Job Loss + Debt Emergency Protocol: Protect Your Severance, File Within 7-14 Days

If you received a layoff notice in the last 14 days or anticipate one within 30 days, filing a consumer proposal within 7 to 14 days of notice protects 100 percent of your severance as an exempt asset under Bankruptcy and Insolvency Act Section 67, eliminates 60 to 80 percent of unsecured debt creating proposal payments of 200 to 400 dollars monthly that severance funds for 6 to 12 months during job search, Employment Insurance bridges through months 7 to 15 at approximately 2,100 to 2,400 dollars monthly for manufacturing workers or 2,500 to 3,000 dollars for federal employees, and reemployment at 70 to 90 percent of prior income sustains through 60-month completion with 90-plus percent success rates for workers who execute this emergency protocol versus 50 to 60 percent completion rates for those who wait until severance depletes before seeking help.

The critical difference between proposals and bankruptcy for laid-off workers with severance: proposals treat severance as a protected exempt asset allowing 100 percent for living expenses, while bankruptcy treats severance as income for surplus calculations under Office of the Superintendent of Bankruptcy directives potentially consuming 5,000 to 25,000 dollars in surplus payments to the bankruptcy estate over 9 to 21 months. This fundamental distinction explains why 90 percent of manufacturing and federal workers with severance packages exceeding 25,000 dollars choose consumer proposals over bankruptcy despite bankruptcy’s faster total debt discharge timeline.

---

👉 Skip to Your Situation

EMERGENCY (Laid off in last 7 days):

• 72-Hour Emergency Protocol ← Start here NOW

PLANNING (Layoff expected within 30 days):

• Severance Math & Runway Calculator
• Regional Protocols (Windsor/Ottawa/Hamilton/Oshawa)

DECISION SUPPORT:

• Consumer Proposal vs Bankruptcy
• Dual Crisis: Job Loss + Mortgage Renewal

Already filed or considering:

• What Happens After Filing
• Case Studies: 90%+ Success Stories

---

Every week of delay after receiving your layoff notice consumes 900 to 1,200 dollars of severance paying credit cards and lines of credit who will eventually accept only 20 to 40 cents on the dollar through your proposal anyway—those dollars cannot be recovered once spent and represent lost financial protection during your unemployment period when you need every dollar for mortgage payments and essentials.

The Severance Math: Understanding Your Runway

Calculating After-Tax Severance by Employment Sector

Manufacturing workers (Ontario): Ontario Employment Standards Act mandates 1 week per year of service minimum for employees with 5+ years tenure at companies with $2.5 million+ annual payroll. Most unionized manufacturing workers covered by Unifor, CAW, or other collective agreements receive 2 weeks per year of service.

(After-tax calculation assumes 25% combined federal/provincial marginal rate typical for $68,000 income; actual may vary)

Federal employees: Treasury Board of Canada Secretariat policies mandate 2 weeks per year minimum with many collective agreements providing enhanced packages for longer-service employees.

(After-tax calculation assumes 25% marginal rate; federal employees often face slightly higher rates due to income level)

---

Runway Calculation: How Long Does Severance Last?

Formula: After-tax severance ÷ Monthly burn rate = Months of runway

Monthly burn rate includes:

• Mortgage or rent payment
• Debt minimums (credit cards, lines of credit, personal loans)
• Essential expenses (property tax, utilities, insurance, food, transportation, minimum discretionary)
• Typical burn rate: $3,800 to $5,200 monthly for homeowners with debt

Example 1: Manufacturing worker WITHOUT consumer proposal

Problem: Manufacturing reemployment averages 9-12 months at 70-80% prior income, creating 3-6 month gap between severance depletion and reemployment that $2,200 monthly EI cannot cover (EI only provides 46% of $4,800 burn rate).

---

Example 2: Same worker WITH consumer proposal filed day 7

Post-severance sustainability (month 8+):

• EI: $2,200/mo
• Part-time warehouse work: $600/mo
• Total income: $2,800/mo
• Covers 68% of $4,125 burn rate (vs 46% without proposal)
• Shortfall: $1,325/mo (vs $2,600 without proposal) = 49% reduction
• Modest savings of $3,000-$5,000 bridges 2-4 months to reemployment

Reemployment (month 11):

• New logistics coordinator role: $52,000 annual (76% of prior $68,000)
• Net monthly: $3,250
• Exceeds $4,125 obligations by $125-$400/mo depending on savings position
• Proposal completes successfully through 60-month term

Success probability: 90%+ for workers filing within 14 days with 6-12 month severance runway vs 50-60% for those waiting until severance depletes.

---

Why Severance Alone Fails: The Reemployment Gap

Manufacturing sector reemployment data (2024-2025 Ontario layoffs):

• Average time to reemployment: 9.5 months
• Windsor/Hamilton: 10-12 months (saturated local markets from concentrated layoffs)
• Toronto/GTA: 7-9 months (broader employment opportunities)
• Income at reemployment: 70-80% of prior income typical
• Example: $68,000 prior → $52,000 new role = 76% = typical outcome

Federal sector reemployment data (2015-2016 Harper-era cuts):

• Average time to reemployment: 14 months
• Ottawa 2026 projection: 12-18 months (28,000 competing with similar backgrounds)
• Geographic relocation: 8-12 months if willing to move Toronto/Montreal/Calgary
• Income at reemployment: 75-90% of prior income depending on sector match
• Example: $90,000 federal analyst → $75,000 private sector policy = 83% = typical

The mathematical problem: Even generous severance packages of 7-10 months gross (5-7 months after-tax when spread over typical burn rates) fall short of 9-18 month reemployment timelines by 2-11 months. Employment Insurance at 55% of prior earnings ($2,100-$3,000 monthly) cannot cover burn rates of $4,000-$5,200 monthly, creating shortfalls of $1,000-$2,200 monthly that deplete emergency savings within 2-4 months and force missed mortgage payments by month 10-14—just as reemployment materializes but too late to prevent foreclosure proceedings after 90 days arrears.

Consumer proposals eliminate this gap by reducing burn rates through 60-80% debt elimination, extending severance runway by 1-2 months AND reducing post-severance shortfalls by 40-50%, making EI + part-time work sustainable bridges to reemployment.

---

The 72-Hour Emergency Protocol

This protocol applies if you received a layoff notice within the last 7 days OR anticipate receiving one within 30 days and carry unsecured debt exceeding $10,000.

