Why This Court Decision Matters for Anyone Considering a Consumer Proposal in Canada
What the Court Actually Decided, And What It Means for You
On Wednesday, April 22, 2026, a court released a decision involving two consumer proposals that our firm, Metus Lykos Debt Law Firm, filed on behalf of our clients.
The Office of the Superintendent of Bankruptcy (“OSB”) objected to those proposals on the basis that our legal fees had not been disclosed. We took the position that those fees were protected by solicitor–client privilege.
The court ruled that the fees must be disclosed. But crucially, it also confirmed that Canadians have the right to have a law firm represent them throughout the insolvency process.
This is something we at Metus Lykos have been advocating for a long time.
As a law firm, we are not an unregulated “debt advisor.” We are regulated by the Law Society, and Canadians are entitled to have us in their corner.
The OSB has been trying to address the issue of unregulated debt advisors — companies that often act as referral services to trustees, adding costs without adding real value. Lack of transparency, poor service, and questionable practices have hurt vulnerable Canadians who are already in difficult situations.
We at Metus Lykos Debt Law Firm wholeheartedly agree with the OSB on this matter: unregulated debt advisors need to be addressed.
Do You Have the Right to a Lawyer During a Consumer Proposal?
What is wrong with Canadians having a lawyer on their side when they are dealing with insolvency?
A consumer proposal is not a casual conversation. It is a legal process with real consequences.
Licensed Insolvency Trustees (LITs) are expected to act neutrally between debtors and creditors, and many of them are people who take that responsibility seriously. But neutrality is not the same as advocacy.
A lawyer’s duty is clear. Here at Metus Lykos Debt Law Firm, we act for our clients, protect their interests, and secure the best possible outcome for them.
How Trustee Compensation Works, And Why Independent Legal Advice Matters
In a consumer proposal, trustee compensation is tied, in part, to the size of the debt load of the proposal. Meaning, if the dollar amount of a proposal increases, the compensation to the trustees increases.
This doesn’t mean trustees are acting improperly, but it does mean there are built-in financial incentives in the system.
And when someone is dealing with overwhelming debt, often for the first time in their life, they deserve someone whose duty is exclusively to them.
Real Example: What Happens When a Debtor Faces a Formal Examination Alone
Metus Lykos had a client who was required to attend a formal examination under oath regarding their financial affairs. The notice they received made it clear that failing to attend could lead to serious consequences, including potential imprisonment.
No one should have to walk into a process like that alone.
Your Legal Rights in a Consumer Proposal: What the Court Said
- Canadians have the right to legal representation throughout the insolvency process.
- A law firm is not a “debt advisor.”
- Independent legal advice has a place in insolvency proceedings.
Considering a Consumer Proposal? Here’s How a Debt Lawyer Can Help
Canadians should understand their rights, have options, and have someone on their side.
If you are considering a consumer proposal or just trying to figure out your options, take the time to understand the process. Ask questions and get advice.
Speak With a Licensed Debt Law Firm in Ontario
If you want to speak with a licensed law firm that will take the time to understand your situation and advocate for you, we’re here to help.
Email: info@debtlaw.ca
Phone: 905-232-3222
