What Is a Consumer Proposal?
A Consumer Proposal is a legal agreement under the Bankruptcy and Insolvency Act (Canada). It lets you settle unsecured debt for less than the full amount you owe, paid over a period of time that you can afford. The proposal is filed by a Licensed Insolvency Trustee (LIT), but having a debt lawyer on your side means you have an advocate whose legal duty runs entirely to you — not to your creditors, and not to the court.
Consumer Proposals are available to individuals with $10,000 to $250,000 in unsecured debt. Common types of unsecured debt covered include credit cards, personal loans, lines of credit, payday loans, income tax debt, and student loans (subject to eligibility rules). You can learn more about eligibility and how the process works on our Consumer Proposal service page.
From the moment you begin the process to the day your debt is legally discharged, here is exactly what the timeline looks like.
The Consumer Proposal Timeline: Stage by Stage
How long does a Consumer Proposal take from start to finish? There are five key stages. Each one has a defined timeframe.
- Initial consultation and assessment (1 to 2 weeks). You meet with a debt professional to review your income, debts, and assets. A payment plan is structured based on what you can realistically afford and what creditors are likely to accept. We provide legal advice throughout this stage so you understand your rights and options before anything is formally filed.
- Filing the proposal (1 to 5 days after the decision is made). The Consumer Proposal is formally submitted to the Office of the Superintendent of Bankruptcy (OSB) by a Licensed Insolvency Trustee. From the moment the proposal is filed, a legal stay of proceedings takes effect immediately. This means collection calls must stop, wage garnishments must stop, and creditors cannot take further legal action against you.
- Creditor voting period (45 days). Once the proposal is filed, creditors have 45 days to review and vote. They can accept, reject, or request a creditors’ meeting to negotiate changes. If creditors holding the majority of your debt (by dollar value) accept the proposal, it is deemed accepted by all creditors. If no response is received within 45 days, the proposal is automatically deemed accepted.
- Court approval period (15 days after creditor acceptance). After creditors accept the proposal, there is a 15-day window during which the OSB or another interested party can ask the court to review the terms. If no review is requested, the proposal is deemed approved by the court. In total, the approval process typically takes 45 to 60 days from the date the proposal is filed.
- Payment period (up to 60 months). Once the proposal is approved, you begin making your agreed monthly payments. These payments are fixed — they do not change if your income goes up or down. Interest does not accrue. There are no additional fees added to the balance. You also complete two mandatory financial counselling sessions during this period. When all payments are made and both counselling sessions are done, your remaining debt is legally discharged.
How Long Does a Consumer Proposal Take to Get Approved?
Approval happens in two steps. Creditors have 45 days to vote after the proposal is filed. After that, there is a 15-day court review window. If no objections are raised, the proposal is deemed approved. In practice, most proposals are approved without complication within 45 to 60 days of filing.
During those 45 to 60 days, the stay of proceedings is already active. You are already legally protected. Collection efforts must stop from the moment the proposal is filed, not from the date of approval. That protection begins immediately.
Can You Pay Off a Consumer Proposal Early?
Yes. There is no minimum term and no prepayment penalty under the Bankruptcy and Insolvency Act. You can accelerate your monthly payments, make lump-sum contributions at any time, or pay off the entire remaining balance whenever you have the funds to do so.
Paying off early does not change the amount you owe under the proposal. It simply shortens the timeline. This is one of the most underused advantages of a Consumer Proposal. If you receive a tax refund, an inheritance, or a bonus, you can direct that money toward your proposal and complete the process years ahead of schedule.
Use our debt repayment calculator to see how different payment amounts affect your payoff timeline. Seeing those numbers in real terms often changes how people think about early repayment.