Hour 1-4: Immediate Assessment

Step 1: Read severance letter carefully

• Severance amount: Gross dollars or weeks of pay?
• Payment timing: Lump sum on final day OR salary continuance over weeks/months?
• Benefits continuation: Health/dental coverage period?
• Final employment date
• Deadline to sign release (typically 2-4 weeks)
• DO NOT SIGN RELEASE YET—complete 72-hour protocol first to understand implications

Step 2: Locate financial documents Gather these immediately:

• Most recent mortgage statement (balance, rate, payment, maturity date)
• All credit card statements (balances, minimums, interest rates, most recent payment date)
• Line of credit statements
• Personal loan documents
• Payday loans (if any)
• Tax debts (CRA Notices of Assessment showing amounts owing)
• Last 3 pay stubs
• Most recent tax return (2024 or 2023)

Step 3: Quick runway calculation

Use this worksheet:

After-tax severance (gross × 0.70-0.75): $__________

Monthly obligations:
- Mortgage/rent: $__________
- Credit card minimums: $__________
- Line of credit minimums: $__________
- Personal loans: $__________
- Essentials (estimate $1,500-$2,000): $__________
TOTAL BURN RATE: $__________

Runway: Severance ÷ Burn rate = ________ months

Decision point:

• If runway <9 months AND total debt >$10,000 → PROCEED to Hour 4-8 immediately
• If runway >12 months AND total debt <$15,000 → Monitor situation, may not need intervention
• If post-severance shortfall >$2,000/mo (burn rate minus EI ~$2,200) → EMERGENCY, proceed immediately

---

Hour 4-8: Licensed Insolvency Trustee Research & Booking

Step 4: Find Licensed Insolvency Trustees

Find a Licensed Insolvency Trustee by city or postal code in our directory, or use the federal Office of Superintendent of Bankruptcy directory:

• Visit: https://www.ic.gc.ca/app/scr/tds/web/?lang=eng
• Filter by city: Windsor, Ottawa, Hamilton, Toronto, your location
• Look for firms with:
  • “Emergency consultation” or “same-day consultation” mentions
  • “Layoff specialist” or “manufacturing worker experience” in descriptions
  • Google reviews 4.5+ stars with 50+ reviews
  • Reviews mentioning “communication,” “completed proposal,” “helpful during job loss”

Step 5: Book 2-3 consultations for next 48-72 hours

Call or book online with these key points:

• Mention “emergency layoff case” to get priority scheduling
• Request consultation within 48-72 hours (not next week)
• Ask if virtual/Zoom consultations available if preferred
• Confirm consultation is free with no obligation

Typical wait times:

• January-March 2026: 1-3 days for emergency cases
• April-August 2026 (crisis peak): 7-14 days even for emergencies—book IMMEDIATELY

Step 6: Prepare one-page financial summary

Create a document with:

FINANCIAL SNAPSHOT - [Your Name] - Layoff Emergency

Employment:
- Prior annual income: $__________
- Layoff notice date: __________
- Final employment date: __________
- Severance: ________ weeks = $________ gross = $________ after-tax
- Payment timing: [Lump sum / Salary continuance]

Mortgage:
- Balance: $__________
- Payment: $__________/mo
- Renewal date: __________
- Home value (estimate): $__________

Debts:
1. Credit Card 1: $________ balance, $________ minimum
2. Credit Card 2: $________ balance, $________ minimum
3. Line of Credit: $________ balance, $________ minimum
4. [Other]: $________ balance, $________ minimum
TOTAL UNSECURED DEBT: $__________
TOTAL MONTHLY MINIMUMS: $__________

Assets:
- RRSP: $__________
- TFSA: $__________
- Vehicle: [Year, Make, Model, estimated value $________]

Dependents: [Number of children, ages]

Step 7: Email summary to trustees before consultation

Send 24 hours before your scheduled consultation with subject line: “Emergency Layoff Case - Consultation [Date/Time]”

This maximizes meeting efficiency—trustee reviews your situation in advance and comes prepared with preliminary recommendations.

---

Step 8: CRITICAL — Stop paying unsecured creditors immediately

DO NOT PAY:

• Credit cards
• Lines of credit
• Personal loans
• Payday loans
• Collection agencies

Why: Every dollar paid to unsecured creditors after receiving your layoff notice is a dollar unavailable for protected living expenses during your proposal. These creditors will accept 20-40% through your proposal anyway—paying them 100% before filing provides zero benefit and depletes your severance needlessly.

DO CONTINUE PAYING:

• Mortgage (secured debt, not included in proposal)
• Car loans (secured debt, if you need vehicle for job search)
• Utilities (to avoid service disruption)

Exception: If you haven’t received layoff notice yet but anticipate one, continue minimum payments until notice received to avoid 30-day late marks damaging credit unnecessarily before filing.

---

Hour 24-48: Trustee Consultations

Step 9: Attend 2-3 virtual or in-person consultations

Typical consultation structure (60-90 minutes):

• Trustee reviews your financial situation completely
• Explains consumer proposal process, bankruptcy process, and no-filing baseline
• Models all three scenarios with specific numbers for your situation
• Answers your questions
• Provides written recommendation

All consultations are:

• Free
• No obligation
• Confidential
• Protected (cannot be used against you if you choose not to proceed)

---

Step 10: Ask trustee to model three scenarios

Scenario 1: Consumer Proposal

• Settlement at 25-35% of total debt over 60 months (typical for laid-off workers)
• Exact monthly proposal payment: $__________
• Total settlement amount: $__________
• Monthly relief vs current minimums: $__________
• Severance runway with proposal: ________ months
• Post-severance sustainability on EI + proposal payment
• Creditor acceptance probability: ________%
• Total costs including trustee fees: $__________

Scenario 2: Bankruptcy

• Surplus income obligations based on severance: $__________/mo for ________ months
• Total surplus consumed from severance: $__________
• Assets at risk: Home equity above $10,783 (Ontario) = $__________
• Discharge timeline: 9 months (no surplus) or 21 months (surplus income)
• Total costs: $__________

Scenario 3: No-Filing Baseline (for comparison)

• Current debt minimums: $__________/mo
• Severance runway: ________ months
• Post-severance shortfall: $__________/mo
• Months until mortgage default: ________
• Cost of inaction: Foreclosure, 6-8 year credit damage, loss of $________ home equity

---

Step 11: Request written proposal estimates within 24 hours

Professional trustees provide written estimates same day or next day. Written proposals should show:

• Exact monthly payment
• Settlement percentage and total amount
• Completion timeline
• Anticipated creditor acceptance rate
• Fee structure (trustee fees, government filing fee)
• Comparison to bankruptcy alternative

Red flags (avoid these trustees):

• Won’t provide written estimate within 24 hours
• Pushes bankruptcy when you have significant home equity and proposal is clearly viable
• Cannot answer specific BIA Section 67 severance exemption questions
• No emergency filing capability (standard 14-21 day timeline only, cannot accommodate 5-7 day emergencies)
• Pressure tactics or hard sales approach

Green flags (indicators of quality trustee):

• Written proposal provided same day or within 24 hours
• 5-7 business day emergency filing commitment for layoff cases
• Completion rates 85%+ for homeowners (ask directly)
• 50+ layoff cases handled in last 12 months (Windsor/Hamilton/Ottawa trustees should have 100+)
• Clear explanation of severance protection under BIA Section 67
• Transparent about both proposal AND bankruptcy options, letting you decide

---

Step 12: Assess trustee emergency experience

Ask these critical questions at each consultation:

Question 1: “How many layoff cases have you handled in 2025-2026?”

• Acceptable answer: 50+ for general trustees, 100+ for Windsor/Hamilton/Ottawa trustees
• Red flag: “A few” or vague non-numeric answer

Question 2: “What’s your completion rate for manufacturing/federal worker proposals?”

