Frequently asked questions.

The right answer depends on your total debt, the types of debt you owe, your income, your assets, and your goals. There is no single option that works for everyone. A consumer proposal is often the better fit for people with stable income and assets to protect. Bankruptcy may suit someone with lower income and minimal assets. Consolidation works when you can qualify for a meaningfully lower interest rate and your debt is manageable in full.

The most reliable way to find out is a free consultation with a Program Manager. We review your complete financial picture and give you an honest assessment of every path available, including options that do not involve a formal insolvency process.

Insolvency is a financial condition, not a legal status. You are insolvent when you cannot meet your financial obligations as they come due, or when your total debts exceed the value of your assets. Many people are insolvent for months or years before they seek help.

Insolvency is the threshold that makes you eligible for formal debt relief options like a consumer proposal or bankruptcy. A Licensed Insolvency Trustee confirms whether you meet the criteria during your free consultation.

A Stay of Proceedings is a legal protection that takes effect automatically the moment a consumer proposal or bankruptcy is filed with the Office of the Superintendent of Bankruptcy. It immediately requires all unsecured creditors to stop collection calls, cease legal action, and halt any wage garnishments that are in effect.

The Stay is not something you request or negotiate. It is a legal consequence of the filing, and creditors are required to comply. It applies to unsecured creditors. Secured creditors, such as a mortgage lender or car finance company, are not affected as long as you continue making those payments.

Yes, you can contact creditors directly and some may offer payment arrangements or temporary relief. However, creditors are not legally required to agree, and any arrangement you reach is not binding on creditors who refuse. Interest typically continues during informal negotiations.

A consumer proposal, by contrast, is a legal process. Once creditors holding the majority of your debt by dollar value accept it, following court approval, the proposal is binding on all unsecured creditors, including those who voted against it. Interest stops on the day of filing regardless of whether creditors have voted. Informal negotiation does not offer these protections.

Filing a consumer proposal or bankruptcy only affects the person who files. Your spouse or partner is not automatically included in your insolvency, and their credit is not directly affected by your filing, provided they do not share the debts being addressed.

If you have joint debts, such as a joint credit card or a loan you co-signed together, the creditor can still pursue your spouse or co-signer for the full amount, even after you file. Your Program Manager will discuss the implications of any joint debts during your consultation.

A consumer proposal is a legally binding agreement between you and your unsecured creditors, filed by a Licensed Insolvency Trustee under the Bankruptcy and Insolvency Act. It allows you to settle your unsecured debts for a negotiated amount, typically less than what you owe, paid in monthly instalments over up to five years.

Once the proposal is accepted by creditors holding the majority of your debt by dollar value and approved by the court, it becomes binding on all unsecured creditors. Interest stops on the date of filing. Only a Licensed Insolvency Trustee can file a consumer proposal. Learn more on our consumer proposal page.

In most consumer proposals, you keep your home and your vehicle. Consumer proposals address unsecured debt. As long as you continue making your secured payments, such as your mortgage and car loan, those assets are not at risk through the proposal process.

Yes. In most cases, income tax debt and HST or GST arrears owed to the Canada Revenue Agency can be included in a consumer proposal. The CRA is an unsecured creditor like any other in this context, and must comply with the Stay of Proceedings once a proposal is filed. This is one area where a consumer proposal has a clear advantage over a consolidation loan. Lenders will not typically approve a loan to pay out tax debt, so in practice consolidation is rarely available for CRA debt.

Consumer proposals can be structured for up to 60 months. Most are arranged over 36 to 60 months, depending on what represents a fair offer to creditors relative to your income and assets. You can pay your proposal off early at any time with no penalty.

Rejection is uncommon when a proposal is properly prepared by an experienced trustee. If creditors holding the majority of your debt by dollar value do not accept the proposal, your trustee can work with you to amend it and resubmit. Alternatively, you may explore other options including bankruptcy. Your trustee advises you throughout this process.

If you miss three monthly payments during your proposal, it is automatically annulled. If your financial situation changes, contact your trustee as soon as possible. An amendment to the proposal may be possible before that point. Proactive communication is always better than waiting.

For a first-time bankruptcy with no surplus income, the minimum period is 9 months. If your income exceeds the OSB surplus income threshold for your family size, the minimum extends to 21 months. A second bankruptcy carries minimums of 24 months without surplus income, or 36 months with it. Learn more on our bankruptcy page.

Provincial exemptions protect a range of assets from your creditors in a bankruptcy. In the prairie provinces, these typically include equity in your principal residence up to a certain amount (varying by province), one vehicle up to a set value, clothing, household furniture and appliances up to provincial limits, tools needed for your employment, and most RRSP savings except contributions made in the 12 months before filing.

