Understanding Consumer Proposals in British Columbia: A Practical Guide for 2025

Struggling with unsecured debt in British Columbia? A consumer proposal can help you legally settle what you owe for less—without losing key assets. This guide explains how proposals work in BC, what they cover, the pros and cons, and smart steps to improve your outcome.

What is a Consumer Proposal in BC?

A consumer proposal is a formal agreement under Canada’s Bankruptcy and Insolvency Act (BIA) that lets you repay part of your unsecured debt over time (up to five years). Only a Licensed Insolvency Trustee (LIT) can file and administer it. While proposals are governed federally, they’re widely used by British Columbians because they protect you from collections, reduce overall debt, and avoid bankruptcy when you have steady income but can’t keep up with payments.

For a BC-focused overview, see our plain-English resource on consumer proposals in British Columbia. For official information about insolvency law and the LIT role, start at Canada.ca.

How a Consumer Proposal Works in BC

Here’s the typical process from first call to completion:

1. Initial assessment. You meet with a Licensed Insolvency Trustee to review income, expenses, assets, and debts. The LIT explains options (proposal, bankruptcy, debt management, etc.) and estimates a realistic offer based on what you can afford—not what creditors demand.
2. Drafting your offer. Your LIT proposes a monthly payment or lump-sum that would settle your unsecured debts over a set term (maximum five years). Trustee fees are built into your payments and set by regulation rather than added on top.
3. Immediate legal protection. Once filed, most collection actions stop because of the stay of proceedings. Learn how this protection works in detail in our guide to the stay of proceedings in consumer proposals.
4. Creditor voting period. Creditors have 45 days to review and vote. If the majority by dollar value accept, the proposal is binding on all included unsecured creditors.
5. Repayment and counselling. You make payments to the LIT per the proposal terms and attend two mandatory financial counselling sessions to strengthen budgeting and long-term money management.
6. Completion and release. After making all payments, the proposal is completed and your included unsecured debts are legally settled.

Eligibility in BC

Consumer proposals are designed for individuals who:

• Have more unsecured debt than they can reasonably repay (e.g., credit cards, lines of credit, personal loans, overdue utility bills, and many types of tax debt).
• Can afford a steady payment (or lump sum), but not the full balances plus interest.
• Prefer to avoid bankruptcy and keep essential assets while making a fair offer to creditors.

If your debt exceeds the consumer proposal limit or your financial situation is more complex (e.g., large business debts), your trustee may explore alternatives such as a Division I proposal. For broader context and comparisons, see our complete 2025 guide to consumer proposals vs. bankruptcy.

Debts Included vs. Excluded

Included (typically):

• Credit cards, unsecured lines of credit, personal loans
• Overdue utility accounts and many other unsecured bills
• Income tax debt (subject to rules on penalties and interest)

Excluded or treated differently:

• Secured debts (e.g., mortgages, car loans) are not included unless you choose to surrender the asset; otherwise, you keep paying per the contract.
• Support obligations (child/spousal support) and court-ordered fines can’t be compromised.
• Student loans generally must be over 7 years since you ceased being a student to be discharged in a proposal. Under federal law, newer student loans remain owing even after you complete the proposal.

Curious how proposals affect what you own? Read our expert explainer on what happens to assets in a consumer proposal.

Costs and Fees in BC

Trustee fees are regulated and come out of the payments you make; the LIT will explain the fee structure transparently during your assessment. You don’t pay separate “extra” advisory charges. This makes proposals predictable: the amount you agree to pay includes administration costs.

Timeline and Credit Impact

A consumer proposal can last up to five years, with flexible options such as monthly payments or a lump sum if available. On your credit report, proposals are recorded with a negative rating while active and remain for a period after completion (commonly up to three years, depending on credit bureau policies). You can begin rebuilding credit during and after the proposal with careful budgeting and secured credit products.

For up-to-date market context and how creditors view proposals, check insolvency trends tracked by Statistics Canada.

Benefits and Drawbacks

Key Benefits

• Immediate relief from collections. The stay of proceedings often halts calls, lawsuits, and most wage garnishments.
• Keep core assets. Unlike bankruptcy, proposals generally let you keep your home equity and vehicle if payments are maintained.
• Pay less than full balances. Creditors often accept a portion of debt when the alternative may be extended nonpayment or bankruptcy.
• Set, simplified payments. A single monthly payment (or lump sum) brings predictability to your budget.
• Structured support. You’ll attend two financial counselling sessions to strengthen long-term money skills.