• Acceptable answer: 85-90%+ for homeowners with severance
• Red flag: “Most complete” without specific percentage, or <75%

Question 3: “Can you file within 7 business days for emergency cases?”

• Acceptable answer: “Yes, we have emergency protocols for layoff cases, can file within 5-7 business days”
• Red flag: “Our standard timeline is 14-21 days” with no flexibility

Question 4: “What happens if I lose my job DURING the proposal?” (Tests knowledge)

• Acceptable answer: “We file an amendment under BIA Section 66.3 to extend the term or defer payments temporarily while you’re on EI. Most creditors approve amendments because the alternative is annulment where they get nothing. Your fixed payments never increase when you get reemployed unlike bankruptcy surplus calculations.”
• Red flag: “You’d have to keep making payments or the proposal fails” (shows lack of amendment knowledge)

Question 5: “How does severance protection work under BIA Section 67?”

• Acceptable answer: “Severance is an exempt asset under Section 67(1)(b), meaning it’s protected in proposals and cannot be seized. Unlike bankruptcy where it’s treated as income for surplus calculations potentially consuming thousands, proposals protect 100% of your severance for living expenses and proposal payments.”
• Red flag: Cannot clearly explain Section 67 exemption or conflates proposal treatment with bankruptcy treatment

---

Hour 48-72: Decision & Filing Initiation

Step 13: Compare written proposals

Create comparison table:

Selection criteria priority:

1. Emergency filing capability (5-7 days beats 14 days by wide margin for severance protection timing)
2. Layoff case experience (50+ recent cases minimum, 100+ ideal for crisis-region trustees)
3. Completion rates (85%+ for homeowners; ask specifically about laid-off worker completion rates)
4. Monthly payment sustainability (lowest isn’t always best if trustee has poor completion rates—slightly higher payment with higher completion probability is superior)
5. Communication quality (you’ll interact with this trustee for 60 months; responsiveness and clarity matter)

Monthly payment note: A $225/mo proposal with 91% completion rate is superior to a $200/mo proposal with 70% completion rate. Completion is the goal—failing a proposal and returning to pre-filing status wastes 12-24 months and depletes financial resources for nothing.

---

Step 14: Select trustee & sign retainer

Retainer structure:

• Engagement letter/retainer agreement outlines scope, process, fees
• No upfront payment typical—trustee fees come from proposal payments (creditors pay trustee from settlement amount)
• Some trustees charge $100 government filing fee upfront (refundable if proposal rejected, which is rare at <5%)
• Sign digitally or in-person

Timeline after signing:

• You submit documents (Step 15)
• Trustee prepares legal filing (3-5 business days)
• Trustee files with Office of Superintendent of Bankruptcy
• Stay of proceedings takes effect immediately—all collections stop within 24-48 hours

---

Step 15: Submit required documents immediately

Gather and send to trustee same day or next day:

Required documents:

• Last 2 years tax returns (2024 and 2023 CRA Notice of Assessment)
• Last 3 pay stubs
• Layoff notice letter OR severance letter
• Mortgage statement (current balance, payment, maturity date)
• All credit card statements (most recent)
• Line of credit statements
• Personal loan documents
• Bank statements (last 3 months, all accounts)
• RRSP/TFSA statements (balances)
• Vehicle ownership (registration showing year/make/model for valuation)
• Property tax assessment (shows home assessed value)

Asset valuations:

• Home: Use realtor.ca or similar to estimate current market value
• Vehicles: Use Canadian Black Book or AutoTrader to estimate value
• Trustees need reasonable estimates, not professional appraisals

Submission method:

• Most trustees accept secure email or encrypted portal upload
• Organize clearly: “Severance Letter.pdf”, “Credit Card 1 Statement.pdf”, etc.

---

Step 16: Trustee prepares & files proposal

Emergency filing timeline (layoff cases):

• Strong trustees file within 5-7 business days from document submission
• Standard timeline: 14-21 days
• Trustee prepares Form 47 (Consumer Proposal), supporting schedules, Statement of Affairs
• Files with OSB electronically
• Stay of proceedings takes effect immediately upon filing

What “stay of proceedings” means:

• All collection calls STOP within 24-48 hours (creditors notified automatically by OSB)
• Wage garnishment threats STOP (cannot garnish wages once stay in effect)
• Legal actions STOP (lawsuits, judgments cannot proceed)
• Interest stops accruing on included debts
• You have legal protection breathing room

---

Step 17: Do NOT tell creditors you’re filing

Critical timing:

• Wait until stay is in effect (trustee confirms via email/call)
• Creditors may accelerate collection efforts if warned proposal is coming
• Some creditors rush to obtain judgments in the 5-7 days before filing if they know it’s coming

What to say if creditors call during 5-7 day filing period:

• “I’m working with a financial advisor to address this”
• “I will have an update for you within the next week”
• DO NOT say “I’m filing a consumer proposal on [date]”

After filing:

• Trustee sends statutory notices to all creditors within 5 days per BIA requirements
• You can say “I’ve filed a consumer proposal; please contact my trustee at [phone/email]”
• All future creditor contact goes through trustee, not you

---

Post-Filing Protocol: Days 8-60

Step 18: Stop paying ALL unsecured creditors

Once stay of proceedings is in effect:

STOP PAYING:

• Credit cards
• Lines of credit
• Personal loans
• Payday loans
• Collection agencies
• Tax debts (CRA included in proposal)

Redirected funds: Money previously paid to unsecured creditors now funds:

• Proposal payment ($200-$400/mo typical)
• Extra mortgage payment cushion
• Emergency savings
• Essential expenses

---

Step 19: Maintain perfect record on secured debts

PAY PERFECTLY:

• Mortgage: NEVER miss, NEVER late—missing mortgage payments jeopardizes entire proposal and puts home at risk
• Car loan: Perfect payments if you need vehicle for job search/reemployment
• Property taxes: Some municipalities can seize property for tax arrears even during proposal

Why this matters: Your proposal was filed specifically to protect your home by creating sustainable payment structure. Missing mortgage payments defeats this purpose and may cause trustee to recommend annulment if homeownership is unsustainable.

