Housing Crisis Consumer Proposal: Your Canadian Debt Relief Solution

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Tyler McAllister

Senior Finance Writer

Last Updated July 14, 2025

Quick Summary: As Canada’s housing crisis intensifies, with home prices exceeding $800,000 in major cities and rental rates increasing 15-20% annually, many Canadians are turning to consumer proposals as a debt relief solution. This comprehensive guide explores how consumer proposals can help reduce housing-related debt by 50-80% while allowing individuals to maintain their homes and establish a path to financial stability.

Understanding the Housing Crisis Impact

The Canadian housing market has reached a critical point where both homeowners and renters face significant financial pressures. With average home prices in major cities exceeding $800,000 and rental rates increasing by 15-20% annually in many areas, Canadians are taking on unprecedented levels of debt to maintain their housing situations. This has led to a surge in credit card debt, personal loans, and second mortgages as people struggle to make ends meet.

How Consumer Proposals Address Housing-Related Debt

A consumer proposal represents a legally binding agreement between you and your creditors, offering a structured way to address overwhelming debt while potentially maintaining your housing situation. Our debt relief experts have helped numerous clients navigate this process successfully, often reducing their total debt by 50-80% while maintaining ownership of their homes.

The Power of Consumer Proposals in Housing Debt Management

When facing housing-related financial challenges, a consumer proposal offers several key advantages:

  • Protection from creditors, including mortgage lenders (for second mortgages)
  • Ability to maintain ownership of your home while addressing other debts
  • Consolidation of multiple debts into one manageable monthly payment
  • Interest stops accumulating from the date of filing
  • Up to 5 years to repay the negotiated amount

Understanding the Cost-Benefit Analysis

For many Canadians, the financial mathematics of a consumer proposal make compelling sense. Consider this example: if you’re carrying $75,000 in unsecured debt (credit cards, lines of credit, personal loans) related to housing costs, a consumer proposal might reduce this to $30,000, payable over 60 months at $500 per month. This represents significant savings while providing a clear path to debt freedom.

Qualifying for a Consumer Proposal During the Housing Crisis

To qualify for a consumer proposal, you must:

  • Have unsecured debts between $5,000 and $250,000 (excluding your primary mortgage)
  • Be able to make regular monthly payments
  • Have a stable income source
  • Be a Canadian resident or own property in Canada

The Impact on Your Housing Situation

One of the most common questions our financial specialists receive concerns the impact on current housing arrangements. Here’s what you need to know:

First Mortgages

Your primary mortgage is typically not included in a consumer proposal. You can continue making regular payments directly to your mortgage lender.

Second Mortgages

These can potentially be included in your consumer proposal, depending on your specific situation and the equity in your home.

Rental Situations

A consumer proposal can help renters by reducing other debts, making it easier to maintain rental payments and potentially save for future housing needs.

Alternative Solutions to Consider

While consumer proposals offer significant advantages, our debt relief experts always present clients with a complete picture of available options:

Debt Management Programs

These informal arrangements can help you repay debts in full while potentially reducing interest rates.

Mortgage Refinancing

In some cases, consolidating debts through mortgage refinancing might be appropriate, though this has become more challenging with recent interest rate increases.

Bankruptcy

While generally considered a last resort, bankruptcy might be appropriate in certain situations where debt loads are extremely high and asset preservation isn’t a primary concern.

Frequently Asked Questions About Housing Crisis Consumer Proposals

Can I keep my house if I file a consumer proposal?

Yes, you can typically keep your house when filing a consumer proposal as long as you maintain your mortgage payments. The proposal addresses your unsecured debts while allowing you to retain your assets, including your home.

How will a consumer proposal affect my ability to refinance my mortgage in the future?

A consumer proposal will impact your credit rating for 3 years after completion. However, many Canadians successfully refinance their mortgages 2-3 years after completing their proposal, especially if they’ve maintained good payment history on their mortgage.

What happens to my second mortgage in a consumer proposal?

Second mortgages can potentially be included in a consumer proposal, depending on your home’s equity position. Our debt relief experts can assess your specific situation and provide detailed guidance.

Can I file a consumer proposal if I’m behind on my rent?

Yes, you can file a consumer proposal while having rental arrears. The proposal can include past-due rent, though future rent payments must be maintained outside the proposal.

Will my landlord be notified if I file a consumer proposal?

Unless your landlord is one of your creditors (due to rental arrears), they won’t be notified of your consumer proposal. The process is confidential between you, your creditors, and the Licensed Insolvency Trustee.

Moving Forward: Professional Support for Your Housing Debt Challenges

The current housing crisis has created unprecedented financial challenges for many Canadians. However, understanding and utilizing debt relief options like consumer proposals can provide a path forward. Our team of financial specialists has extensive experience helping individuals and families navigate these challenging times while protecting their housing situations.

Remember that each financial situation is unique, and the best solution depends on various factors specific to your circumstances. We encourage you to reach out to our debt relief experts for a confidential consultation to discuss your situation and explore all available options. With proper guidance and a well-structured plan, you can overcome housing-related debt challenges and work toward a more stable financial future.

Taking the first step toward addressing your housing-related debt may feel overwhelming, but you don’t have to face these challenges alone. Our experienced team of debt relief professionals is here to help you understand your options and develop a personalized solution that addresses your specific needs and circumstances.

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