--- title: Why are consumer proposals becoming the more attractive option for debt relief? date: 2018-03-12T17:33:33-04:00 author: Freida M. Richer canonical_url: "https://grantthorntonlimited.ca/en/debt-help-resources/articles/why-are-consumer-proposals-becoming-the-more-attractive-option-for-debt-relief" section: Articles --- [ Back to the hub ](https://grantthorntonlimited.ca/en/debt-help-resources/articles) # Why are consumer proposals becoming the more attractive option for debt relief? Freida M. Richer CIRP, Licensed Insolvency Trustee ![Man seated at a desk contemplating filing a consumer proposal](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/Web-image-square/_articleHero/6614/why-consumer-proposals-are-becoming-the-more-attractive-option-in-canada.webp) Freida M. Richer CIRP, Licensed Insolvency Trustee [](https://gtdebtsolutions.com/wp-content/uploads/2018/03/BlostPost-The-Other-Option-Consumer-Proposals.jpg)According to the [Office of the Superintendent of Bankruptcy](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/statistics-and-research/insolvency-statistics-canada-2022) (OSB), 103,586 Canadians filed an insolvency proceeding in 2022; however, 75% were able to avoid bankruptcy. A [consumer proposal](https://grantthorntonlimited.ca/en/consumer-proposal/what-is-a-consumer-proposal) is an attractive alternative to bankruptcy to resolve debt for many reasons. In this article, we explore why this might be a viable option to get you back on track. ## What’s a consumer proposal? A consumer proposal is an offer to your creditors to repay a portion of the debt you owe. Once accepted, consumer proposals can provide fixed and lower payments. This means that you could make a single, interest-free payment each month that’s based on what you can afford. A reduced monthly payment, spread out over a maximum of five years, allows you to keep your assets, stay consistent, and find financial freedom. Many see their debt reduced by up to 80%. ## What makes consumer proposals an attractive option? There are many benefits of filing a consumer proposal. Here are just a few: - **You’re in control of your assets.** You don’t need to worry about losing your home, car, RRSP, or valuables, as your property is protected with certain exceptions. This means you can continue to make mortgage and vehicle payments during a consumer proposal. - **You will pay back less than you owe.** You will repay a percentage of what you owe your creditors, resulting in a fixed, interest-free monthly payment. - **You can escape challenging debt.** Depending on your unique situation, you can include debt from credit cards, lines of credit, payday loans, personal loans, income taxes, student loans, and more. - **You can silence debt collectors.** [Collection calls](https://grantthorntonlimited.ca/en/debt-help-resources/articles/stop-collection-calls-for-good) and [wage garnishments](https://grantthorntonlimited.ca/en/debt-help-resources/articles/wage-garnishment-how-it-works-and-what-you-can-do) from creditors will immediately stop upon filing a consumer proposal. - **Your credit score is less impacted.** There’s less of an[ impact on your credit rating](https://grantthorntonlimited.ca/en/debt-help-resources/articles/how-to-read-your-credit-report) which will sit at an R7 instead of an R9 (bankruptcy). You can also continue to act as a director of an incorporated business. - **You can avoid bankruptcy.** Consumer proposals are viewed more favourably, allowing you to avoid the social and emotional stigma of filing bankruptcy. - **You can become debt free.** Once you’ve made all your monthly payments in your consumer proposal, you’ll receive a certificate that officially releases you from your debt. ## How are creditors involved? A consumer proposal is a creditor driven process in that your creditors will vote on whether to accept or reject your repayment offer. Acceptance of your offer will be legally binding and, upon completing the terms of your proposal, creditors agree to write off the remaining balance that you owe. For example, if creditors accept your offer to pay back 40% of your debt over 5 years, they’ll write-off the remaining 60% once you complete the requirements and terms of the proposal. The motivation for creditors to accept your offer is that they typically receive a higher return over what they would get if you went bankrupt. A consumer proposal is a formal arrangement that can only be facilitated by a Licensed Insolvency Trustee (LIT). Your LIT will work on your behalf to make an offer to your creditors to either modify your payments or to repay only a percentage of what you owe. [Learn more about what happens when you meet with a Licensed Insolvency Trustee.](https://grantthorntonlimited.ca/en/debt-help-resources/articles/what-happens-when-you-meet-with-a-lit) There is no cost to meet with a LIT and discuss out what a consumer proposal would look like for you. We offer judgment-free, 30-minute consultations to help you find the best path to debt freedom. [Book online](https://grantthorntonlimited.ca/en/get-in-touch/contact-us) or call us today at 1-844-4GT-DEBT to start your path to a brighter financial future. About the Author Freida M. Richer CIRP, Licensed Insolvency Trustee ## Latest articles [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/67684/assets-CP-square.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [What happens to your assets in a consumer proposal? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/65155/recreational-vehicle-square.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [### What happens to an RV, boat, or ATV loan if you file a consumer proposal or bankruptcy in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/63555/influencer-survey.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) [### Influenced into debt: How social media impacts Canadians' finances ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) ## Subscribe to our newsletter Get tips and tools to help manage your finances and live debt free. \*I agree to receive communications from Doane Grant Thornton. I understand that I can unsubscribe at any time. ## **Take the first step** to debt freedom Speak to one of our debt solutions professionals during a free, no-obligation consultation. [ Book a free consultation ](https://grantthorntonlimited.ca/en/get-in-touch/contact-us) ## Related articles ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/67684/assets-CP-square.webp) ### [What happens to your assets in a consumer proposal? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) In most cases, a consumer proposal allows you to keep all of your assets while bankruptcy may require you to surrender certain non-exempt assets. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) ![Marina filled with sailboats and recreational boats along the Charlottetown waterfront on a sunny day.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/65155/recreational-vehicle-square.webp) ### [ What happens to an RV, boat, or ATV loan if you file a consumer proposal or bankruptcy in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) For many Canadians, recreational vehicles offer freedom, adventure, and unforgettable family memories. But if you’ve financed an RV, travel trailer, boat, ATV, snowmobile, or side-by-side, those monthly payments can become difficult to manage if life takes an unexpected turn. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) ![A woman sitting with papers and a calculator in front of her](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/63201/cp-annulment-square.webp) ### [ What happens if you miss a consumer proposal payment? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-miss-a-consumer-proposal-payment) Missing a payment during your consumer proposal can feel scary—but it’s not the end of the road. This article explains exactly what happens if you miss a consumer proposal payment, how to avoid annulment, and what to do if your consumer proposal is annulled. 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[ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-are-the-risks-of-instant-loans-in-canada) ![Photo of parents and adult daughter hugging and smiling.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/53508/family-finance-1.webp) ### [ Family finance: The emotional cost of financially supporting family ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-family-finance-the-emotional-cost-of-financially-supporting-family) With rising costs, increased debt loads, and tighter budgets, many Canadians turn to family for support. But money can also strain relationships, create pressure, and sometimes lead to debt on both sides of the conversation. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-family-finance-the-emotional-cost-of-financially-supporting-family)