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.
You can make a consumer proposal in Canada if you are an individual who is insolvent or bankrupt and your total debts, excluding debts secured by your principal residence, are not more than $250,000 (Bankruptcy and Insolvency Act, s. 66.11). The proposal is prepared and filed by a Licensed Insolvency Trustee acting as administrator, must be completed within five years (s. 66.12(5)), and becomes binding on all unsecured creditors once it is accepted, or deemed accepted, and approved, or deemed approved, by the court. A rule change that would raise the limit to $325,000 was proposed in the Canada Gazette on 29 November 2025, but it was not in force on 27 October 2026.
Part of the consumer proposal vs bankruptcy overview. General information, not legal advice.
Who qualifies
The BIA calls an eligible person a consumer debtor. Three conditions apply:
- You are an individual. Corporations cannot make a consumer proposal. A sole proprietor can, because the business debts are personal debts.
- You are insolvent (you owe at least $1,000 and cannot meet your obligations as they come due, or your assets would not cover your debts), or you are already bankrupt.
- Your debts are within the limit: $250,000 or less, excluding debts secured by your principal residence.
How the $250,000 is counted
| Debt | Counts toward $250,000? |
|---|---|
| First mortgage on your principal residence | No |
| Home equity line of credit secured on your principal residence | No, because it is secured by the residence |
| Car loan | Yes (it is secured, but not by your residence) |
| Credit cards, unsecured lines of credit, personal loans | Yes |
| Income tax owed to the CRA | Yes |
| Student loans | Yes, even if they would not be released |
| Mortgage on a rental property | Yes |
The limit is per debtor. Couples whose finances are linked can file a joint consumer proposal where the OSB's directives allow it; ask the trustee how the limit applies to a joint filing in your situation. If your debts exceed the limit, the alternative is a Division I proposal, where creditors must vote and a rejection leads to bankruptcy.
The proposed $325,000 limit
The Regulations Amending the Bankruptcy and Insolvency General Rules and the Companies' Creditors Arrangement Regulations, pre-published in the Canada Gazette, Part I, on 29 November 2025, would prescribe $325,000 under s. 66.11 and index it to inflation each April from 2027. The same draft would raise the summary administration asset threshold from $15,000 to $20,000 and update trustee fees. As drafted, these parts would take effect only on the first anniversary of the final regulation's registration, and proceedings already started would stay under the old rules. When we checked on 27 October 2026, the General Rules on the Justice Laws website were current to 30 September 2026 and still had no amending regulation, and no final regulation had been published in the Canada Gazette, Part II, up to its 21 October 2026 issue, so $250,000 is the limit in force. Check the OSB website before relying on either figure.
Step by step: from first meeting to certificate
| Step | What happens | Time limit in the BIA |
|---|---|---|
| 1. Assessment | The LIT reviews your income, debts, assets and alternatives | Before filing |
| 2. Filing | The proposal and your statement of affairs are filed with the Official Receiver; the stay of proceedings starts | Day 0 |
| 3. Report to creditors | The administrator sends creditors the proposal, a report and a proof of claim form | Within 10 days (s. 66.14) |
| 4. Creditor review | Creditors can accept, reject or ask for a meeting | 45 days (s. 66.15) |
| 5. Meeting, if requested | Called if the Official Receiver directs it or creditors with at least 25% of proven claims ask | Held within 21 days of being called |
| 6. Deemed acceptance | If no meeting is required by the end of the 45 days, the proposal is deemed accepted (s. 66.18) | Day 45 |
| 7. Court approval | Deemed approved unless a review is requested | 15 days after acceptance (s. 66.22) |
| 8. Payments | You pay the administrator, who distributes to creditors at least every three months | Up to 5 years |
| 9. Counselling | Two counselling sessions | During the proposal |
| 10. Certificate of full performance | Issued when all payments and duties are complete | At the end |
What a proposal can and cannot do
- Covers unsecured debts: cards, lines of credit, personal loans, payday loans, CRA income tax and GST/HST owed personally, unpaid utility and phone bills, deficiencies after a vehicle repossession.
- Does not bind secured creditors unless they choose to participate. To keep your house and car, you keep paying the mortgage and the car loan.
- Does not release the debts listed in s. 178(1), such as support, fines and recent student loans, unless the creditor agrees; see debts that survive.
- Stops interest on included unsecured debts from the filing date.
- Stops collection: lawsuits, garnishment and collection calls by unsecured creditors (s. 69.2); see the stay of proceedings.
How much to offer
There is no fixed percentage. Creditors compare your offer with what they would get in a bankruptcy, after fees, and with what you can afford over the term. A trustee will typically build the offer from your surplus income and non-exempt asset values, then add a margin. The consumer proposal offer calculation shows the arithmetic, and the proposal cost split estimator shows how much of each payment reaches creditors after the tariff fees and the 5% OSB levy.
Illustrative example. You owe $52,000 in unsecured debt. The trustee estimates that creditors would receive about $11,000 in a bankruptcy. An offer of $350 a month for 60 months ($21,000 in total) leaves creditors about $15,200 after fees and the levy on the exact tariff calculation, before sales tax ($21,000 − $1,793.17 fixed costs = $19,206.83; ÷ 1.2 = $16,005.69 distributed; less the 5% levy of $800.28), which is more than the bankruptcy estimate. A lower offer might be rejected; a higher one might be unaffordable.
Changing or failing a proposal
You can apply to amend a proposal if your circumstances change. If you pay monthly and fall behind by three payments, the proposal is deemed annulled (s. 66.31), the stay ends and creditors can resume collection; see default and annulment. Paying the full amount early is allowed and ends the proposal sooner.
When to get advice
A Licensed Insolvency Trustee must explain the alternatives before you file. Get independent legal advice if you are separating, if a creditor alleges fraud, or if you have property or debts outside Canada.
Related: what the proposal costs is set by the tariff in trustee fees and the OSB levy, and the assets you keep matter because of exemptions by province.
Frequently asked questions
Can creditors refuse my proposal?
Yes. If a meeting is called and creditors holding a majority in value of the claims voting reject it, the proposal fails. You can make a new proposal, try another solution or file for bankruptcy. A failed consumer proposal does not automatically make you bankrupt.
Can I make a consumer proposal if I am already bankrupt?
Yes, a bankrupt can make a consumer proposal, which, if approved, can annul the bankruptcy. This is sometimes used when income or assets turn out to be higher than expected.
Do I need to stop using credit cards?
Cards included in the proposal are cancelled by the issuer. You can keep paying a secured car loan or mortgage, and many people use a secured credit card afterwards to rebuild their record.
Is there a minimum debt?
The BIA definition of insolvency requires debts of at least $1,000. In practice, trustees rarely recommend a proposal for small amounts that a budget or a DMP could handle.
Sources
- Justice Laws Website — BIA ss. 66.11–66.4 (consumer proposals), s. 2 (insolvent person)
- Office of the Superintendent of Bankruptcy — consumer proposal guide and trustee search
- Canada Gazette — Part I, Vol. 159, No. 48 (29 November 2025), proposed General Rules amendments
- Financial Consumer Agency of Canada — managing debt and credit report information