---

Step 20: Trustee sends creditor notices

Automatic process after filing:

• Trustee sends Form 47 (proposal document) to all listed creditors within 5 days of filing per BIA requirements
• Creditors have 45 days from filing to vote on proposal
• Creditors vote by dollar value (not by number)—majority of dollars voting must accept
• Acceptance requires 50%+ of dollar value voting in favor
• Creditors not voting are deemed to accept (abstentions count as yes votes)

Typical creditor response:

• 60-70% of creditors do not vote at all (deemed acceptance)
• 25-30% vote to accept
• 5-10% vote to reject
• Overall acceptance rate: 95-99% when properly structured

---

Step 21: Creditor meeting (if required)

When creditor meetings occur:

• Only if creditors holding 25%+ of debt value request meeting
• Rare for straightforward proposals (<10% of cases)
• More common for high-debt proposals (>$100,000) or complex asset situations

Meeting structure:

• Virtual or in-person within 21 days of filing
• You attend with trustee
• Trustee chairs meeting
• Creditors ask questions about your finances, proposal terms, reemployment prospects
• Creditors vote
• Simple majority of dollars voting required for acceptance

Typical duration: 30-60 minutes

Your role: Answer questions honestly, explain layoff situation and reemployment plan, demonstrate good faith

---

Step 22: Court approval

After creditor acceptance:

• Proposal goes to court for approval within 2-3 weeks
• Court reviews to ensure proposal is fair, reasonable, in compliance with BIA
• Typically rubber-stamped unless unusual circumstances
• You may NOT need to attend court in person (trustee represents you in most cases)
• Some provinces allow virtual attendance if required

Court approval criteria:

• Creditors accepted (50%+ by value)
• Proposal terms comply with BIA requirements
• Proposal is better for creditors than bankruptcy alternative
• No fraud or concealment

Rejection rare: <1% of proposals rejected by court after creditor acceptance

---

Step 23: Begin proposal payments

Payment commencement:

• First payment typically due 30 days after court approval
• Set up automatic payment (pre-authorized debit from bank account)
• NEVER miss a payment—3 consecutive missed payments = automatic annulment per BIA Section 66.31

Payment method:

• Most trustees require pre-authorized debit (PAD)
• Reduces missed payment risk dramatically
• Payments withdrawn same day each month (you choose the date)

Recommended payment date: 2-3 days after pay deposit or EI deposit to ensure funds available

---

Consumer Proposal Strategy for Layoff Cases

Why Proposals Protect Severance (vs Bankruptcy)

Bankruptcy and Insolvency Act Section 67(1)(b) exempts severance pay from property divisible among creditors in bankruptcy, meaning it cannot be seized. Consumer proposals, as arrangements to avoid bankruptcy, inherit this protection—severance remains 100% yours for living expenses.

However, bankruptcy treats severance as income for surplus calculations:

While severance is technically exempt from seizure in bankruptcy, trustees treat ongoing severance payments as income for surplus income calculations under Office of Superintendent of Bankruptcy directives. This triggers 50% surplus payments on amounts exceeding federal income thresholds.

2026 Federal Surplus Income Thresholds (Superintendent’s Standards):

• Single person: ~$2,543/month
• Single with 1 dependent: ~$3,178/month
• Single with 2 dependents: ~$3,613/month
• Couple: ~$3,178/month
• Couple with 1 dependent: ~$3,613/month

Surplus calculation example:

Manufacturing worker, single, receives $32,000 severance over 8 months = $4,000/month

• Monthly income: $4,000
• Surplus threshold (single): $2,543
• Excess: $4,000 - $2,543 = $1,457
• Surplus payment (50%): $1,457 × 50% = $729/month
• Duration: 8 months of severance payments
• Total consumed by bankruptcy: $729 × 8 = $5,832

This extends bankruptcy from 9 months (no surplus) to 21 months (surplus income) minimum.

Consumer proposal advantage:

• NO surplus income calculations
• 100% of severance available for mortgage, proposal payments ($200-$400/mo), essentials
• Fixed monthly payments never increase regardless of severance amount
• Preserves $5,000-$25,000 that bankruptcy would consume depending on severance size

Who benefits most:

• Manufacturing workers with 15-25 years service receiving $25,000-$50,000 severance packages
• Federal employees with 20-30 years service receiving $40,000-$75,000 packages
• In both cases, proposals preserve 100% for living expenses vs bankruptcy consuming 15-50% in surplus payments

---

Typical Settlement Structure for Laid-Off Workers

Creditor acceptance rates by debtor profile:

Why creditors accept lower settlements from laid-off workers:

Creditors compare your proposal offer to the bankruptcy alternative. In bankruptcy:

• Homeowners with equity above provincial exemptions must pay surplus income OR surrender home
• Laid-off workers on EI have minimal surplus income capacity
• Bankruptcy dividend to unsecured creditors: typically 0-5% of debt

A 25-30% consumer proposal generating $10,000-$15,000 to creditors over 5 years beats a $0-$2,000 bankruptcy dividend by wide margin—creditors accept the superior recovery.

---

Real settlement examples:

Example 1: Windsor Manufacturing Worker

---

Example 2: Ottawa Federal Employee

---

Combining Proposal with Mortgage Extension (Dual Threat Cases)

If you’re renewing your mortgage the same month as your layoff (dual threat scenario), combining consumer proposal with mortgage amortization extension creates maximum sustainability.

Component 1: Consumer Proposal

• Eliminates 60-80% unsecured debt
• Creates $600-$800/mo relief from eliminated debt minimums

Component 2: Mortgage Amortization Extension

• Extend remaining 20 years → 25 years at renewal
• Saves $300-$400/mo on typical $500,000 mortgage
• No credit check required (renewal with existing lender)
• Eligibility: LTV <80%, clean payment history (which you have because you stopped paying unsecured debts, not mortgage)

Combined monthly relief:

• Proposal savings: $600/mo
• Extension savings: $350/mo
• Total: $950/mo relief

Applied to dual-threat scenario:

*Severance amortized monthly
**EI $2,200 + part-time $600-$1,200
***Reemployment at 75% prior income

Result: Not only absorb the $500 renewal shock but create manageable path from severance → EI → reemployment without mortgage default.

For complete dual-threat strategy: Read Mortgage Renewal Crisis 2026 Protocol →

---

Reemployment Reality Check

Setting realistic expectations for job search timelines and income levels informs proposal payment sustainability and completion probability.

Manufacturing Workers: 9-12 Month Timeline

Historical data (2024-2025 Ontario manufacturing layoffs):

• Average reemployment: 9.5 months
• Windsor/Hamilton: 10-12 months (concentrated layoffs saturate local market)
• Toronto/GTA: 7-9 months (broader employment opportunities)
• Oshawa: 10-11 months (GM layoffs create local saturation)

Income expectations at reemployment:

• Typical: 70-80% of prior income
• Example: $68,000 prior → $52,000 new logistics role = 76% = typical
• Sectors: Logistics/warehousing, skilled trades, construction, non-tariff-affected manufacturing

Windsor-specific challenges:

• 40% manufacturing employment = limited alternative sectors
• 11.2% unemployment Q2 2025 = saturated local market
• Requires: GTA job search (45-60min commute), relocation, or retraining
• Alternatives: Commercial driving (Class AZ license 4-6 weeks, $55K-$70K starting), forklift certification (2-4 weeks, $45K-$55K), skilled trades apprenticeship

Age factor:

• Under 45: 9-10 months typical, strong retraining prospects, willing to relocate
• Ages 45-54: 11-13 months, moderate retraining success, family/mortgage ties limit relocation
• Age 55+: 15-24 months or underemployment at 50-60% prior income, limited retraining success, retirement considerations

---

Skills transferability by prior role:

---

Federal Employees: 12-18 Month Timeline

Historical data (2015-2016 Harper-era federal cuts):

