Picture this: you’re at the kitchen table, bills spread out like a losing hand of cards. You shuffle through credit card statements, student loan reminders, maybe even a tax notice from the CRA. The total feels overwhelming—but then another thought creeps in: “Is it even bad enough yet to do something about it?”
The truth? You don’t need to wait for six figures of debt before exploring options like a consumer proposal or bankruptcy. There are clear thresholds—and knowing them can help you take action sooner rather than later.
Many people delay getting help because they assume their debt “isn’t bad enough.” Meanwhile, interest keeps growing, collection calls keep buzzing, and the weight of it all starts bleeding into everyday life. Debt isn’t a competition—if it feels unmanageable to you, it’s worth looking at your options.
The earlier you explore solutions like a consumer proposal, bankruptcy, or even debt consolidation, the more choices you’ll have. Acting sooner often means less stress and a smoother path forward.
A consumer proposal has clear minimum and maximum limits on how much debt qualifies. Bankruptcy, on the other hand, isn’t about the number—it’s about whether you can realistically keep up with payments. Both provide relief, but they’re triggered differently.
To qualify for a consumer proposal, you must owe at least $1,000 in unsecured debt and be insolvent — meaning you’re unable to pay your debts as they come due. You must also have no more than $250,000 in total debt, excluding any mortgage on your principal residence. If filing jointly with a spouse, the combined debt must not exceed $500,000 (again, excluding mortgages on principal residences).
Note: Each individual must meet the $250,000 threshold independently. For example, if one spouse has $400,000 in unsecured debt and the other has $100,000, the higher-debt spouse would not qualify to file a consumer proposal.
So, what kinds of debts can be included in a proposal? Here are the most common:
Secured debts—like mortgages or car loans—aren’t included. But here’s the good news: as long as you keep up with those payments, you usually keep the asset.
Like any debt solution, a consumer proposal has its ups and downs. It can be a lifesaver in the right situation, but it does come with trade-offs. Here’s what that looks like:
For many people, the positives far outweigh the negatives. A proposal often feels like a middle path: you get relief and structure without having to sacrifice the things you’ve worked hard to keep.
Bankruptcy can start at as little as $1,000 in unsecured debt—but here’s the catch: you also need to show that you can’t keep up with payments. So even if your debt isn’t massive, if it’s unmanageable, bankruptcy could still apply.
Here’s where bankruptcy really stands apart from a proposal: there’s no upper limit. It doesn’t matter whether you owe $10,000 or a million dollars. If the debt can’t be managed, bankruptcy is an option.
Bankruptcy comes with its own set of benefits and drawbacks. It can provide quick relief, but it also has a bigger impact on your credit and assets.
Although bankruptcy is often seen as the “last resort,” for some people it’s the fastest way to lift an unbearable weight and finally start fresh.
Think of cost as a tug-of-war. With a consumer proposal, you’ll usually pay more back overall, but at a discount and over time. Bankruptcy can look cheaper, but if you earn above a certain level, those extra “surplus income” payments can sneak in and drive up the bill.
This one’s simple: a proposal lets you keep your stuff. Bankruptcy? You might have to give up certain things — although basics like clothing, furniture, and often your car are protected. For many people, this is the dealbreaker.
Both hit your credit, just differently. A proposal shows up as an R7, while bankruptcy lands as an R9. Neither sticks around forever, but proposals are usually gentler when it comes to rebuilding.
Bankruptcy is quick, sometimes taking just 9 months. Proposals last longer, up to 5 years, but you can pay them off early if life takes a turn for the better.
If your paycheque is steady (or above average), bankruptcy might actually cost more. Proposals keep things simple with one fixed payment you can plan around.
Want to hang onto your home equity or certain retirement savings? A consumer proposal makes that possible. Want to reset as fast as humanly possible? Bankruptcy might be your path.
For some people, bankruptcy makes more sense given their circumstances. Some, want the stability of keeping their assets, even if it takes longer. The “better” choice is the one that lets you finally breathe again.
Here’s the truth: you don’t have to figure this out on your own. Only Licensed Insolvency Trustees (LITs) can file either option, and they’re the people who can lay it all out for you. They’ll help you understand what each path means — and which one actually makes sense for your life.
Don’t wait until stress takes over your daily life. Whether it’s a consumer proposal, bankruptcy, or another solution like the debt snowball method, there’s a path forward.
Book a free consultation with Farber today and picture this instead: the kitchen table clear of bills, no more dreaded calls from creditors, just space to breathe — and plan your next chapter.
We offer a powerful debt-relief solution that can significantly reduce your debt without the drawbacks of declaring bankruptcy.
Book a free, confidential, no-obligation consultation and together, we can make a plan to help regain control of your money.
Although debt can be overwhelming, there are ways to start fresh and improve your relationship with money.