Understanding the Duration of a Consumer Proposal in Canada: Timeline, Steps, and Tips

When debt feels overwhelming, a consumer proposal can offer a structured, realistic path forward. For many Canadians, one of the first questions is about timing—how long does it take from the first meeting to final completion? Understanding the duration helps you plan, set expectations, and stay motivated. This guide breaks down the typical timeline, key milestones, and practical ways to finish sooner, all in clear, everyday language.

Introduction

A consumer proposal is a formal agreement with your creditors to settle unsecured debts for less than you owe, paid over time. It’s administered by a Licensed Insolvency Trustee (LIT) and governed by federal law. The process is designed to be transparent, predictable, and protective—payments are locked in, interest stops, and creditors must pause collection once the proposal is filed.

Below, you’ll find a step-by-step timeline, realistic time estimates, examples, and insights that help you understand the duration from start to finish—and how to responsibly shorten it when possible.

What Is a Consumer Proposal?

A consumer proposal is a legally binding repayment plan for unsecured debts such as credit cards, lines of credit, and personal loans. You make fixed payments to your LIT, who distributes funds to creditors. The proposal usually reduces the total amount you repay and stretches payments over a period that fits your budget—typically up to a maximum of 60 months (five years).

Crucially, once filed, a “stay of proceedings” takes effect. That means creditors must stop most collection actions and wage garnishments, offering you breathing room to rebuild financially.

How Long Does a Consumer Proposal Take?

Most Canadians can expect a consumer proposal to unfold across two broad phases:

• Setup phase (4–10 weeks): Initial consultation, preparation, filing, creditor voting, and court approval.
• Repayment phase (12–60 months): You make fixed payments until the agreed amount is satisfied. Early payoff is allowed.

In total, the duration depends on the payment schedule you choose and whether you accelerate payments over time. Many people complete proposals in three to five years, while others finish sooner with lump-sum payments or higher monthly contributions.

Step-by-Step Timeline

While individual cases vary, the process follows a consistent path. Here’s how long each step typically takes and why.

Initial Consultation with an LIT

Typical timing: 1–14 days

Your journey starts with a free consultation with a Licensed Insolvency Trustee. The LIT reviews your debts, income, assets, and goals. They explain options—including a consumer proposal, debt management plans, or bankruptcy—and help you decide what’s best for your situation.

Many trustees can meet within a few days, and some offer same-week appointments (in person or virtual). If you have all your documents ready—recent pay stubs, a list of debts, and monthly expenses—this step can move quickly.

Preparing and Filing Your Proposal

Typical timing: 1–2 weeks

Once you choose to proceed, your LIT prepares the paperwork: a detailed summary of your finances and the proposed repayment terms. After you review and sign, the LIT files the consumer proposal with the federal regulator.

Filing triggers immediate protections, including the stay of proceedings. If a creditor was calling daily or a wage garnishment was in place, those actions should pause once the proposal is officially filed.

Stay of Proceedings: What Happens Immediately After Filing

Typical timing: Immediate upon filing

The stay of proceedings is a major milestone. It means creditors must halt most collection activities while the proposal is considered. You’ll also stop paying interest on included unsecured debts. This gives you time and stability to focus on the proposal process and budgeting for your payments.

Creditor Voting and the 45-Day Period

Typical timing: Up to 45 days

After filing, creditors review the proposal and vote to accept or reject. Acceptance is more likely when the proposal offers a fair return compared to alternatives. Your LIT will propose terms that balance your ability to pay with creditors’ expectations.

Most proposals are accepted without requiring you to attend a meeting. If a meeting is called, your LIT will guide you through the process.

Court Approval

Typical timing: 2–3 weeks after creditor acceptance

Once creditors accept, the proposal is sent for court approval. Typically, this is straightforward and doesn’t require your attendance. After approval, the proposal becomes legally binding, and you begin making payments as agreed.

Making Payments and Completing the Proposal

Typical timing: 12–60 months

Payment schedules are flexible. You can choose monthly, biweekly, or periodic lump-sum payments. The maximum term is 60 months, but you can finish earlier by increasing payments or making lump sums when possible (for example, using a tax refund or bonus).

If your financial situation improves, talk to your LIT about accelerating your payments to shorten the total duration.

