Consumer Proposal
Quick Definition
A legal alternative to bankruptcy where you offer to repay a portion of your debts.
Full Explanation
A consumer proposal is a formal legal agreement, administered by a Licensed Insolvency Trustee (LIT), where you offer to pay back a portion of what you owe to unsecured creditors over up to 5 years. It is an alternative to bankruptcy that allows you to keep your assets. To qualify, unsecured debts must be $250,000 or less (excluding mortgage). Creditors vote on the proposal; if creditors representing more than 50% of the debt by value accept, all creditors are bound. Payments are fixed and interest-free. A consumer proposal remains on your credit report for 3 years after completion.
Related Terms
Bankruptcy
A legal process for individuals unable to repay debts, offering a fresh financial start.
Debt Consolidation
Combining multiple debts into a single loan, typically at a lower interest rate.
Credit Score
A 3-digit number (300–900) indicating your creditworthiness to lenders.
Insolvency
The state of being unable to pay debts as they become due.
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