Consumer Proposal vs Bankruptcy: Timeline Comparison
One of the most common questions we hear is: which is faster, a Consumer Proposal or bankruptcy? The honest answer is that it depends on your situation. Here is how the two compare across the most important dimensions.
| Factor | Consumer Proposal | Bankruptcy |
|---|---|---|
| Approval timeline | 45 to 60 days | Automatic upon filing |
| Minimum payment period | No minimum (early payoff allowed) | 9 months (first bankruptcy, surplus income rules may extend) |
| Maximum payment period | 60 months (5 years) | 21 months if surplus income applies (first bankruptcy) |
| Payments fixed? | Yes — set at the time of filing | No — surplus income payments vary monthly with income |
| Asset protection | Yes — you keep your assets | No — non-exempt assets may be surrendered |
| Credit report impact | 3 years after completion (R7 rating) | 6 years after discharge, first time (R9 rating) |
| Collections stop? | Yes — immediately upon filing | Yes — immediately upon filing |
For a deeper breakdown of these two options, our article on Consumer Proposal vs bankruptcy covers the key differences in plain language.
What Happens to Your Credit While the Proposal Is Active?
Once a Consumer Proposal is filed, your credit report is updated with an R7 rating on the accounts included in the proposal. This reflects that you are repaying your debts through an arrangement. It is not the same as a default or a write-off.
The Consumer Proposal notation remains on your Equifax and TransUnion credit reports for 3 years after you complete all payments, or 6 years from the date it was filed, whichever comes first. For someone who completes a 4-year proposal, the credit record clears approximately 3 years later, meaning the total impact spans about 7 years from filing. For someone who pays it off in 2 years, the record could clear in as little as 5 years from the filing date.
Many people begin rebuilding their credit during the proposal period, not just after. Using a secured credit card responsibly while your proposal is active is a practical way to start improving your credit file before the proposal even ends.
What Factors Affect How Long Your Consumer Proposal Takes?
The length of your Consumer Proposal depends on choices you make when the proposal is structured. Here are the main factors that affect the timeline:
- Total debt amount. Larger balances generally require longer payment terms to keep monthly payments affordable.
- Your income and budget. The monthly payment is based on what you can afford, balanced against what creditors are likely to accept. A higher monthly payment means a shorter timeline.
- Lump-sum availability. If you have assets you can liquidate or family who can contribute a lump sum, the proposal can be structured to pay out in a very short time, sometimes in a single payment.
- Creditor negotiations. In most cases, creditors accept the proposal as filed. In some cases, creditors may request a creditors’ meeting and negotiate for slightly higher terms. This can affect the monthly amount and therefore the length of the proposal.
- Early voluntary payments. Any additional amounts you pay above the monthly minimum go directly toward the balance and shorten the remaining term.
What Happens at the End of a Consumer Proposal?
When you make your final payment and complete both mandatory financial counselling sessions, the remaining unsecured debt included in your proposal is legally discharged. You receive a Certificate of Full Performance. The discharged debt is gone. You cannot be sued for it, and creditors cannot contact you about it.
This is one of the most significant differences between a Consumer Proposal and an informal debt settlement. In a Consumer Proposal, the discharge is a legal fact governed by federal legislation. In informal negotiations, a creditor who agrees to settle could theoretically claim the remainder later if the agreement is not properly documented. The legal certainty of a Consumer Proposal is a major reason clients choose it.
We are a law firm, not a Licensed Insolvency Trustee. Our role is to represent your legal interests throughout every stage of the process. We make sure the terms of your proposal are as favourable as possible, that your rights are protected during the creditor voting period, and that you understand exactly what you are agreeing to before a single document is filed. To explore what this looks like for your situation, visit our Consumer Proposal service page.
Why a Debt Lawyer Makes a Difference
A Licensed Insolvency Trustee administers the Consumer Proposal process. That is their legal role, and it is a neutral one. They are not permitted to be your advocate. They serve the process, not you personally.
We are different. As a law firm licensed by the Law Society of Ontario, our legal duty runs entirely to you. We advise you on your legal rights. We review the terms before anything is filed. We flag anything that could work against your interests. We represent you if creditors push back during the voting period.
The LIT files and administers the proposal. We make sure what gets filed reflects your best possible outcome. That distinction matters in ways people do not always see until they need it.
Ready to Take the First Step?
If you are carrying more debt than you can manage, we can walk you through your options in a free, confidential conversation. No pressure, no obligation. Just clear answers about what the Consumer Proposal timeline could look like for you.
Frequently Asked Questions
How long does a Consumer Proposal take from start to finish?
