Understanding Consumer Proposals: A Real-World Scenario

Senga Bailey
June 19, 2023


Consumer Proposals can be a lifeline for Canadians struggling with unsecured debt. They offer a structured and legally binding approach to paying off creditors without losing crucial assets. But what does this look like in practice? Let’s explore a real-world example of how a Consumer Proposal can work.

The Case Study

Our case study involves an individual with $78,000 in unsecured debt. This debt includes loans from various sources such as Eastern Loans, Easy Financial, My Canada Payday, and more. They also owe a substantial amount to the Canada Revenue Agency in personal taxes. This individual also has a secured debt of $15,000 to Carfinco, with a 2013 Nissan Maxima as security.

Their net monthly income is $3,800, which exceeds the Superintendent’s Standards maximum allowed for a family of one, resulting in a surplus income calculation of $1,257. Half of which gets paid to the creditors and half you keep.

The Consumer Proposal

Given their financial situation, the debtor opts for a Consumer Proposal where they offer to repay 30% of the total unsecured debt, amounting to $22,200. If the creditors accept the proposal, the debtor will make monthly payments of $390 for 60 months.

In addition to the payments, the debtor will attend two mandatory counselling sessions. These meetings are designed to help debtors understand the causes of their debt problems and provide practical advice on budgeting, money management, and how to use credit wisely.

What About the Car?

The debtor’s secured debt, a car loan with Carfinco, isn’t included in the Consumer Proposal. This is because secured debts are tied to an asset – in this case, the 2013 Nissan Maxima. The debtor will continue to make regular vehicle payments to Carfinco and keep their car, so long as they keep up with the agreed payments. Alternatively they may choose to return the vehicle and include any shortfall on the loan in the proposal.


After 60 months (five years), if all payments have been made and the counselling sessions attended, the debtor will be released from the remaining balance of the unsecured debt. Essentially, they’ll have eliminated their $78,000 debt by paying just $22,200 over five years, without having to sell off their essential assets, like their car.

This case illustrates how a Consumer Proposal can be an effective tool to manage and eliminate substantial unsecured debt. Each situation is unique, and it’s recommended to seek advice from a Licensed Insolvency Trustee to explore your options and understand what’s best for your financial situation.


Disclaimer: This blog post is intended to provide general information and does not constitute financial advice. Please consult with a financial advisor or a Licensed Insolvency Trustee for personalized advice.