If you’re feeling overwhelmed by debt and unsure where to turn, you may have heard about consumer proposals. They’re a legal and effective way to reduce your debt and avoid bankruptcy, but knowing how to qualify for a consumer proposal is the first step toward getting relief.
This guide explores everything you need to understand about eligibility. Whether you’re a full-time employee, freelancer, or retiree, you’ll discover practical guidance on how to qualify, what trustees look for, and what options you have if you don’t meet the standard criteria.
Why Consider a Consumer Proposal as a Debt Solution?
A consumer proposal is a legally binding agreement between you and your creditors that allows you to repay a portion of your debts over a period of up to five years. It’s an alternative to bankruptcy and is administered by a Licensed Insolvency Trustee (LIT). Unlike personal bankruptcy, a consumer proposal lets you keep your assets, avoid legal actions from creditors, and make affordable monthly payments. Many Canadians choose this option because it provides debt relief without the long-term impact of bankruptcy.
How to Qualify for a Consumer Proposal
If you’re trying to figure out how to qualify for a consumer proposal, the good news is that the requirements are clear—and in many cases, achievable. Here’s what you need to know to get started:
Debt Limits You Should Know
You must have between $1,000 and $250,000 in unsecured debt to qualify. If you and your spouse want to file jointly, the total must not exceed $500,000. Only unsecured debts – like credit cards or payday loans – count toward this limit. Secured loans, such as mortgages or car loans, don’t apply.
Only Certain Debts Apply
Consumer proposals cover unsecured debts, including credit card debt, personal loans, tax debt, and medical bills. Secured debts, like a mortgage or car loan, are not included and must be paid separately if you wish to keep those assets.
Insolvency Requirement
To qualify, you must be insolvent. That means either your debts are greater than your assets or you can’t make your monthly payments on time. You need to show that repaying everything in full simply isn’t realistic.
Residency Matters
You don’t have to be a Canadian citizen, but you do need to live in Canada or own property here to be eligible for a consumer proposal.
Filing Through a Licensed Insolvency Trustee (LIT)
Only a Licensed Insolvency Trustee can file your proposal. They will act on your behalf, helping negotiate a manageable repayment plan with your creditors and guiding you through every step.

What You’ll Need to Prepare
Having the right paperwork ready can speed up the process. Here’s what you’ll likely need:
- Proof of Income: Recent pay stubs, benefit payments, or self-employment records that show what you earn.
- Debt Information: Statements for your credit cards, loans, and tax obligations. Accuracy matters—your trustee needs a full picture.
- Asset Details: Documentation of what you own (like a vehicle or investments) and any secured debts tied to those assets.
- Monthly Budget: A breakdown of your current household expenses, such as rent, groceries, transportation, and insurance.
- Tax Returns: Recent filings may be requested, especially if tax debt is part of your total or if you’re self-employed.
With these documents in hand, your trustee can assess your financial picture and propose a realistic repayment plan that works for both you and your creditors.
Tips to Improve Your Chances of Getting Approved
If you’re serious about learning how to qualify for a consumer proposal, preparation is key. Here are practical tips to strengthen your application:
- Be transparent – Disclose all your debts and assets upfront.
- Gather paperwork – Include income verification, bank statements, and creditor details.
- Set a realistic budget – Propose a monthly amount you can consistently afford.
- Include all creditors – Missing any can create problems down the line.
- Stay responsive – Reply quickly to trustee requests to avoid delays.
Following these steps helps build trust with your trustee and increases the chances of your creditors accepting the proposal.
What a Trustee Considers When Reviewing Your Application
Understanding how to qualify for a consumer proposal also means knowing what criteria your Licensed Insolvency Trustee will use during their review:
- Do your income and expenses show that you can sustain the payments?
- Is the amount you owe within the eligible range?
- Have you had a prior proposal or bankruptcy?
- Are your creditors likely to accept the deal based on your repayment offer?
Trustees aren’t just gatekeepers—they also help structure your proposal in a way that balances what you can afford with what creditors will find reasonable. Depending on your unique situation, other options like corporate proposals or business-related solutions may also be considered.
Selecting a Trustee Who Understands Your Needs
All consumer proposals must be filed through a Licensed Insolvency Trustee, but not every firm offers the same quality of service. If you’re exploring how to qualify for a consumer proposal, choosing a team that offers both technical expertise and cultural understanding can make all the difference.Kunjar Sharma & Associates Inc. is well known for:
- Offering multilingual consultations to better serve clients from diverse backgrounds
- Taking a community-first approach that respects cultural identity
- Crafting custom financial solutions based on each person’s unique needs
With over four decades of experience, Kunjar Sharma’s team delivers guidance that’s professional, compassionate, and results-focused. Their services also include credit counselling to support long-term financial health.
Conclusion
The process may feel intimidating, but the truth is: thousands of Canadians successfully file consumer proposals every year. Learning how to qualify for a consumer proposal gives you the clarity and confidence to move forward.
If your debt feels unmanageable, now is the time to explore your options. A confidential consultation with a Licensed Insolvency Trustee can give you the answers you need—whether you’re ready to file or just want to understand what’s possible.
The sooner you act, the sooner you can take control of your financial future.