Options, Costs and 2026 Rules
How consumer proposals and bankruptcy work under the Bankruptcy and Insolvency Act, what they cost, what you keep and which debts survive.
consumer proposal vs bankruptcy Canada
Consumer proposal or bankruptcy? Debt relief in Canada, step by step
When debts can no longer be paid on schedule, Canadian law offers a handful of formal and informal ways out. These guides explain how each one works in 2026, what it costs under the federal rules, and how to check every claim with the official source.
- Compare credit counselling, debt management plans, consumer proposals, bankruptcy and provincial programs
- Work out surplus income, proposal costs and plan payments with the calculators and worked examples
- Spot unlicensed debt consultants and use the OSB, FCAC and provincial sources to verify
Start hereBankruptcy Surplus Income Payment Estimator (2026 standards)
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Calculations and Checklists
Surplus income, proposal offers, plan payments and asset scenarios worked out step by step, plus checklists for meeting a trustee and keeping your duties.
Pitfalls, Failed Plans and Official Sources
Why proposals fail, how unlicensed debt consultants operate, credit report effects, Quebec and provincial programs, and where to verify everything.
Start here
Options, Costs and 2026 Rules
Consumer proposal rules in Canada: the $250,000 limit, the 45-day vote and the 5-year maximum
Who can make a consumer proposal under the BIA in 2026, how the $250,000 limit is counted, the step-by-step timeline, creditor voting and the proposed $325,000 change.
Options, Costs and 2026 Rules
Consumer proposal vs bankruptcy in Canada: how to choose in 2026
How a consumer proposal and personal bankruptcy compare in Canada in 2026 on eligibility, cost, assets, income, duration and credit impact, with the alternatives.
Pitfalls, Failed Plans and Official Sources
How long does a consumer proposal or bankruptcy stay on your credit report in Canada?
Equifax and TransUnion retention periods for consumer proposals, bankruptcies and debt management plans by province according to the FCAC, with worked timelines and rebuilding steps.
Pitfalls, Failed Plans and Official Sources
Debt relief mistakes Canadians make, and the official sources to check first
Common mistakes with consumer proposals, bankruptcy and debt help in Canada, illustrative failure cases, and the federal and provincial official sources to verify rules.
Calculations and Checklists
Debt relief in Canada worked out: one household, four options, the arithmetic shown
An illustrative Ontario borrower with $42,000 of unsecured debt compared across repaying, a debt management plan, a consumer proposal and bankruptcy, using 2026 rules.
Options, Costs and 2026 Rules
Surplus income in a Canadian bankruptcy: the 2026 standards and the 50% rule
How surplus income works in a Canadian bankruptcy under OSB Directive 11R2-2026, the 2026 Superintendent's standards, the $200 threshold and how it extends the bankruptcy.
Tools
Bankruptcy Surplus Income Payment Estimator (2026 standards)
Estimate the monthly surplus income payment in a personal bankruptcy from your household's available income and the Superintendent's 2026 standard.
Consumer Proposal Cost Split Estimator
See roughly how the money you pay into a consumer proposal splits between the administrator's tariff fees, fixed costs and your creditors.
Debt Management Plan Saving Calculator
Compare clearing unsecured debt at its current interest rate with a credit counselling debt management plan at a reduced rate over the same period.
Licensed Insolvency Trustee First Meeting Checklist
Documents to bring and questions to ask before you choose between a consumer proposal, bankruptcy or another debt solution.
Debt relief options in Canada compared
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Negotiating directly with creditors | You ask each lender for a hardship arrangement, lower payment or reduced interest | Short-term problems with one or two creditors | No legal protection; arrangements may still be reported to credit bureaus |
| Debt consolidation loan | A new loan pays off several debts at a lower rate | Good credit and a stable income, where the rate truly falls | Only helps if the total cost falls and you stop borrowing again |
| Debt management plan (non-profit credit counselling) | Voluntary plan: you repay full principal through an agency, often with interest reduced or waived | Steady income that can repay principal within about 5 years | Creditors can refuse; no stay of lawsuits; noted on credit report until 2 years after completion |
| Orderly Payment of Debts (AB, NS, SK, PEI) | Court consolidation order under BIA Part X; one payment to an administrator | Residents of participating provinces with eligible debts | Repays debts in full; not every debt can be included; available only in some provinces |
Frequently asked questions
What is the difference between a consumer proposal and bankruptcy?
A consumer proposal is a legally binding deal, made through a Licensed Insolvency Trustee, to repay part of your unsecured debt over up to five years while you keep your assets. Bankruptcy releases most debts but you give up non-exempt assets and may make surplus income payments. Both stop most collection action once filed.
What is the debt limit for a consumer proposal in 2026?
Your total debts, excluding debts secured by your principal residence, must be $250,000 or less (BIA s. 66.11). A proposed change to $325,000 was published for comment in November 2025 but was not in force when we checked in October 2026. Above the limit, a Division I proposal is the alternative.
How long does a first bankruptcy last?
A first-time bankrupt is normally discharged automatically after 9 months, or 21 months if surplus income payments are required, provided nobody opposes the discharge and counselling has been completed. A second bankruptcy takes 24 or 36 months.
Can I include student loans?
Government student loans are not released if you file while still a student or within 7 years of ceasing to be a full- or part-time student (BIA s. 178(1)(g)). After 5 years you can ask the court for hardship relief. Older student loans are included like other unsecured debts.
Do I lose my house or car?
In a consumer proposal you generally keep both as long as you keep paying the mortgage and car loan. In a bankruptcy, equity above your province's exemptions may have to be paid to the estate. Ask a trustee to estimate it for your province.
Who can legally file a consumer proposal for me?
Only a Licensed Insolvency Trustee acting as administrator. Debt consultants and settlement firms cannot file; many simply refer you to a trustee after charging a fee. Check any trustee in the OSB's public search.
How long does a proposal or bankruptcy stay on my credit report?
According to the FCAC, a consumer proposal is removed 3 years after it is paid off or 6 years after you signed it, whichever comes first. A first bankruptcy usually stays 6 years after discharge, 7 years with TransUnion in Newfoundland and Labrador, Ontario, PEI and Quebec.
Is credit counselling free?
Non-profit credit counselling sessions are usually free or low-cost, but a debt management plan may involve modest monthly fees. Ask for every fee in writing, and be wary of firms that charge large upfront fees.
How this site is made
Debt Exit Map is an independent information project. Guides are drafted with the help of AI writing tools and checked against official and primary sources before publication; see our Editorial Policy. We are not affiliated with any provider mentioned on the site and do not sell products or services.