Factors That Can Speed Up or Slow Down Your Proposal

Your timeline depends on both administrative steps and your payment plan. Here’s what influences duration:

• Your monthly payment amount: Higher payments shorten the term; lower payments extend it.
• Lump-sum contributions: A one-time payment can significantly reduce time remaining.
• Budget stability: Consistent income and spending help avoid missed payments.
• Document readiness: Having all statements and IDs prepared speeds up filing.
• Creditor cooperation: Reasonable proposals tend to be accepted without delays.

Tips to Shorten Your Timeline

• Organise your documents before the first meeting (debtor list, balances, pay stubs).
• Choose a realistic monthly amount you can sustain—and increase it if your income rises.
• Apply unexpected funds (tax refunds, bonuses) directly to your proposal.
• Use budgeting apps or a simple cash-flow tracker to stay on track.

Common Delays to Avoid

• Waiting to book your LIT consultation.
• Missing documents or slow responses during preparation.
• Overly optimistic payment plans that lead to missed payments.
• Ignoring creditor questions forwarded by your LIT.

Real-World Example of a Proposal Timeline

Consider Alex, who owes $35,000 in unsecured debt across several credit cards and a line of credit. With help from an LIT, Alex proposes to repay $14,000 over 48 months. Here’s how the timeline looks:

• Week 1: Initial consultation and document gathering.
• Week 2–3: Proposal drafted and filed; stay of proceedings begins.
• Day 1–45: Creditors review and accept the proposal; court approval follows.
• Month 2: Payments start: $292/month.
• Month 18: Alex receives a bonus and applies $2,000 to the proposal, shortening the overall term.
• Month 42: Final payment made; certificate of completion issued.

Alex finished six months early by making one lump-sum payment and increasing monthly payments slightly after a raise.

Impact on Your Credit and Life During the Proposal

While completing a proposal takes time, the process can reduce stress immediately by stopping collection calls and clarifying a path forward. Here’s what to expect day-to-day.

Credit Reporting Timeline

During a consumer proposal, your credit file will reflect the arrangement—often with an R7 rating for accounts included. Most Canadian credit reports note a consumer proposal for a limited period after completion. Rebuilding credit is achievable during and after the proposal with consistent payments, responsible use of credit (such as a secured card), and keeping balances low.

Working with an LIT and Budgeting

Your LIT is there to support you. Expect counselling sessions that cover budgeting, responsible credit use, and planning ahead. Many clients find these sessions equip them to manage money more confidently, both during and after the proposal.

Consumer Proposal vs. Bankruptcy: Timing Considerations

For some, bankruptcy may seem faster. A first-time bankruptcy can last nine months or longer, depending on income and compliance. A consumer proposal usually takes longer overall but comes with benefits many value:

• You retain control over assets like your car (subject to secured loan terms).
• Payments are fixed and interest-free.
• Flexibility to pay off early.
• Less disruption to daily life and work.

Your LIT will compare both options based on your financial profile and goals.

Costs and Fees: How They Affect Duration

Fees for a consumer proposal are set by federal guidelines and are included within your agreed payments, not charged on top. This means your monthly amount covers both the settlement and administrative costs. While fees don’t directly change the length, your payment level does—higher payments lead to shorter durations.

After Completion: What to Expect

When you make your final payment, your LIT issues a certificate of completion. Included debts are settled according to the proposal agreement. You can now focus on credit rebuilding and long-term financial goals.

Many Canadians choose to keep using the budgeting habits learned during counselling, maintain an emergency fund, and check their credit reports to track progress.

Trusted Resources for Canadians

For official information about debt relief and consumer protection, explore these resources:

• Visit the Government of Canada for federal guidance on insolvency processes and consumer protections.
• Review household debt trends and economic indicators with Statistics Canada.
• Learn about employment supports, training, and income programs via Employment and Social Development Canada.

If you’d like to explore debt relief options tailored to your situation, you can also visit Canadian Debt Relief for educational resources and guidance.

Conclusion

Understanding the duration of a consumer proposal helps you make informed, confident decisions. While the setup phase usually takes a few weeks, the repayment period varies based on your budget—typically 12 to 60 months. With steady payments, occasional lump sums, and support from a Licensed Insolvency Trustee, many Canadians complete proposals ahead of schedule and emerge with stronger financial habits. The process is structured, compassionate, and designed to give you a clear path to stability.