What Debts can be part of a Consumer Proposal?

Consumer proposals can only be applied to unsecured debt–your credit card debt is unsecured, but your mortgage is secured because the lender can repossess the property and sell it to get their money back.

You must include all unsecured creditors in the consumer proposal. The most common unsecured debts are credit cards, retail loans (for furniture, electronics, etc.), personal loans from financial institutions, loans from friends and family, income tax, and lines of credit. Legally, any loans from family and friends must be part of this proposal as all unsecured creditors must be treated identically.

Secured debt includes mortgages, car loans/leases, and boat loans.

Retail financing contracts are a blend of both secured and unsecured debt. For example, if you bought a couch and used the store’s financing to purchase it and now owe $2,000 on the balance, the store might repossess the couch, which now has a resale value of $500. The remaining $1,500 would become unsecured debt that would be part of your consumer proposal.