• Average reemployment: 14 months
• Ottawa 2026 projection: 12-18 months (28,000 competing with similar backgrounds creates saturation)
• Geographic relocation: 8-12 months if willing to move Toronto/Montreal/Calgary (broader opportunities)

Income expectations at reemployment:

• Private sector: 75-90% of prior income depending on sector match
• Example: $90,000 federal policy analyst → $75,000 private sector policy role = 83%
• Crown corporations: 90-100% if comparable role available (limited openings)
• Municipal government: 80-95% (fewer positions available than federal)
• Consulting: Variable ($60-$120/hour contract = $50,000-$120,000 annual equivalent)

---

Ottawa-specific advantages:

• Strong tech sector: Shopify, others hire for policy/compliance roles valuing former federal analysts
• Consulting firms: Many work with federal government, value insider knowledge of procurement/RFP processes
• Post-secondary institutions: Carleton, University of Ottawa administrative/research positions
• Professional associations: Policy, advocacy, research positions
• Think tanks: Conference Board, CD Howe, others hire former federal policy staff

Ottawa-specific challenges:

• 22,000 total job losses including spillover = saturated market
• Similar skill profiles: Most federal employees have policy/analysis/administrative backgrounds creating direct competition for same private sector roles
• Real estate timing pressure: If homeowner, must decide sell vs keep during job search (see keep vs sell analysis below)

---

Skills transferability by prior federal role:

---

Reemployment During Active Proposal

Proposal payments DON’T increase with new income:

Unlike bankruptcy’s surplus income calculations that adjust based on your earnings, consumer proposal payments are fixed at filing and never increase regardless of your reemployment income. This creates massive advantage for laid-off workers.

Scenario comparison:

Bankruptcy:

• Filed while earning EI: $2,200/mo
• Reemployed month 12 at $60,000: $4,000/mo net
• Surplus income recalculated: ($4,000 - $2,543 threshold) × 50% = $729/mo additional payment
• Extends bankruptcy from 9 to 21 months minimum
• Total extra cost: $729 × 9 months = $6,561 additional consumed from reemployment income

Consumer Proposal:

• Filed with $225/mo payment based on severance/EI capacity
• Reemployed month 12 at $60,000: $4,000/mo net
• Proposal payment: Still $225/mo (unchanged)
• Extra income: $4,000 - $3,800 obligations = $1,200/mo disposable for savings/early completion
• Option: Pay off proposal early with lump sum (new employer signing bonus, tax refund, accumulated savings)

Early completion advantage:

Approximately 55% of laid-off workers who complete proposals do so in 36-48 months vs full 60-month term, using reemployment income to accelerate final payments and exit insolvency status faster.

Example: Worker with $13,500 proposal ($225/mo × 60 months) gets reemployed month 14 at $58,000. Increases voluntary proposal payments to $400/mo starting month 15. Completes proposal in month 48 instead of month 60, exiting insolvency 12 months earlier and beginning credit rebuilding sooner.

---

Regional Considerations

Windsor Manufacturing Workers (Risk 10/10)

Crisis factors:

• -1.6% employment impact highest in Ontario
• 40% manufacturing employment vs 10% provincial average
• 11.2% unemployment Q2 2025 highest in Ontario
• Limited economic diversification: Auto sector dominates, few alternative employers

Severance typically:

• Unifor/union contracts: 2-3 weeks per year
• 15-20 years typical tenure = 30-60 weeks = 7.5-15 months gross
• At $65,000-$75,000 wages: $24,000-$55,000 after-tax severance

Action protocol:

1. File consumer proposal within 7 days of layoff notice, no exceptions

   • Windsor market too saturated to wait—10,000+ competing for limited roles
   • Every week of delay depletes severance paying creditors unnecessarily

2. Do NOT wait to “see if another auto job opens up”

   • Tariff impacts are structural, not cyclical—jobs unlikely to return 2026-2027
   • Waiting 3-6 months for non-existent openings depletes severance to zero

3. Expand job search immediately:

   • GTA logistics hubs: London (45min), Hamilton (60min), Mississauga (90min) aggressive commute but tolerable short-term
   • Commercial driving: Class AZ license 4-6 weeks training, $55,000-$70,000 starting, high demand
   • Forklift certification: 2-4 weeks, $45,000-$55,000, immediate openings in warehousing
   • Skilled trades: If under 45, consider apprenticeship (electrical, HVAC, plumbing)

4. If renewing mortgage 2026:

   • Extend amortization at renewal (saves $300-$400/mo)
   • Coordinate with proposal filing (60-90 days before renewal if possible)

5. If home equity strong (>30% LTV):

   • Keep home via proposal + extension creates sustainable path
   • GTA commute tolerable from Windsor (60-90min) for logistics/warehouse roles paying $50,000-$60,000

6. If equity weak (<15% LTV):

   • Consider selling before Windsor market saturates further with competing listings
   • Use net proceeds to clear debts, move to rental, relocate to stronger job market (GTA, London)

Resources: Windsor Debt Relief: Manufacturing Worker Guide → · Licensed Insolvency Trustees in Windsor →

---

Ottawa Federal Employees (Risk 9/10)

Crisis factors:

• 22,000 total job losses by 2029 (16,000 federal + 6,000 spillover)
• 1 in 9 jobs federal employment = regional depression risk
• Real estate cascade: 28,000 laid-off workers + partners listing homes 2026-2028
• 5-10% price erosion projected through 2027-2028 as inventory surges

Severance advantage:

• Treasury Board: 2+ weeks per year
• 20-30 years typical tenure = 40-60 weeks = 10-15 months gross
• At $85,000-$105,000 wages: $40,000-$75,000 after-tax severance (stronger cushion than manufacturing)

Unique decision: Keep vs Sell Home

Path A—Keep Home via Consumer Proposal:

When this makes sense:

• Strong equity (>25% LTV) = $100,000+ cushion
• Confident Ottawa reemployment prospects:
  • Tech sector (Shopify, others hiring policy/compliance roles)
  • Consulting firms working with government (insider knowledge valued)
  • Crown corporations (limited openings but 90-100% income replacement)
  • Post-secondary institutions (Carleton, uOttawa administrative roles)
• Willing to weather 12-18 month job search
• Deep Ottawa roots (aging parents, children in school, community ties)
• Bet: Real estate recovers 2028-2029, keep equity long-term, ride out temporary decline

Strategy:

• File consumer proposal within 7-14 days of layoff notice
• Request mortgage extension at renewal (if renewing 2026)
• Combined proposal + extension creates sustainable payments
• Severance funds 10-15 months runway during job search
• Outcome if successful: Keep $150,000-$250,000 equity, complete proposal 2031, mortgage paid off 2051, home value recovers to $750,000-$800,000 by 2029-2030

---

Path B—Sell Proactively:

When this makes sense:

• Planning to relocate Toronto/Montreal for better job prospects anyway
• Equity >$80,000 after all debts paid = sufficient for fresh start
• Risk-averse about 5-10% market decline = prefer guaranteed liquidity
• Timing advantage: Selling Q1-Q2 2026 (now through June) before Q3-Q4 inventory surge
• Bet: Maximize equity recovery before decline, re-enter market 2028-2029 at lower prices

