A consumer proposal for payday loans is one of the fastest ways to break the high-interest cycle and reduce what you owe.

Most people save about 70% of their payday loan balance and replace several unaffordable loans with one predictable monthly payment. This gives you immediate protection, stops payday lenders from contacting you, and helps you take control of your finances again.

Payday loans trap people in a cycle because fees are extremely high and repayment schedules are unrealistic. Even one missed payment can create a spiral that feels impossible to escape.

The debt grows quickly when:

• Fees are added every two weeks, making it nearly impossible to pay down the actual principal.
• Borrowers take a new loan to pay the old one, turning one small loan into several.
• Automatic withdrawals bounce, causing overdraft fees and more interest.
• Lenders pressure borrowers, calling repeatedly or sending aggressive reminders.
• High costs push people to use multiple lenders, each taking money from the same paycheque.

A consumer proposal stops all of this and replaces chaos with clarity.

How a Consumer Proposal Reduces Payday Loan Debt

A proposal legally reduces your payday loan balances and stops all fees immediately. You repay only a fraction of what you borrowed, spread out over up to five years.

It works because:

• Interest and rollover fees stop the moment the proposal is filed, saving you a huge amount of money.
• You repay only part of the debt, often around 30% depending on your budget.
• All payday loans are combined, giving you one simple monthly payment.
• Lenders must stop contacting you, including calls, texts, emails, and automatic withdrawals.

Your payment is based on affordability, not the unrealistic terms of payday lenders. For many people, this is the first time their budget becomes manageable.

Payday Lenders Must Follow Federal Rules

Even if payday lenders seem aggressive, they must follow federal insolvency laws.

Once your trustee files your proposal:

• They must stop all collection attempts, no matter what province you live in.
• They cannot withdraw money from your bank, even if they have pre-authorized access.
• They cannot add new fees, interest, or rollover charges.
• They cannot threaten legal action, because the proposal protects you.
• All lenders must deal directly with your trustee, not with you.

This legal protection is often a huge relief for borrowers who feel overwhelmed.

How Much You Can Expect to Save

Payday loan borrowers often save more than expected because fees and rolled-over balances disappear entirely.

Savings come from:

• Eliminating multiple rollover fees, which make payday loans so expensive.
• Paying back only a portion of your total balance, often around 30%.
• Stopping all future interest, so your debt no longer grows every two weeks.
• Stretching payments over 60 months, which lowers your monthly cost dramatically.
• Removing aggressive withdrawals, which stabilizes your bank account and cash flow.

For many people, this is the most affordable way to get out of payday loan debt.

Why a Consumer Proposal Instead of More Payday Loans

Many people take new payday loans because they feel they have no other option.

A proposal is usually the better choice when:

• You have two or more payday loans, even if they are small.
• Loans are being rolled over repeatedly, causing the balance to grow.
• You are borrowing just to make it through the month, without actually paying down debt.
• Lenders are withdrawing money every payday, leaving you short for rent or bills.
• Your bank account is constantly overdrawn, or you feel embarrassed checking your balance.

If these describe your situation, a proposal gives you a much healthier path forward.

This consumer proposal calculator shows an approximate of how much you could save.

Consumer Proposal Ontario | Consumer Proposals