If you’ve recently filed a consumer proposal, you might be waiting to find out whether it’s been accepted by your creditors. This can be a stressful time because there may be some uncertainty about what will happen if you have your consumer proposal rejected by your creditors.
While the majority of consumer proposals are accepted on the first round, you should prepare yourself for the possibility that you’ll have to go back to the drawing table. Find out what happens when your consumer proposal is rejected, and what other debt solutions you can consider if you can’t get it approved.
Marble Fast-Track Loan
Marble Fast-Track Loan
Build up your credit score
Competitive interest rates
Loans available to pay out consumer proposals
Marble Fast-Track Loan
Apply today for a credit builder loan and improve your financial health. Borrow anywhere from $2,500 to $15,000. This loan is strictly for borrowers exiting a consumer proposal.
APR: 18.99% – 24.99%
Loan amounts: $2,500-$15,000
Loan terms: 36-84 months
Fees: Legal and admin fees of $295 - $1,500 (based on size of loan)
A consumer proposal is an agreement that you’ll enter into with a designated legal “trustee” (also called a Licensed Insolvency Trustee). This agreement is designed to give you some relief from your debt and your creditors. It does this by forgiving a portion of the money you owe and setting a payment schedule that fits your budget.
Once your consumer proposal is accepted, you’ll only have to pay one easy monthly payment. Your credit score will also go down to one of the lowest scores possible. This will affect your ability to apply for loans and other forms of financing. A note that you had a consumer proposal will also stay on your credit report for up to three years after you pay it off, which will keep your credit score low for that amount of time.
Compare credit builder loans
How do consumer proposals get approved?
Your Licensed Insolvency Trustee will work with you to negotiate an agreement to submit to your creditors. Once the agreement is submitted, your creditors will have 45 days to accept or reject your offer. The majority of your creditors (75% or over) will need to accept the agreement for it to proceed.
If 75% of your creditors vote for your consumer proposal to pass, the creditors that voted “no” will have to abide by the agreement as it has been laid out. If more than 25% of your creditors vote to reject your offer, they’ll need to have a special meeting to negotiate different terms for your consumer proposal.
What happens if I have my consumer proposal rejected?
If your consumer proposal is rejected, don’t worry. This might just mean you need to tweak it a little bit before it’s deemed acceptable by your creditors. In this case, your creditors will usually request changes to the terms that you’re offering. They may also meet as a group to figure out how they can find a collective solution and negotiate a plan of action to help you resolve your debt.
If you can’t seem to reach an agreement with your creditors after they meet with you to discuss your options, you may need to consider other options. This could include developing a debt consolidation plan with a credit counselling service. It could also mean filing for bankruptcy or selling off your assets if you’ve run out of other options.
Example of how negotiating a consumer proposal might work
Todd and Sally have been married for three years and together have accumulated a debt of $54,000. Sally works a part-time job while Todd was recently laid off from his job as a construction worker. Since they can’t meet their debts, they file for a consumer proposal offering their creditors $23,000.
Their creditors reject the offer but advise that they would be willing to accept $38,000. The couple demonstrates that they can’t afford this offer by submitting a budget and supporting documentation about Todd’s layoff. They counteroffer $32,000 and their creditors have a meeting to discuss these terms. At the meeting, the majority of their creditors accept the amended amount and approve the consumer proposal.
Infobox: What terms will my creditors want to make changes to?
Your creditors may reject your proposal because they want to make amendments to it. The main terms that typically need to be adjusted before your proposal is accepted include the following:
How much you have to pay each month. Your creditors may want you to pay a higher amount each month than what you’ve proposed. This will typically depend on your income and how much you can reasonably afford to pay each month.
How much you’ll pay back in total. You’ll have to propose a total amount that you can afford to repay. Your creditors may then negotiate on the amount you propose, based on how much of your debt they’re willing to collectively forgive.
How long you’ll need to make your repayments. Your creditors may also want to cut down on the length of time you want to make your payments over. They may suggest a shorter term with higher payment amounts so they can collect their money faster.
What eligibility criteria do I need to meet to file a consumer proposal?
To file a consumer proposal, you’ll need to meet the following eligibility criteria in most cases:
Owe between $1,000 and $250,000 (excluding your mortgage).
Have a source of income to make your monthly payments.
Be unable to repay all your creditors in full with interest and have trouble getting a debt consolidation loan because your debts are too high.
What information will I need to submit?
Before your trustee can decide if a consumer proposal is the best fit for your needs, you may need to supply the following documents:
List of assets. Add up the value of all the assets you own to demonstrate your total net worth.
Outline of monthly expenses. Provide a budget to outline the monthly expenses you have to pay in addition to your outstanding debts.
Marital status. You’ll need to say whether you’re married since you may have to file a consumer proposal jointly with your partner.
What are some of my other debt solutions if I can’t get approved?
If you can’t get approved for your consumer proposal, there are a number of other options you can pursue:
Debt settlement. You may be able to settle your debt with your creditors without a consumer proposal, which could protect your credit score in the long run.
Debt consolidation loan. You can take out a debt consolidation loan to combine several debts into one easy payment.
Credit counselling. You’ll be matched with a credit counsellor to investigate the best approach to tackling your debt.
Borrowing from loved ones. It might make sense to ask for a no-interest loan from family or friends to keep your credit score intact.
Sell off your assets. You may be able to sell or downsize your house or vehicle to pay down your debt.
Bankruptcy. If you can’t qualify for a consumer proposal, you may need to file for bankruptcy, which will force you to forfeit all of your assets. Read our guide on consumer proposals vs bankruptcies here.
Your creditors will have 45 days to approve or reject your consumer proposal once it’s filed. If your proposal is rejected, you may be able to submit another offer with amended conditions. Find out more about what you can do if your proposal doesn’t go through, and learn about other debt solutions that may be available to you under these circumstances.
Frequently asked questions about having a consumer proposal rejected
You’ll typically need to wait up to 45 days to find out if your consumer proposal has been accepted or rejected. Once a decision is made, you’ll be informed about the outcome by your Licensed Insolvency Trustee.
No. You’ll need 75% or more of your creditors to approve your consumer proposal for it to go through. If the majority of your creditors don’t pass your consumer proposal, you’ll likely need to amend the terms of the agreement and submit it again.
The main reasons your creditors might reject your consumer proposal are because you’re not offering enough money or because you’ve offered an unsuitable term for your repayment schedule.
It can take many years to recover from a consumer proposal, depending on how long it takes you to pay it off. You’ll usually have to wait three years after you complete your payments to get your credit score back to normal. Can I get a loan to pay off a consumer proposal?
If you don’t make your payments, your consumer proposal may be cancelled. If this happens, you’ll lose all the money you put down on it already and your creditors can resume collecting fees and interest on your debts.
Claire Horwood is a writer at Finder, specializing in credit cards, loans and other financial products. She has a Bachelor of Arts in Gender Studies from the University of Victoria, along with an Associate's Degree in Science from Camosun College. Much of Claire's coursework has focused on writing and statistics, with a healthy dose of social and cultural analysis mixed in for good measure. She has also worked extensively in the field of "Blended Finance" with the Canadian government. In her spare time, Claire loves rock climbing, travelling and drinking inordinate amounts of coffee.
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.