Strategic timing:

• List NOW (February-March 2026): Capture pre-decline pricing, limited competing inventory
• Avoid Q3-Q4 2026: First wave of 28,000 layoffs floods market, prices begin erosion
• Avoid 2027: Peak inventory, maximum price pressure, worst time to sell

Example financial outcome:

Post-sale strategy:

• Move to $2,400/mo rental (vs $3,500 post-renewal ownership cost) = saves $1,100/mo
• Housing savings: $1,100/mo × 24 months = $26,400 over 2 years
• Severance preserved: $52,000 for living expenses during job search
• Combined financial position: $56,000 proceeds + $26,400 savings + $25,000 remaining severance = $107,000 liquid wealth by reemployment
• Re-enter 2028-2029: Ottawa market stabilized or declined 7-10%, purchase equivalent home at $651,000-$630,000 with $130,000 down (20%), mortgage $501,000-$521,000

Which path depends on:

1. Equity position: >$100,000 equity favors keep, $50,000-$80,000 borderline, <$50,000 favors sell
2. Reemployment confidence: Strong Ottawa network favors keep, willing to relocate favors sell
3. Risk tolerance: Risk-averse favors sell (guaranteed liquidity), risk-tolerant favors keep (bet on recovery)
4. Relocation willingness: Yes = sell and move for work, No = keep and search locally

Resources: Ottawa Debt Relief: Federal Employee Keep vs Sell Analysis → · Licensed Insolvency Trustees in Ottawa →

---

Hamilton Steel & Auto Parts Workers (Risk 8/10)

Crisis factors:

• -1.1% employment impact from tariffs
• 22% manufacturing employment, steel production + auto parts supply chain concentration
• Toronto proximity = moderate advantage

Action protocol:

1. File consumer proposal within 7-14 days of layoff notice

   • Hamilton market less saturated than Windsor but still significant competition

2. Leverage GTA job market access:

   • 45-minute GO Train commute to Toronto tolerable for reemployment
   • 30-40% more opportunities within 60-minute radius vs Windsor’s isolation
   • Mississauga/Brampton logistics hubs: $50,000-$65,000 roles
   • Toronto skilled trades: $60,000-$80,000 with apprenticeship/certification

3. Steel workers specific considerations:

   • Consider industrial maintenance roles (80-90% prior income)
   • Facility management for large commercial/industrial properties
   • HVAC/boiler operation certification (6-12 weeks) opens building operations roles

4. Auto parts workers:

   • Logistics coordinator/supervisor roles (former production supervisors transition well)
   • Warehouse management (former quality control inspectors valued)
   • Quality control in other sectors (food processing, pharmaceuticals, electronics)

Advantage over Windsor: Hamilton’s proximity to Toronto/Mississauga logistics and industrial hubs creates significantly more reemployment opportunities without requiring full relocation—daily commute tolerable for 12-18 months until securing local Hamilton role.

Resources: Hamilton Debt Relief: Manufacturing Worker Guide → · Licensed Insolvency Trustees in Hamilton →

---

Oshawa: GM Layoffs Completed, Post-Crisis Response (Risk 8/10)

Current status (as of February 2, 2026):

• 1,100-1,200 GM workers laid off January 31, 2026
• Severance already being paid (week 3-4 of payments for most workers)
• ACTION WINDOW CLOSING RAPIDLY

For GM workers laid off Jan 31:

If you haven’t filed a consumer proposal yet and you were part of the January 31 GM layoffs, you have approximately 2-3 weeks maximum before significant severance depletion occurs.

Emergency protocol for GM workers:

1. Book LIT consultation TOMORROW (February 3-4)

   • Mention “GM Oshawa Jan 31 layoff” for emergency priority
   • Many Oshawa trustees running emergency clinics specifically for GM workers

2. File by mid-February (February 14-17 maximum)

   • Week 4 of severance payments = already consumed ~25% of cushion
   • Filing by week 6 protects remaining 75% for proposal payments

3. Typical GM severance (unionized Unifor workers):

   • 32 weeks typical for 16 years service = $42,000 gross, $31,500 after-tax
   • Already received: ~$8,000 (weeks 1-4)
   • Remaining to protect: ~$23,500

4. Don’t wait for “another GM opening”

   • January 31 layoffs were permanent production cuts, not temporary
   • Oshawa plant reduced to single shift, no rehiring planned 2026-2027

Reemployment prospects:

• Oshawa unemployment 9.7% (third-highest Ontario)
• 28% manufacturing employment = concentrated but less extreme than Windsor
• Toronto proximity (35-min GO Train) = moderate advantage
• Logistics/warehousing expanding in Durham Region

Resources: GM Oshawa Layoffs 2026: Emergency Response Guide → · Licensed Insolvency Trustees in Oshawa →

---

Case Studies: Complete Scenarios

Case Study 1: Marcus - Windsor Auto Worker (Successful 60-Month Completion)

Marcus, 42, worked 15 years at a Windsor automotive parts supplier before receiving his layoff notice on March 15, 2026. With $45,000 in credit card debt across three cards, a $385,000 mortgage, and $68,000 annual income, his household was already within $150 of monthly insolvency before the layoff—one of thousands of Windsor families in identical positions as tariff-driven manufacturing contraction peaked Q2 2026.

His severance package provided 30 weeks at $68,000 income, totaling $29,430 after-tax. Without intervention, his monthly burn rate of $4,800 ($2,400 mortgage + $900 credit card minimums + $1,500 essentials) meant severance would last only 6.1 months—well short of the 10-month average reemployment timeline for Windsor manufacturing workers. The gap between severance depletion and new employment would force mortgage default or bankruptcy.

The 72-Hour Decision: Marcus consulted three Licensed Insolvency Trustees within 48 hours of receiving his notice. He learned that filing a consumer proposal within 7-14 days would protect 100% of his severance as an exempt asset under BIA Section 67, while bankruptcy would treat severance as income for surplus calculations potentially consuming $5,000-$8,000 over 21 months. On March 22 (Day 7), he signed a retainer with a trustee proposing $13,500 settlement on $45,000 debt payable at $225 monthly over 60 months—a 70% debt reduction versus paying $900 monthly to creditors who would eventually accept this settlement anyway.

The Timeline to Success:

Critical Success Factors: Marcus filed within 7 days protecting all severance, expanded his job search to London/Chatham-Kent beyond Windsor’s saturated market, maintained communication with his trustee during the 3-month unemployment period, and secured reemployment at 76% prior income which was sufficient to sustain fixed proposal payments. His case exemplifies the 90%+ completion rate for manufacturing workers who execute emergency protocol within the 7-14 day window versus 50-60% completion for those who wait until severance depletes.

---

Case Study 2: Nadia - Ottawa Federal Analyst (Dual Crisis: Job Loss + Home Sale Decision)

Nadia, 38, received her workforce adjustment notice from Innovation, Science and Economic Development Canada on January 20, 2026, one of 22,000 federal employees targeted in the 2025-2029 reduction. With 20 years of federal service, she received 40 weeks severance totaling $51,920 after-tax on her $90,000 salary. Her financial position included $32,000 unsecured debt ($640 monthly minimums), a $485,000 mortgage with $210,000 remaining at 2.4% (renewing July 2026 at 4.7%), and $275,000 home equity.

