Understanding How Long a Consumer Proposal Lasts in Canada: Timelines, Tips, and What to Expect

When debt becomes unmanageable, a consumer proposal can offer a structured, affordable way to regain control—without declaring bankruptcy. If you’re considering this path, it’s natural to focus on time: how long it takes to get approved, how long you’ll be making payments, and when it’s finally over. This guide explains the timelines step-by-step, shows the factors that set the term, and shares practical ways to finish your proposal sooner.

What is a Consumer Proposal?

A consumer proposal is a legally binding agreement under Canada’s Bankruptcy and Insolvency Act (BIA) that lets you repay a portion of what you owe over time, usually in one fixed monthly payment (or a lump sum). It’s filed and administered by a Licensed Insolvency Trustee (LIT) and immediately provides protection from collection calls, interest, and most legal actions.

According to guidance from the Financial Consumer Agency of Canada, proposals are a formal debt relief option designed to help you avoid bankruptcy while making a realistic repayment plan.

Understanding How Long a Consumer Proposal Lasts

The maximum length of a consumer proposal is 60 months (five years). Many proposals are shorter—36 to 48 months is common—especially if you can afford slightly higher payments or make a partial lump-sum contribution.

Key factors that set your term

• Affordability of your monthly payment: Lower affordable payments often mean a longer term (up to the 60‑month cap).
• Creditor expectations: Creditors vote on your offer; your LIT adjusts terms to reach a settlement they’ll accept.
• Total debt and household budget: The size of your unsecured debt and your living costs determine what you can realistically repay each month.
• Payment structure: Monthly payments versus a one-time (or staged) lump sum can change how long it lasts.

Examples of common terms

• 48-month plan: $350 per month for four years to settle $28,000 of unsecured debt (credit cards, lines of credit, payday loans).
• 36-month plan with top-ups: $500 per month plus a $1,500 tax refund applied each spring to shorten the timeline.
• Lump-sum proposal: A one-time payment funded by family assistance or a sale of a non-essential asset. This may complete within weeks after approval.

Interest on included unsecured debts is frozen once your proposal is filed, so your payments go directly to the agreed settlement amount. For a deeper look at how interest works in practice, see our guide to consumer proposal interest treatment.

Timeline From Start to Finish

While your payment term can last up to 60 months, your overall timeline includes several stages. Here’s what most Canadians experience.

Pre-filing assessment (a few days to 2 weeks)

• Consult a Licensed Insolvency Trustee to review your budget, assets, and debts.
• Discuss offer options (monthly vs. lump sum) and a realistic payment you can sustain.
• Gather documents (ID, income proof, bills, creditor statements).

Helpful context: The Government of Canada provides consumer information on debt relief programs and how the BIA framework protects you.

Filing and stay of proceedings (immediate)

When your LIT files your proposal, a stay of proceedings immediately stops most collections, lawsuits, and wage garnishments. Learn how this legal shield works in detail in our guide to the stay of proceedings.

Creditor voting and approval (up to 45 days, plus court approval)

• Creditors have up to 45 days to review and vote on your offer.
• If 50%+ of voting creditors (by dollar value) accept, all are bound by the proposal.
• The court then approves it (often administrative unless objections are raised).

For data on acceptance trends, see consumer proposal acceptance rates in Canada.

Making payments and completion (up to 60 months)

• Make your fixed payments (or your lump-sum payment) as set in the proposal.
• Attend two mandatory financial counselling sessions with your LIT.
• Once you’ve made all required payments, you receive a Certificate of Full Performance and the proposal is complete.

How to Shorten Your Consumer Proposal Term

You can finish early by paying off the remaining balance at any time. Consider these strategies to reduce the number of months you’re in a proposal:

• Apply annual tax refunds and work bonuses toward your balance.
• Make small bi-weekly or weekly payments instead of monthly to build momentum.
• Use a partial lump sum (from savings or a family gift) to reduce the length.
• Trim non-essential expenses and reallocate savings to your proposal.

Because interest is frozen on included debts, every extra dollar directly accelerates completion.

What Can Extend or Annul a Proposal?

You can’t exceed 60 months, but amendments within that cap are possible if you run into trouble. Watch for these pitfalls:

• Missed payments: If you miss three payments, your proposal is deemed annulled. The stay of proceedings ends, and creditors can resume collection. Your LIT may help you apply to revive the proposal, but it’s not guaranteed.
• Underestimating your budget: If your payment is too tight, talk to your LIT early about amending terms before missing payments.
• New debt: Avoid taking on new unsecured credit during your proposal; it can strain your budget and jeopardize completion.

Good news: an increase in income does not automatically extend the proposal or change your monthly payment. You simply continue as agreed—or pay it off faster if you wish.

Impact on Credit and Life During and After

While a consumer proposal is active, it will appear on your credit file. After you complete it, the record generally remains for a limited period (commonly up to three years after completion). The Financial Consumer Agency of Canada offers guidance on understanding and improving your credit report post-proposal.

For a deeper dive into how proposals affect credit and practical rebuilding steps, see our guide on consumer proposals and your credit score.

Consumer Proposal vs. Bankruptcy: Which Is Typically Longer?

In many cases, a first-time bankruptcy can be shorter (often 9 to 21 months depending on your income), whereas a consumer proposal can run up to 60 months. However, proposals can be tailored to your budget, often reduce the total you repay, and avoid the surplus income calculations that can lengthen bankruptcy. The right choice depends on your income, assets, and goals.

Compare the timelines and trade-offs in our complete guide to bankruptcy vs. consumer proposals.

Costs and Interest During a Proposal

Trustee fees are set by federal regulation and are included in your proposal payment—there are no separate, out-of-pocket fees. Interest on included unsecured debts stops on filing, which is a major reason proposals can be completed faster than DIY repayment plans with compounding interest. For specifics on how interest is treated and why your payment goes further, review our expert interest guide.

Current Trends and What They Mean for Timelines

Household budgets are under pressure from elevated living costs. Statistics Canada data show higher debt-service ratios in many households and an uptick in insolvency filings in recent cycles. These conditions can influence proposal terms—creditors may accept longer terms when budgets are tight, as long as the offer is reasonable and affordable.

For context on the macro environment, explore our analysis of mid-year market trends in 2025 and see how inflation affects consumer proposals in Canada.

Tax Debt and Government Creditors

Consumer proposals can include many kinds of unsecured debt, including certain tax balances. If the Canada Revenue Agency is a creditor, the stay of proceedings still applies on filing, pausing most collection actions. For general information about CRA’s role and taxpayer obligations, see the Canada Revenue Agency.

Practical Checklist to Stay on Track

• Set your payment on an automatic debit schedule aligned with payday.
• Build a small emergency buffer ($500–$1,000) to prevent missed payments.
• Direct windfalls (refunds, bonuses, gifts) to your proposal to finish early.
• Complete your two counselling sessions promptly to maintain momentum.
• Review your budget quarterly and adjust expenses to protect your plan.

Conclusion

Understanding how long a consumer proposal lasts comes down to three things: the 60‑month legal cap, what you can afford each month, and whether you can accelerate with extra payments. The filing-to-approval stage typically takes weeks, while your repayment term is tailored to your budget—often 36 to 60 months. With interest frozen and legal protection in place, a well-structured proposal can deliver predictable, sustainable progress toward becoming debt-free.