What is the Total Cost of a Consumer Proposal?
The total cost of a consumer proposal in Canada includes not only your monthly repayment amount but also the long-term impact on your credit and mortgage borrowing power. A consumer proposal is a legally binding debt relief option filed through a Licensed Insolvency Trustee (LIT). It allows you to settle your unsecured debt by repaying a portion of what you owe—typically 40% to 60%—over a period of up to five years. Once accepted by a majority of creditors, it stops wage garnishments, collection calls, and interest charges.
It’s a popular alternative to bankruptcy in Canada for individuals who still have income or assets, like home equity, and want to avoid losing them.
What Debts Are Included in a Consumer Proposal? Consumer proposals can cover:
- Credit card balances
- Personal loans
- Payday loans
- CRA tax debt
Secured debts, like your mortgage or car loan, are not included and must continue to be paid separately.
Consumer Proposal vs. Bankruptcy: Key Differences
| Feature | Consumer Proposal | Bankruptcy |
|---|---|---|
| Asset Protection | You keep your assets | Some assets may be surrendered |
| Debt Forgiveness | Partial | Nearly total |
| Monthly Payments | Fixed and affordable | Based on income thresholds |
| Credit Score Impact | R7 (moderate) | R9 (severe) |
| Duration on Credit Report | 3 years after completion | 6 years after discharge |
| Public Record | Yes | Yes |
Advantages of a Consumer Proposal
- Legally stops interest, collections, and wage garnishments
- Allows you to retain your home and vehicle
- Reduced repayment amount
- Flexible terms up to 60 months
- More favourable than bankruptcy for mortgage refinancing
Disadvantages of a Consumer Proposal
- Serious hit to your credit score (often drops to 500s)
- Appears on your credit report for up to 6 years from the filing date
- Cannot include mortgage debt
- Limits your ability to get new credit while in the proposal
- May delay refinancing opportunities with A-lenders
Let’s take the next step—together. If you’re considering paying out a consumer proposal using your home equity, we can walk you through your options with clarity and care. Speak to a Sunlite Mortgage advisor today and take the next step toward financial peace of mind.
Consumer Proposal Trends in Canada: Filing Data (2020–2025 YTD)
Visit the Office of the Superintendent of Bankruptcy Canada for the latest insolvency statistics and resources.
Consumer proposals have surged across Canada, reflecting growing financial stress from inflation, rising interest rates, and high household debt. Here’s how the trend has developed:
| Year | Filings |
|---|---|
| 2020 | 63,200 |
| 2021 | 72,200 |
| 2022 | 78,400 |
| 2023 | 83,000 |
| 2024 | 87,200 |
| 2025 YTD | 41,000 |
2025 Consumer Proposal Filings by Province
| Province | Filings |
|---|---|
| Ontario | 18,200 |
| Quebec | 10,800 |
| Alberta | 5,400 |
| British Columbia | 3,900 |
| Other Provinces | 2,700 |
Ontario consistently leads the country, likely due to higher property values and cost of living. However, the trend is national. More Canadians are filing consumer proposals than bankruptcies—and many of them are homeowners.
Plan wisely. Move confidently. Your financial recovery is a journey—and with the right plan in place, it doesn’t have to be uncertain. Sunlite Mortgage can help you pay down your proposal, rebuild your credit, and prepare for your next chapter.
Three Borrowers, Three Paths: How Paying Off a Consumer Proposal Impacts Long-Term Cost
Whether you’re working with a private lender, a bank, or a B-lender, the timing of when you pay off your consumer proposal significantly affects how much interest you’ll pay—and how soon you can refinance.
| Scenario | Description | Total Payment | Interest Paid |
|---|---|---|---|
| 1 | Paid off early: $700K mortgage + $150K debt, refinanced with B-lender at 6.99% (3 yrs), 5.99% (1 yr), then A-lender at 4.39% | ~$1,371,970 | ~$728,029 |
| 2 | Second mortgage for CP at 9.99%; kept first mortgage at 4.39%, refinanced at 6.25%, then 4.39% | ~$1,506,156 | ~$743,844 |
| 3 | Paid CP over 6 years; kept mortgage at 4.39%, then renewed at 6.99% (3 yrs), 4.39% after; CP cost added | ~$1,656,248 | ~$526,252 (includes ~$82,500 CP) |
Make informed choices with advice you can count on.
Let Sunlite Mortgage help you rebuild with confidence, starting with a conversation that puts your goals first.
Should You Pay Off a Consumer Proposal Early?
Read next: Should I File a Consumer Proposal and Then Refinance My Mortgage?
If you have equity in your home, the answer is often yes.
Paying off your consumer proposal early can significantly reduce your long-term interest costs, shorten your credit reporting timeline, and expedite your return to A-lender mortgage rates.
At Sunlite Mortgage, we help homeowners make strategic refinancing decisions that align with their recovery goals.
📞 Ready to take the next step? Connect with a Sunlite Mortgage advisor to explore your options.
