consumer proposal

Is There an Advantage to Paying off My Consumer Proposal Early?

Are you grappling with the weight of debts, considering a Consumer Proposal as a way to regain control over your financial life? Then, you’re in the right place! In this article, we’ll explore the pros and cons of paying off your Consumer Proposal early. Is there an advantage to paying off my Consumer Proposal Early?  Let’s find out.

What is a Consumer Proposal?

A Consumer Proposal is a powerful debt relief mechanism in Canada that offers individuals struggling with financial distress a lifeline toward regaining their financial freedom. This legal arrangement is facilitated by a Licensed Insolvency Trustee (LIT) and is designed to help Canadians facing unmanageable debt by providing a structured plan for partially repaying their unsecured creditors. In fact, a LIT office is the only professional debt advisor that can file a Consumer Proposal.

A Consumer Proposal is the most popular way in Canada to consolidate debt when a regular bank consolidation loan is unavailable.

Debt Relief Canada

Debt relief in Canada is crucial for those facing overwhelming financial hardships. While various options are available, a Consumer Proposal stands out as a responsible way to address your financial situation. It allows you to make manageable monthly payments, typically over a maximum of five years, with the potential for substantial debt reduction.

The Early Bird Advantage

Now, let’s delve into the advantages of paying off your Consumer Proposal early and how it can positively impact your financial future:

  1. Financial Freedom Sooner: One of the most significant advantages of paying off your Consumer Proposal early is that it accelerates your journey toward financial freedom. By making more substantial payments each month or contributing lump sums when possible, you can finish ahead of schedule. This will free up future monthly cash flow to start saving and investing.
  2. Improved Credit Score: When you pay off your Consumer Proposal early, it’s like getting a jump start on rebuilding your credit score. The sooner you pay it off, the sooner your credit score will improve. A higher credit score will open doors to better interest rates and more financial opportunities in the future.
  3. A Sense of Accomplishment: You did it! You set a goal to get out of debt and you got there even sooner than you thought. What a great feeling!

What about the Cons?

Many people that we meet are excited to pay off their balance early. After months or years of paying out large monthly payments that have been gobbled up by interest, they are used to seeing their cash flow disappear into a bottomless pit of Canadian debt payments.

When we then tell them that the monthly payment required in a Consumer Proposal will be only a fraction of what they have been used to paying, they get excited. I could finish paying faster, they say. While there are several advantages to finishing early, what about the cons? Here are a few:

  • A Consumer Proposal is most often interest free. There is no interest charged. Is there an advantage to paying off an interest free loan? Yes, as per the reasons above. However, you could also jump-start your savings and investing instead.

We recommend that people build up an emergency savings bank account before getting aggressive in paying down their Consumer Proposal. Building up this savings account may take 12-24 months so some patience is required.

Once you are feeling good about finances and are in a position of strength, then is the right time to attack the payments.

  • Getting back into debt. This can occur if you take out a loan to pay off your Consumer Proposal. Is this a wise move? It can be a viable option, depending on your specific circumstances. However, it’s essential to consult a financial advisor and your LIT to ensure that this choice aligns with your long-term financial goals. Loans can provide the means to clear your Consumer Proposal early. Still, they require careful consideration and planning.

It’s crucial to ensure that the terms are favorable and won’t exacerbate your financial challenges.

Pro Tip: if you are considering a loan, pay very specific attention to the interest rate and administration fees that you will be paying. Some lenders and consultants will have very high rates and costs. Be careful!

Consumer Proposal Canada – A Beacon of Hope

The internet can be a murky place filled with false hopes and offers that are too good to be true. A Consumer Proposal is a Federal Government of Canada option that is regulated by the government for the protection of the public.

Consumer Proposals have provided thousands of Canadians with the chance to regain control over their financial lives. These legally binding agreements ensure that you’re on a structured path to becoming debt-free. By paying off your Consumer Proposal early, you’re taking an active role in your financial recovery.

Are you curious if you qualify to file a Consumer Proposal? Try our Consumer Proposal Calculator here.


In conclusion, paying off your Consumer Proposal early offers a multitude of advantages that can lead to a brighter financial future. From faster financial freedom to improved credit scores,  and the potential to access better financial opportunities, the benefits are significant.

Consumer Proposals are a lifeline for many Canadians struggling with debt. By taking control of your financial future, you’re not just paying off your Consumer Proposal; you’re paving the way to a more secure and prosperous life. With determination, wise financial decisions, and the support of professionals in the field, you can emerge from the shadow of debt into the bright light of financial stability and hope.

We Are Here To Help

Here at Chase & Associates, we offer a free consultation where we will gain an understanding of your situation and provide you with information as to whether a Consumer Proposal would work for you.

Once you make the decision to contact us and do something about your debt you are more than halfway there to a brighter financial future.

Len Hiquebran, CPA, CA, LIT

After completing my articling at a local accounting firm, I spent some time working in industry as a controller of a logging company. Subsequently, I joined Derek L. Chase & Associates Ltd. in 2017 and began working in the insolvency field. In June 2020 I completed my studies and was granted a license by the Federal Government to be a Licensed Insolvency Trustee.