Buried in Debt?
You Have Options.

A consumer proposal is a legally binding debt settlement agreement administered by a Licensed Insolvency Trustee (LIT) under the Bankruptcy and Insolvency Act (BIA). It allows you to repay 20-50% of unsecured debt (typically $10,000-$250,000) over up to 5 years with zero interest. Filing triggers an immediate 'stay of proceedings' that stops wage garnishment within 24-48 hours, freezes all collection calls, and protects your assets including your home and car. Creditors vote on acceptance, requiring approval from those holding a majority of your debt value. The average acceptance rate is 87% (Office of the Superintendent of Bankruptcy 2024).

Consumer proposals typically eliminate 60-80% of unsecured debt, with the amount you repay based on what creditors would receive in bankruptcy. For example, if you owe $40,000 in credit cards and lines of credit, you might repay only $8,000-$16,000 over up to 5 years with zero interest. The exact percentage depends on your income, assets, province, and family size. Licensed Insolvency Trustees use official guidelines to calculate your offer. Most proposals are accepted by creditors; the average acceptance rate is 87% (Office of the Superintendent of Bankruptcy 2024). There is no minimum or maximum debt amount—proposals have been filed for amounts from under $10,000 to over $250,000.

Yes. Filing a consumer proposal triggers an automatic 'stay of proceedings' under the Bankruptcy and Insolvency Act, which legally stops wage garnishment within 24-48 hours. This protection is immediate and applies to most unsecured creditors including credit cards, lines of credit, personal loans, and CRA tax debt. Your employer is notified by the Licensed Insolvency Trustee and must stop deducting payments. The stay also stops collection calls, lawsuits, and other enforcement actions. You do not need to wait for creditor approval—protection begins as soon as the proposal is filed. Many LITs can file the same day as your initial consultation.

The statute of limitations on debt in Canada ranges from 2 to 6 years depending on your province. Ontario, British Columbia, Alberta, Saskatchewan, Nova Scotia, New Brunswick, and Prince Edward Island have 2-year limits. Quebec has a 3-year limit. Manitoba, Newfoundland and Labrador, and the territories have 6-year limits. After the limitation period expires, creditors cannot sue you to collect the debt, though they may still contact you and the debt may remain on your credit report for up to 6-7 years. The clock typically starts from the date of your last payment or acknowledgment. If you are unsure, use our free Statute of Limitations calculator to check your province.