The Ottawa-Specific Crisis: Unlike manufacturing workers in Windsor or Hamilton where “keep home, find new job” is the default path, Ottawa federal employees faced a unique calculation: 28,000 total job losses (16,000 direct federal + 12,000 spillover) would flood the market with 15,000-20,000 home listings between Q2 2026 and Q3 2027. Conference Board projections showed “modest” housing impact, but independent analysts warned of 5-10% price erosion as inventory surged while the buyer pool contracted. Timing was critical—Q1-Q2 2026 listings captured current prices before the avalanche.

The Keep vs Sell Decision Matrix:

Path A - Keep home via consumer proposal:

• File proposal settling $32,000 debt for $9,600 at $160/mo
• Extend mortgage amortization at renewal (20 years remaining → 25 years) saving $380/mo
• Combined relief: $640 old minimums → $160 proposal + $380 extension savings = $860/mo improvement
• Bet on: Reemployment in Ottawa private sector/consulting within 12-18 months at $70,000-$80,000
• Risk: If unemployment extends beyond 18 months, forced sale occurs during 2027 price trough

Path B - Sell proactively NOW:

• List immediately (February 2026) before competing with thousands of federal employee listings
• Net proceeds after mortgage payoff: ~$250,000 (after realtor fees, legal, closing)
• Pay all $32,000 debt, bank $218,000, rent 2-bedroom ($1,800/mo)
• Severance + sale proceeds fund 24+ months while pursuing opportunities in Toronto/Montreal
• Risk: Selling near market top but giving up home appreciation if Ottawa recovers 2028-2030

Her Choice: Nadia chose Path B (proactive sale) because her financial analysis revealed the math favored selling. She listed her Westboro home February 15 for $499,000, received three offers in 10 days, and sold for $506,000 on March 1—before the deluge. By April 2026, Ottawa listings surged 40% year-over-year as the first wave of federal employees received final employment dates, validating her timing.

18-Month Outcome:

The Advantage of Selling: Nadia avoided proposal filing entirely by selling at the right moment. While federal colleagues who kept homes and filed proposals succeeded (85-90% completion rate), they absorbed 5-8% equity erosion through 2026-2027 and faced reemployment pressure to maintain payments. Nadia eliminated all financial stress, relocated without constraints, and positioned herself to re-enter Ottawa real estate if/when prices stabilize 2028-2029 at her discretion.

Ottawa-Specific Insight: This case study illustrates why Ottawa federal employees face fundamentally different strategic calculus than Windsor/Hamilton manufacturing workers. Manufacturing workers have limited relocation options and strong local roots making “keep home via proposal” optimal. Federal employees often have transferable skills, national mobility, and equity positions making “sell proactively, relocate strategically” a viable—sometimes superior—path.

---

Case Study 3: James - Hamilton Steel Worker Age 58 (Bankruptcy Was Optimal)

Profile:

• Age: 58, single (divorced, children adult/independent)
• Employment: Steel production, 28 years service
• Layoff notice: February 10, 2026
• Final employment date: June 30, 2026
• Severance: 56 weeks (2 weeks × 28 years) = $75,000 gross, $52,500 after-tax
• Prior income: $72,000 annual
• Mortgage: $220,000 balance (modest owing to 1998 purchase, significant principal paid down)
• Mortgage payment: $1,575/mo, no renewal until 2028
• Unsecured debt: $85,000 ($45,000 credit cards, $40,000 LOC accumulated during 2015 divorce and subsequent years)
• Home value: $310,000 (Hamilton east end)
• Equity: $90,000 after selling costs
• Assets: Vehicle $6,000, RRSP $35,000, no other significant assets

---

Why consumer proposal FAILED analysis:

Proposal terms offered:

• Settlement: $85,000 × 30% = $25,500 over 60 months = $425/mo
• Combined with mortgage: $1,575 + $425 = $2,000/mo debt obligations
• Essentials: $1,350/mo
• Total burn: $3,350/mo

Severance runway:

• $52,500 ÷ $3,350 = 15.7 months (strong runway, seemingly viable)

Post-severance (month 16+):

• EI: $2,250/mo (at $72,000 prior income)
• Obligations: $3,350/mo
• Shortfall: -$1,100/mo
• Requires part-time work of $1,200+/mo to bridge

The age/reemployment problem:

• Age 58, 28 years steel production (single employer, single sector)
• Limited computer skills (plant floor role, minimal office/systems experience)
• Steel sector declining structurally (tariffs make Canadian steel uncompetitive long-term)
• Hamilton steel sector contracting 2026-2028 (Dofasco, Stelco both reducing workforce)

Realistic reemployment timeline:

• 18-24 months to find minimum wage warehouse/logistics work at $35,000-$40,000 annual
• Net income at $38,000: $2,400/mo
• Obligations: $3,350/mo
• Permanent shortfall: -$950/mo
• Proposal payment of $425/mo UNAFFORDABLE on reemployment income
• Completion probability: 30-40% (high failure/annulment risk)

If proposal annulled (failed):

• Returns to pre-proposal status after 18-24 months
• $85,000 debt reinstated at higher balances (interest continues during proposal)
• 18-24 months of payments ($425 × 20 months = $8,500) consumed for nothing
• Creditors resume collection, likely force bankruptcy anyway
• Wasted time and money with no resolution

---

Why bankruptcy was optimal:

Home equity analysis:

• Equity: $90,000
• Ontario bankruptcy exemption: $10,783
• Non-exempt equity: $90,000 - $10,783 = $79,217 must be paid to estate OR home surrendered

Three bankruptcy options:

Option 1: Pay $79,217 to estate (impossible on EI $2,250/mo)

Option 2: Refinance/HELOC to extract $79,217 (denied—age 58, unemployed, cannot qualify)

Option 3: Surrender home for trustee sale (CHOSEN)

---

Bankruptcy filing & outcome:

March 15, 2026:

• James files bankruptcy (not proposal)
• Lists home for trustee sale

April-July 2026 (months 1-4, still on severance):

• Living in home while listed (rent-free during sale process)
• Home sells June 15: $310,000
• Trustee proceeds:
  • Sale price: $310,000
  • Less mortgage payoff: -$220,000
  • Less selling costs: -$15,000
  • Net to estate: $75,000
  • James receives exemption: $10,783 to pocket
  • Estate receives: $64,217

Surplus income calculation during severance:

• Severance: $52,500 over 4.5 months (March-July) = $11,667/mo
• Single threshold: $2,543/mo
• Surplus: ($11,667 - $2,543) × 50% = $4,562/mo
• Duration: 4.5 months
• Total surplus from severance: $20,529

Total to bankruptcy estate:

• Home equity: $64,217
• Severance surplus: $20,529
• Total: $84,746 paid to estate
• Creditors receive: $84,746 ÷ $85,000 debt = 99.7% recovery (nearly full recovery)