Important Drawbacks

• Credit impact. Your credit profile is significantly affected for the duration of the proposal and a period thereafter.
• Strict adherence required. Missing payments may lead to annulment—and creditors can resume collections.
• Not all debts qualify. Secured debts, support payments, fines, and most student loans under seven years aren’t discharged.
• Public record. Insolvency filings are recorded in a public database, though most people will only encounter the credit report impact day-to-day.

Need a deeper comparison? Explore whether a proposal is preferable to bankruptcy in our analysis: Is a Consumer Proposal Better Than Bankruptcy in 2025?

Practical Examples and Scenarios

• Credit card and line of credit debt. A BC resident with $35,000 in unsecured debt and stable income proposes $250/month for 60 months. The total is far less than the balance plus interest, and collections stop once filed.
• Utility arrears. Overdue hydro or telecom accounts are often included. If rising living costs caused missed payments, a proposal can consolidate and reduce these debts. See our focused advice on managing utility debt through a consumer proposal.
• Job loss and income disruption. If employment changes led to debt, proposals can provide structure while you stabilize. For guidance on navigating debt after layoffs and where to find supports, review our resource on debt management after job loss and visit Employment and Social Development Canada for benefits and programs.

Steps to File and Navigate Creditor Acceptance

Here’s how to put your best foot forward:

1. Document everything. Income, expenses, creditor statements, and any special circumstances (medical costs, family obligations) help your LIT craft a credible offer.
2. Set a realistic payment you can sustain. Creditors weigh feasibility. A slightly lower offer you can maintain is often better than a higher offer you might miss.
3. Understand the vote. Creditors have 45 days to consider the proposal. If the majority by dollar value vote “yes,” the agreement binds all included unsecured creditors.
4. Know your rights. The stay of proceedings typically halts most garnishments and lawsuits while the proposal is active. For how this shield works, see the stay of proceedings guide.

Consumer Proposal vs. Other Options

Consumer proposals aren’t one-size-fits-all. You might consider:

• Bankruptcy. Faster discharge for many debts but with stricter asset and income considerations. Compare details in the Consumer Proposal vs. Bankruptcy expert guide.
• Debt management plans. Informal arrangements (often via credit counselling) to repay balances in full at reduced interest. These don’t provide a legal stay of proceedings.
• Debt consolidation loans. One new loan to pay off multiple debts. This can work if your credit and income qualify—but it won’t reduce principal, and you’ll still be responsible for interest and fees.

If you’re deciding between bankruptcy and a proposal, consult this comprehensive breakdown: Bankruptcy vs Consumer Proposal (2025). To understand BC-specific economic context, you can also review the BC insolvency rate in 2025.

Tips to Improve Acceptance and Completion

• Build a realistic budget first. Your offer should reflect what you can pay after rent, food, transport, and essentials. The counselling sessions are useful—engage early and adjust spending where possible.
• Protect your payment method. Use automatic deposits or separate accounts to avoid missed payments and proposal annulment.
• Consider a small buffer. If cash flow is tight, build a cushion for irregular expenses (car repair, medical). Stability matters to creditors and your LIT.
• Keep secured debts current. If you want to keep your home or car, maintain those payments outside the proposal.
• Document major changes quickly. If your income drops or rises significantly, speak with your LIT to adjust terms rather than risking missed payments.

Regional Considerations in BC

British Columbia has unique cost-of-living pressures (housing, utilities, and transportation), which can drive higher reliance on credit. Proposals are often chosen by BC residents who want to stop collections and manage debts while keeping essential assets in a high-cost environment.

To ground your decisions in reliable data, consult Statistics Canada for insolvency trends and household debt indicators, and navigate federal policy and consumer protections via Canada.ca.

Conclusion

A consumer proposal is a powerful, court-recognized solution for British Columbians who need relief from unsecured debts yet have income to make steady payments. It can reduce what you owe, pause most collections, and help you keep important assets—provided you understand what’s included, what’s excluded, and how to structure a workable offer. Review your full financial picture with a Licensed Insolvency Trustee, compare alternatives such as bankruptcy or consolidation, and lean on counselling to set habits that last well beyond the proposal’s final payment.