From the initial consultation to the final discharge, a Consumer Proposal typically takes 3 to 5 years for most Canadians. The approval process alone takes 45 to 60 days after the proposal is filed. The payment period runs for however long the agreed payment schedule requires, up to a maximum of 60 months. If you pay it off early, the entire process can be shorter.
Can I pay off my Consumer Proposal early?
Yes. There is no minimum term and no prepayment penalty under the Bankruptcy and Insolvency Act. You can make extra payments at any time, increase your monthly amount, or pay off the remaining balance in a lump sum. The proposal completes as soon as all agreed payments are made and both counselling sessions are done, regardless of how many months remain on the original schedule.
How long does it take for creditors to approve a Consumer Proposal?
Creditors have 45 days from the date the proposal is filed to vote. If creditors holding the majority of the debt by value accept, the proposal is deemed accepted by all creditors. There is then a 15-day window for court review. If no objections are raised, the proposal is approved. Total approval time is typically 45 to 60 days.
What happens if creditors reject the Consumer Proposal?
If creditors holding more than half the total debt by value vote to reject the proposal, the proposal does not proceed as originally submitted. In this situation, a creditors’ meeting is called. At the meeting, the terms can be negotiated, amended, and voted on again. Most proposals that reach this stage are resolved through negotiation. If no agreement is reached, other options — including a Division 1 Proposal for larger debts — may be considered. Having legal representation is particularly important if a creditors’ meeting occurs.
Does the Consumer Proposal stay on my credit report for 7 years?
The rule is 3 years after you complete all payments, or 6 years from the date of filing, whichever comes first. For most people, completion takes 3 to 5 years. If you complete in 4 years, the proposal drops off 3 years later, meaning about 7 years from filing in total. If you pay it off in 2 years, it could drop off as early as 5 years from filing. Paying off early can meaningfully shorten the credit impact period.
What are the two financial counselling sessions in a Consumer Proposal?
Both counselling sessions are mandatory under the Bankruptcy and Insolvency Act. The first session typically covers budgeting, warning signs of financial difficulty, and the factors that led to debt. The second session focuses on money management, financial goal-setting, and building habits for long-term stability. Both sessions are conducted by a qualified counsellor, usually through the Licensed Insolvency Trustee’s office. Completing both is a legal requirement before the debt can be discharged.
Can a Consumer Proposal be extended beyond 5 years?
No. Five years (60 months) is the maximum allowed under the Bankruptcy and Insolvency Act. A Consumer Proposal cannot be extended beyond this limit. If you are unable to maintain payments during the proposal period, there are mechanisms to amend the proposal terms, but the total duration cannot exceed 60 months. If an amendment is not possible and you miss three payments, the proposal may be annulled, which has serious consequences. This is another reason having legal advice throughout the process matters.
Is a Consumer Proposal faster than bankruptcy?
It depends. A first bankruptcy with no surplus income is discharged in 9 months, which is faster than most Consumer Proposals. However, bankruptcy involves surrendering non-exempt assets, monthly surplus income payments that fluctuate with earnings, and a credit record that lasts 6 years after discharge. A Consumer Proposal protects your assets, has fixed payments, and clears from your credit report 3 years after completion. For most people with regular income and assets to protect, the Consumer Proposal offers a better overall outcome even if the timeline is longer.
What if I miss payments on my Consumer Proposal?
Missing up to three monthly payments within any 12-month period does not automatically end the proposal, but it creates a serious risk. If you fall more than three payments behind without an amendment being filed, the proposal is deemed annulled. When a Consumer Proposal is annulled, the stay of proceedings lifts, your creditors can resume collection efforts and legal action, and you lose the legal protection the proposal provided. If you anticipate difficulty making payments, the right step is to contact your trustee and legal representative immediately to explore whether the proposal terms can be amended.
How is a Consumer Proposal different from debt consolidation?
Debt consolidation combines multiple debts into a single loan, usually at a lower interest rate. You still repay the full amount you owe, plus interest. A Consumer Proposal legally reduces the total amount you owe and stops all interest from accumulating. There is no new loan involved. The two are fundamentally different. Debt consolidation is a credit product. A Consumer Proposal is a legal proceeding under federal legislation. Our article on debt consolidation vs Consumer Proposal breaks down the differences in detail.