Specific exemption amounts differ between Alberta, Saskatchewan, and Manitoba. Your trustee will confirm what applies to your situation. Our bankruptcy page includes a summary of current exemptions by province.

The Office of the Superintendent of Bankruptcy sets annual income thresholds based on family size. If your after-tax income in any month exceeds the threshold for your household, you are required to contribute 50 per cent of the excess to your bankruptcy estate. This is called a surplus income payment.

If surplus income applies throughout your bankruptcy, it extends the minimum discharge period from 9 months to 21 months for a first-time bankruptcy. Your trustee calculates surplus income with you each month based on your actual take-home pay.

In most cases, no. RRSPs and RRIFs held with financial institutions are protected under the Bankruptcy and Insolvency Act, with one exception: contributions made within the 12 months before your bankruptcy filing date may not be protected and could be subject to review. Contributions made more than 12 months before filing are generally protected.

Bankruptcies and consumer proposals are filed with the Office of the Superintendent of Bankruptcy and are searchable in their public insolvency database. However, your employer is not directly notified, and personal insolvency filings do not typically appear on standard employment background checks in most cases.

Certain regulated industries and positions requiring security clearance may have different disclosure requirements. If this is a concern, discuss it with your Program Manager during your consultation.

No. Debt consolidation involves borrowing money, typically from a bank or lender, to pay off your existing debts in full. You still owe the complete amount; you are simply paying a different party, ideally at a lower interest rate. A consumer proposal is a legal settlement that may allow you to pay less than the full amount owed, with interest stopped and legal protection from creditors.

Consolidation requires good credit to access a competitive rate, and lenders will not typically approve a loan to pay out CRA debt. A consumer proposal does not require a credit check and can include CRA debt. Our debt consolidation page has a full comparison.

A Licensed Insolvency Trustee is federally licensed and is the only professional in Canada legally authorised to file consumer proposals and bankruptcies, which provide immediate legal protection from creditors. A non-profit credit counsellor can offer debt management plans and budgeting guidance but cannot provide legal protection and creditors are not required to participate in their programs.

Both can be useful depending on your situation. Our LIT explainer page contains a detailed comparison.

The debt settlement industry in Canada is mixed. Some companies operate ethically, but many charge high fees with no guarantee of outcome, have no legal authority to compel creditors to settle, and cannot provide a Stay of Proceedings. The OSB and provincial consumer protection agencies have issued warnings about this industry.

Before engaging any debt help company, confirm whether they are a Licensed Insolvency Trustee by searching the OSB insolvency database. A consumer proposal filed by a Licensed Insolvency Trustee is legally binding on all creditors once accepted and approved by the court. No debt settlement company can offer that.

Yes. The Bankruptcy and Insolvency Act requires two credit counselling sessions as part of every consumer proposal and personal bankruptcy. You cannot receive your Certificate of Full Performance or your absolute discharge until both are completed. Day Group provides these sessions as part of the process, at no additional charge. They can be completed by phone or video.

A consumer proposal will appear on your credit report. The accounts included in the proposal are noted with an R7 rating. The proposal record itself typically remains on your credit report for three years after the date you complete the proposal, or six years from the date of filing, whichever comes first.

Many people begin rebuilding credit during their proposal using a secured credit card. With consistent, responsible credit use, meaningful improvement is achievable within two to three years of completion. Our credit counselling page has a step-by-step rebuilding timeline.

Yes. Many people qualify for a mortgage after completing a consumer proposal or receiving a bankruptcy discharge. Most conventional lenders require at least two years of established credit history after the insolvency is resolved. Some alternative lenders and government-backed programs through CMHC may have different timelines.

The most important factor is demonstrating consistent, responsible credit use during the rebuilding period. Your trustee can discuss realistic timelines based on your specific situation.

Yes. You do not have to wait until your proposal is complete to begin rebuilding. Many people apply for a secured credit card within the first few months of filing. A secured card requires a deposit as collateral and does not typically require a credit check, making it accessible even during the proposal period. Using it for small purchases and paying the balance in full each month begins building positive credit history right away.

It helps to have a rough sense of your total debts and who you owe them to, your approximate monthly income and expenses, and a general idea of your assets: home, vehicle, savings. Precise figures are not required. If you have any recent collection letters, garnishment notices, or court documents, bring those if you can.

If you owe CRA debt, your most recent notice of assessment is useful. Most people come to their first meeting with a general picture of their situation, and the trustee helps organise the details. The most important step is simply making the call.

You can verify any LIT’s licence through the Office of the Superintendent of Bankruptcy’s public insolvency database at ic.gc.ca. Search for Day Group Inc. or the trustee’s name and confirm the licence status shows as Active. Our LIT licence number is 4172. We encourage you to verify it before proceeding with any professional offering debt relief services.