When you feel overwhelmed by debt, bankruptcy sometimes seems like the only option. Yet, there is a gentler, more flexible, and often better-suited solution: the consumer proposal. Framed by law and administered by a Licensed Insolvency Trustee, this process allows you to reduce your debt, lower your payments, and keep your assets — all while avoiding bankruptcy.
What is a consumer proposal?
A consumer proposal is a legal agreement between you and your creditors.
It allows you to repay part of your debt based on your actual ability to pay, interest-free, over a maximum period of five years.
In exchange, your creditors agree to:
Suspend interest and penalties.
Stop all legal action and garnishments.
Give you breathing room financially, while allowing you to keep your assets.
This is a solution governed by the Bankruptcy and Insolvency Act, administered solely by a Licensed Insolvency Trustee recognized by the Government of Canada.
Who can make a consumer proposal?
This option is for anyone who:
Has unsecured debts (credit cards, personal loans, lines of credit, tax debt) of less than $250,000, excluding the mortgage on their primary residence.
Has a stable source of income.
Wishes to avoid bankruptcy while obtaining a significant debt reduction.
In other words, if you have a job or a regular income, and your payments are becoming too burdensome, a proposal is often the best legal solution.
How does the process work?
The process is simple and fast — here are the main steps:
1. Free consultation with a trustee
The trustee assesses your situation, calculates your debt, and determines the best strategy based on your income and assets.
2. Drafting and filing the proposal
Your trustee prepares the file and submits it to the Office of the Superintendent of Bankruptcy (OSB).
From that moment on, calls, seizures, and legal actions stop immediately.
3. Creditors' vote
Your creditors have 45 days to accept or reject the proposal.
In more than 95% of cases, they accept because they recover more than they would if you went bankrupt.
4. Monthly payments
Once the proposal is accepted, you make a single monthly payment, tailored to your financial capacity, for a period of 3 to 5 years.
5. Financial discharge
At the end of the plan, your debts included in the proposal are officially erased.
You start fresh, with a credit score that rebuilds over time.
What are the benefits?
The consumer proposal offers several tangible benefits:
You keep your assets (home, car, RRSPs).
No interest is added during the term of the plan.
Immediate legal protection against calls and garnishments.
Reduced payments, often 30 to 70% lower than the original total.
No mention of bankruptcy on your record.
Professional guidance by a Licensed Insolvency Trustee.
It is a solution that combines rigor and empathy, allowing thousands of Quebecers each year to regain peace of mind.
Consumer proposal vs. bankruptcy: what is the difference?
Consumer Proposal | Personal Bankruptcy | |
|---|---|---|
Assets | You keep your assets. | Certain assets may be seized. |
Duration | 3 to 5 years. | 9 to 21 months depending on the situation. |
Debt repaid | Partial, based on your ability. | Most debts are discharged. |
Credit | R7 (reputational rating). | R9 (complete bankruptcy). |
Cost | Fixed payments, interest-free. | Payments based on your income. |
Psychological effect | You pay a portion — sense of responsibility. | Fresh start, but emotionally heavier. |
In summary: the consumer proposal is an intermediary solution — less radical than bankruptcy, but just as effective in freeing yourself from debt.
Is it the right solution for you?
Every case is unique.
The choice depends on your income, your debt, and your personal goals.
A Licensed Insolvency Trustee can help you compare scenarios based on your situation.
Sometimes a simple debt consolidation is enough, but if your monthly payments exceed what you can reasonably afford, a proposal becomes the best alternative.
At N. Séguin Inc., we take the time to analyze every file with empathy, clarity, and professionalism.
Our priority is to help you regain your stability, without judgment.
And after the proposal?
Once your proposal is completed, you can begin to rebuild your credit.
Here are some good habits to adopt:
Pay all your bills on time.
Use a secured credit card wisely.
Save a small amount each month.
Monitor your credit report regularly.
With these simple steps, your credit score will begin to improve code within the first year after your discharge.
📞 Get a free consultation
Do you think a consumer proposal could be right for you?
Our Licensed Insolvency Trustees are here to listen to you, evaluate your situation, and propose the best solution to regain your financial freedom.
👉 Contact us today for a confidential, free, and no-obligation consultation.
