You must be a Canadian citizen or a property owner in Canada
- Unsecured debt must not exceed $250k
- You must be insolvent, meaning you can't pay your debts when they’re due
- You must have the ability to repay a portion of your outstanding debts
- You must have completed any previous consumer proposals you’ve filed
Debts that we can help you with
Whatever your situation, we’re committed to helping you get out of debt with your best interest in mind.
Consumer Proposal vs Bankruptcy - Side by Side
Consumer proposals and bankruptcy both eliminate debt and stop creditor action but they’re not the same. With a consumer proposal, you keep your assets. In bankruptcy, you may have to give up some belongings to repay creditors.
View Comparison
Consumer Proposal
Personal Bankruptcy
Debt under $250,000 (excluding mortgage)
No limit to size of debt
Available to individuals
Available to individuals or companies
You keep your assets (home, car & investments)
Surrender your assets (exemptions)
Keep your tax refund
Tax refunds go to creditors
Payments are structured based on what you can afford
Payments are based on household income and value of assets
The payment is flexible. Pay everything as lump sum or stretch over 5 years
The payment is NOT flexible.
Typically 9–21 months (longer for repeat filings)
Consumer Proposal Eligibility
Is a Consumer Proposal Right for You?
A consumer proposal can be a powerful option for people who want to reduce unsecured debt, avoid bankruptcy, and make one affordable monthly payment. It is not the right fit for everyone, so the best first step is to understand where it may help.
A Consumer Proposal May Be Right for You If:
You have steady income
You owe more than $5,000 in debt
You owe less than $250,000, excluding the mortgage on your principal residence
You want to avoid bankruptcy
You want to keep your assets
You cannot qualify for a low rate consolidation loan
A Consumer Proposal May Not Be Right for You If:
You cannot afford a monthly payment
Most of your debt is secured
You owe more than $250,000, excluding the mortgage on your principal residence
You can repay your debts through a lower cost option
You do not have steady income
Bankruptcy may provide a faster or more affordable path
Every situation is different. Our Licensed Insolvency Trustee team can review your debts, income, assets, and goals, then explain whether a consumer proposal may be the right option.
Book a FREE CallFrequently Asked Questions About
Consumer Proposals
What is a consumer proposal in Canada?
A consumer proposal is a legal debt solution filed through a Licensed Insolvency Trustee. It allows you to make a formal offer to your creditors to repay a portion of your included unsecured debt through one affordable monthly payment, usually over a period of up to 5 years.
How much debt can a consumer proposal reduce?
A consumer proposal may reduce a significant portion of your unsecured debt. In some cases, it may be possible to reduce unsecured debt by up to 80 percent. The amount depends on your income, assets, debts, budget, and what your creditors are willing to accept.
Who qualifies for a consumer proposal in Ontario?
A consumer proposal may be an option if you are insolvent, have unsecured debt you cannot fully repay, and can afford to make a monthly payment toward a settlement with your creditors. Consumer proposals are available to individuals who owe less than $250,000, not including the mortgage on their principal residence.
How long does a consumer proposal last?
A consumer proposal can last up to 5 years. You can also pay it off early with no penalty, which may help you complete the process sooner and start rebuilding faster.
Will a consumer proposal stop creditor calls and wage garnishments?
Yes. Once a consumer proposal is filed through a Licensed Insolvency Trustee, a stay of proceedings takes effect. This can stop most collection calls, wage garnishments, and legal action from unsecured creditors included in the proposal.
Can I keep my house and car in a consumer proposal?
Yes, you can keep your assets in a consumer proposal, including your home and vehicle, as long as you continue making any required secured loan payments. Your Licensed Insolvency Trustee will review your assets, equity, and secured debts before explaining how a proposal may apply to your situation.
How does a consumer proposal affect my credit score?
A consumer proposal will appear on your credit report and can affect your credit rating while the proposal is active and for a period after it is completed. In many cases, debts included in a consumer proposal are reported with an R7 rating, which shows that the debt is being repaid through a formal arrangement.
A consumer proposal usually stays on your credit report for up to 3 years after completion, or up to 6 years from the date it was filed, whichever comes first. Credit reporting can vary between Equifax and TransUnion, so it is important to review both credit reports for accuracy.
While a consumer proposal does affect credit, many people see it as a step toward rebuilding. It can stop interest on included debts, help you get out of the debt cycle, and give you a clearer path to improving your credit over time.
Is a consumer proposal better than bankruptcy?
It depends on your situation. A consumer proposal may be a better fit if you have steady income, want to avoid bankruptcy, and can afford to repay part of what you owe. Bankruptcy may be more suitable in some situations. A Licensed Insolvency Trustee can explain both options and help you understand what may work best for you.
What debts can be included in a consumer proposal?
A consumer proposal can include many unsecured debts, such as credit cards, personal loans, payday loans, lines of credit, income tax debt, and some student loans. Secured debts, such as a mortgage or car loan, are usually handled separately.
How do I get started with a consumer proposal?
The first step is to speak with a Licensed Insolvency Trustee. At David Sklar & Associates, our team can review your debts, income, assets, and goals, then explain whether a consumer proposal may be the right option for you.
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