A consumer proposal for personal loans is one of the simplest ways to reduce your balance, stop interest, and take back control of your monthly budget.

Many people save about 70% of what they owe on personal loans and replace stressful payments with one predictable amount they can afford. This gives you legal protection and a clear plan to become debt free.

Personal loans feel manageable at first, but they often become difficult to repay over time. Interest charges, long repayment terms, and unexpected life changes can quickly create financial pressure.

Personal loan debt becomes challenging when:

• Monthly payments are too high, especially after job or income changes.
• Interest adds up each month, making it hard to reduce the principal balance.
• You take additional loans to cover emergencies, bills, or other debts.
• You rely on credit to fill budget gaps rather than paying down the loan.
• Late fees and penalties increase the balance and reduce progress.

This creates a cycle where payments feel endless and the balance never seems to go down.

How a Consumer Proposal Reduces Personal Loan Debt

A consumer proposal legally reduces the amount you owe on unsecured personal loans. Instead of repaying the full balance with interest, you make one affordable payment based on what you can realistically manage.

A proposal helps with personal loans by:

• Freezing all interest immediately, which stops the loan from growing.
• Reducing the principal amount owed, often to about 30% of the balance.
• Eliminating late fees and penalties, giving you a fresh start.
• Combining multiple loans and debts into one single payment.
• Providing legal protection, so collection calls and legal actions stop.

This makes repayment predictable and fair based on your household budget.

What Happens to Personal Loans After Filing

Once you file a consumer proposal, the personal loan becomes part of the settlement. You no longer pay the lender directly, and all communication must go through your trustee.

After filing:

• Your loan account is closed so no new borrowing can occur.
• All collections must stop, including calls, letters, and legal threats.
• The lender must abide by the proposal terms once creditors approve it.
• Your monthly payment becomes fixed and stays the same throughout the proposal.

This removes stress and gives you a clean, organized debt repayment plan.

How Much You Can Expect to Save

Savings vary based on your income and debt level, but most people repay only a portion of their personal loan balance.

Savings come from:

• Reducing the principal dramatically, often to 20–35% of the original amount.
• Eliminating interest entirely, saving you thousands of dollars.
• Spreading payments over 60 months to make each month manageable.
• Setting the payment based on your budget, not the lender’s requirements.

For many people, this is the only way to get personal loan debt under control.

When a Proposal Is Better Than a Consolidation Loan

Many people try to take out a consolidation loan to solve their debt, but this often leads to more borrowing or higher interest costs. A consumer proposal is often better when:

• Your credit score is too low to qualify for a consolidation loan.
• The consolidation payment would still be too high for your budget.
• You have multiple types of debt and need everything combined.
• You want to reduce the balance, not just stretch it over more years.
• Interest charges are keeping you stuck despite regular payments.

A proposal solves the root problem by reducing the balance itself, not just rearranging the payments.

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

Consumer Proposal Ontario | Consumer Proposals