New Threshold for Consumer Proposals in Canada: How It Expands Access To Debt Relief

We work with individuals and families every day who are navigating financial stress and looking for real, practical solutions. One of the most significant proposed changes in 2026 is the new threshold for consumer proposals, increasing from $250,000 to $325,000.

This shift reflects the reality of rising living costs, higher debt loads, and the need for more accessible debt relief options in Canada.

Key Takeaways

• The proposed consumer proposal debt limit would increase from $250,000 to $325,000 if enacted as anticipated
• Joint filings for couples may rise to approximately $650,000
• The new threshold will be indexed to inflation annually
• More Canadians will qualify for consumer proposals instead of bankruptcy
• Changes are part of a broader modernization effort led by the Office of the Superintendent of Bankruptcy (OSB)

What Is a Consumer Proposal?

A consumer proposal is a formal, legally binding process administered by a Licensed Insolvency Trustee (LIT) that allows you to:

• Consolidate unsecured debts into one manageable monthly payment
• Stop interest and collection calls
• Avoid bankruptcy while resolving debt

Unlike other options, a consumer proposal is regulated under federal legislation and must be administered by a LIT. It offers a structured and transparent way to deal with debt while maintaining as much financial stability as possible.

Why the New Threshold for Consumer Proposals Matters

The increase from $250,000 to $325,000 is more than just a number, it represents a meaningful expansion of access.

Reflecting Today’s Economic Reality

Debt levels across Canada have increased significantly over the past decade due to:

• Higher housing costs
• Inflation and cost of living pressures
• Increased reliance on credit

The previous $250,000 cap excluded many individuals who could have benefited from a consumer proposal but instead had fewer or more restrictive options.

Expanding Eligibility

With the new threshold:

• More individuals with higher unsecured debt can qualify
• More homeowners and professionals with larger debt loads can avoid bankruptcy
• More families can pursue structured repayment plans

This change allows the system to better serve Canadians as financial realities evolve.

What Other Changes Are Being Proposed?

The new threshold for consumer proposals is part of a broader set of updates designed to modernize Canada’s insolvency framework.

Increased Limit for Joint Consumer Proposals

For couples filing together, the combined debt limit has historically been double the individual threshold. With the proposed increase:

• Joint limit may rise to approximately $650,000

This is especially important for households managing shared debt, mortgages, or lines of credit.

Summary Administration Asset Threshold

For individuals considering bankruptcy, the threshold for “Summary Administration” is expected to increase:

• From $15,000 to $20,000 in realizable assets

This allows more people to qualify for a simpler, more cost-effective bankruptcy process if needed.

Updated Surplus Income Thresholds

The surplus income limits used to determine if additional payments are required during bankruptcy have also been updated:

• Example: A family of three now has a monthly threshold of approximately $4,080 (subject to annual OSB updates)

These updates ensure that payment expectations align more closely with real-world living expenses.

Indexing for Inflation

One of the most important long-term changes is that the consumer proposal threshold will be:

• Indexed annually to inflation

This prevents the limit from becoming outdated again and ensures ongoing relevance.

What This Means for Canadians with Debt

The increase in the consumer proposal threshold opens the door for more flexible and practical solutions.

More Choice, Less Pressure

Many individuals who previously exceeded the $250,000 limit may have felt pushed toward bankruptcy or limited options. Now, more people can:

• Explore repayment plans
• