Pros & Cons of Consumer Proposals

There are some real advantages to choosing a Proposal — especially if you’re looking for a way to deal with debt without losing everything.
You can reduce what you owe

• Most people settle their debts: Most people have to pay back less than 30% of their debts.  That means you pay back what you can afford — not the full balance.
• You keep your assets: Unlike bankruptcy, you don’t have to give up your home, car, or savings. You stay in control, losing none of your possessions
• No more interest or late fees: Your payments are locked in. No surprise costs. No growing balances.
• One simple monthly payment: Everything gets rolled into one fixed payment. It’s easier to manage and budget for.
• Collection calls stop: The moment your proposal is filed, creditors have to back off. That includes lawsuits, wage garnishments, and phone calls.
• You avoid bankruptcy: For many people, this is the biggest benefit, privacy, less stressful, and easier to recover from.

These benefits are why so many people in Ontario choose this option when weighing the pros and cons of Consumer Proposals.

When debt feels overwhelming, a Proposal can be a lifeline, but there are pros and cons to a consumer proposal.  A proposal is one of the most popular debt relief options in Canada because it lets you:

• Avoid bankruptcy
• Reduce your debt
• Keep your home and car
• Make one affordable, interest-free payment
• Stop collection calls and wage garnishments

People choose it because it works — and it helps them move forward without losing everything. If you’re weighing the pros and cons of Consumer Proposals, this option is worth serious consideration.

★★★★★ At first, we were worried about the impact on our credit, but after understanding the pros and cons, it made total sense. YanchDey made the process clear and painless. Jonathan P. Oshawa ON

Every debt solution has trade-offs — and a Consumer Proposal is no exception. But the good news? Most of these “cons” aren’t as bad as they sound, especially when you’re already dealing with serious debt stress.

• ❌ It will affect your credit rating: Yes, a Proposal shows up as an R7 rating on your credit report. But if you’re missing payments, maxed out, or in collections — your credit is likely already bad. The good news is, once everything is in place, you start fresh, rebuilding your credit.

• ❌ Secured debts aren’t included: Unsecured debts — like credit cards, payday loans, and tax debt are covered. But that’s actually helpful, because it means those debts are going to be cut dramatically. You deal with those problem debts without risking losing your car or home.

• ❌ Your creditors can reject the proposal: Creditors do get to vote, and sometimes the first offer is turned down. But don’t stress — the Insolvency Trustee will handle the negotiations and help revise the offer if needed. Most get accepted once the numbers make sense.

• ❌ It becomes part of the public record: Yes, they are listed in a government registry — but personal insolvency is not searchable on Google, and it won’t show up in any public-facing databases. Unless someone goes out of their way to look it up (which is rare), it’s extremely unlikely anyone will ever see it.

• ❌ Missing payments can cancel your plan: Yes if you miss three payments, you’ve got a problem — but here’s the good news: you get a lot of flexibility and warning before that happens. If you run into trouble, your Trustee can often help adjust your plan before it gets that far.

While these drawbacks are worth considering, many people find that the pros and cons of Consumer Proposals still make it the best path toward a fresh financial start.

A Proposal isn’t the right fit or debt solution for everyone — but for many people struggling with finances, it offers the perfect balance between relief and control. If you’re dealing with more than $10,000 in unsecured debt, feeling overwhelmed by interest and collection calls, and want to avoid bankruptcy, this could be your best next step.

To qualify, you’ll need a steady source of income to make monthly payments. But unlike bankruptcy, you won’t have to give up your assets or face ongoing penalties if your income increases. Instead, you’ll make a single, affordable, interest-free payment — and start making real progress again.

Ask yourself:

• Do you want to reduce your debt without losing your home or car?

• Are you ready to stop the stress of juggling payments, calls, and legal threats?

• Do you want a clear, structured plan that gives you a fresh start?

If you’re nodding your head, then it’s worth seriously considering the pros and cons of a Consumer Proposal — and talking to our Insolvency Trustees to see if it’s the right solution for you.

If you’re looking for debt relief, chances are you’ve considered both a Consumer Proposal and bankruptcy. While they’re both legal solutions that help eliminate debt, they work very differently — and one might be much better suited to your situation.

Here’s a quick side-by-side comparison to help you understand how they stack up:

A Consumer Proposal is often a better choice if you want to keep your assets, make a predictable monthly payment, and avoid the long-term consequences of bankruptcy. But every situation is unique — and that’s why it’s so important to get honest, personalized advice before you decide.

• Question: Will my credit be ruined for years? Not ruin it — but yes, it will affect your score. A Consumer Proposal results in an R7 credit rating, which stays on your report for up to 3 years after completion, or 6 years from the start date, whichever comes first. The good news? You can start rebuilding your credit right away — even during the proposal.

• Question: Can creditors reject my proposal?Yes, but it’s rare. Creditors vote on your offer, and if the majority (by dollar value) agree, the proposal is accepted. If not, your Licensed Insolvency Trustee can revise the terms and try again. Most proposals get accepted with a bit of adjustment.

• Question: Will I lose my house or car?Not if you want to keep them. A Consumer Proposal allows you to keep your assets, as long as you stay current on any related loans (like your mortgage or car payment). Unlike bankruptcy, you’re not forced to sell your home or vehicle.

• Question: Can I pay off my Consumer Proposal early?Yes — and there’s no penalty. In fact, many people choose to pay it off faster if their financial situation improves. The sooner you finish, the sooner the R7 rating can start to fall off your credit report.

• Question: What happens if I miss a payment?If you miss three monthly payments, your proposal is annulled, and your original debts come back into full effect. But don’t panic — your trustee can often help you adjust your plan before it gets to that point. Communication is key.

Still unsure? The best way to understand if pros vs cons in a Consumer Proposal is right for you is to talk to someone who’s helped others through it. Give us a call at Yanch Dey today at 905-721-7506 today — we’re here to help.

Insolvency Trustee Kelly Dey

If you’ve read through the pros and cons of a Consumer Proposal and you’re still unsure, that’s totally normal — this is a big decision. But you don’t have to figure it all out on your own.

At Yanch Dey, we’ve helped thousands of people across Ontario find the right solution to get out of debt — without judgment, pressure, or one-size-fits-all advice.

Whether you’re in Oshawa, Scarborough, Whitby, Ajax, Pickering, or anywhere nearby, our team is here to listen, explain your options, and guide you toward a fresh start.

You don’t have to commit to anything. You just have to talk to someone who understands.

Call us at 905-721-7506.