August 2026-February 2028 (months 5-24, on EI then reemployment):

• Moved to rental: $1,200/mo (saves $375/mo vs prior mortgage + property tax + insurance + maintenance)
• EI: $2,250/mo
• Essentials: $1,350/mo
• Surplus: +$700/mo (sustainable, no shortfall)
• No debt payments, no proposal obligations
• Saves: $700/mo × 18 months = $12,600 emergency fund rebuilt

February 2028 (month 24):

• Secures logistics warehouse role: $38,000 annual ($2,400 net monthly)
• No surplus income recalculation (bankruptcy already 24 months, approaching automatic discharge)

March 2028 (month 25):

• Bankruptcy automatically discharged (21-month surplus income + 3-month conditional = 24-month total)
• Debts: $85,000 eliminated completely
• No ongoing obligations

---

Financial position age 60 (2028):

• Liquid assets: $10,783 exemption + $12,600 saved during bankruptcy + $18,000 remaining from severance not consumed = $41,383 cash
• RRSP: $35,000 (protected in bankruptcy, untouched)
• Total liquid: $76,383
• Housing: Rental $1,200/mo (comfortable on $38,000 income)
• No debt
• Monthly surplus on $38,000 income: $2,400 - $1,200 rent - $1,000 essentials = +$200/mo (sustainable)

Age 65 retirement plan (2031):

• CPP: ~$1,200/mo (maximum, 40 years contributions)
• OAS: ~$700/mo
• RRSP withdrawal: $35,000 ÷ 20 years life expectancy = $145/mo sustainable
• Total retirement income: $2,045/mo
• Expenses: $1,200 rent + $900 essentials = $2,100/mo
• Shortfall: -$55/mo (minimal, covered by GIS supplement for low-income seniors)

---

Why bankruptcy was correct for James:

1. Age 58 + limited reemployment prospects made $425/mo proposal payments for 60 months (to age 63) unsustainable
2. Steel sector structural decline meant reemployment would be minimum wage logistics/warehouse at 50-60% prior income
3. Proposal completion probability 30-40% = high risk of failure/annulment after 18-24 months, returning to square one
4. Bankruptcy provided complete discharge of $85,000 debt in 24 months, eliminated all ongoing obligations
5. Home surrender was pragmatically optimal:
   • $90,000 equity couldn’t be extracted via refinancing (age + unemployed = denied)
   • Paying $79,217 to estate via proposal over 60 months = impossible on $2,400 reemployment income
   • Surrendering home freed him from $1,575 mortgage + $250 property tax + $150 insurance + $100 maintenance = $2,075 total ownership cost
   • $1,200 rental saves $875/mo vs ownership = better cash flow for age 58-65 pre-retirement years
6. Credit impact same timeframe: Proposal R7 would remain 6-8 years; bankruptcy R9 remains 6-7 years from discharge = similar total impact
7. Retirement planning: Freed from $85,000 debt with $76,000 liquid + $35,000 RRSP = viable modest retirement vs drowning in unaffordable proposal payments to age 63

Emotional difficulty acknowledged: Losing 26-year home was devastating. James had deep ties, memories, community roots. But pragmatic financial analysis showed keeping home via proposal would fail within 18-24 months anyway due to unsustainable $425/mo payments on reemployment income, resulting in proposal annulment → bankruptcy → forced home sale anyway, but 2 years later after wasting $10,000 in proposal payments and accumulating more interest/fees.

Outcome: James received fresh start allowing sustainable retirement planning. Consumer proposals work for 85-90% of laid-off workers, but 10-15% of cases—typically older workers (age 55+) with limited reemployment prospects and declining industry sectors—benefit from bankruptcy’s complete discharge despite short-term home loss.

---

Bottom Line

Filing a consumer proposal within 7 to 14 days of receiving your layoff notice protects 100 percent of severance as an exempt asset under BIA Section 67 while eliminating 60 to 80 percent of unsecured debt, creating proposal payments of 200 to 400 dollars monthly that severance funds for 6 to 12 months during job search, Employment Insurance bridges through months 7 to 15, and reemployment at 70 to 90 percent of prior income sustains through 60-month completion with 90-plus percent success rates for workers executing this emergency protocol versus 50 to 60 percent completion for those waiting until severance depletes.

Every week of delay consumes 900 to 1,200 dollars of severance paying credit cards and lines of credit who eventually accept only 20 to 40 percent through proposals anyway—those dollars cannot be recovered and represent lost financial protection during unemployment when you need every dollar for mortgage and essentials.

The 72-hour emergency protocol—consultation within 48 hours, selection within 72 hours, filing within 7 business days—is non-negotiable for manufacturing workers facing 9-12 month reemployment timelines and federal employees facing 12-18 month timelines where severance runway must be maximized to bridge the gap between layoff and reemployment.

Take Action Now

If you received a layoff notice in the last 7 days:

• Find a Licensed Insolvency Trustee near you or book emergency LIT consultation (federal directory)
• Gather documents tonight (layoff letter, debt statements, mortgage statement, pay stubs)
• Call 2-3 trustees tomorrow morning mentioning “emergency layoff case”
• Do NOT pay credit cards after receiving layoff notice

If you anticipate layoff within 30 days:

• Start trustee research now
• Prepare financial summary document
• Calculate severance runway
• Read complete protocol above to be ready when notice arrives

If you were laid off 2-4 weeks ago:

• Emergency: You’ve already consumed 15-30% of severance cushion
• Book consultation THIS WEEK
• File within 10 business days maximum
• Every additional week depletes runway dangerously

Tools & resources:

• Find a Licensed Insolvency Trustee →
• Calculate your consumer proposal payment →
• Federal OSB trustee directory
• What is a consumer proposal? →
• Consumer proposal vs bankruptcy comparison →

Regional guides:

• Windsor manufacturing workers →
• Ottawa federal employees →
• Hamilton steel/auto workers →
• Oshawa GM workers (Jan 31 layoffs) →

Related crisis content:

• Canada Financial Crisis 2026 Hub → (take risk assessment quiz)
• Mortgage Renewal Crisis 2026 → (if also renewing mortgage)

---

Last Updated: February 2, 2026

Sources:

• Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3), Sections 66.3, 67
• Office of the Superintendent of Bankruptcy: Surplus Income Directives 2026
• Financial Accountability Office of Ontario: “Impacts of US Tariffs” (May 2025)
• Conference Board of Canada: Ottawa federal layoff impact analysis (October 2025)
• Statistics Canada: Labour Force Survey Q2 2025
• Treasury Board of Canada Secretariat: Workforce adjustment policies
• Ontario Employment Standards Act, 2000
• Insolvency practitioner completion rate data 2023-2025

Disclaimer: This content provides general information about consumer proposals and bankruptcy for laid-off workers in Canada. It does not constitute financial, legal, or professional advice specific to your situation. Consult a Licensed Insolvency Trustee for personalized assessment. Severance protection, reemployment timelines, and proposal acceptance rates are based on historical data and industry standards; individual outcomes may vary. Always verify severance terms with your employer and proposal terms with your trustee before proceeding.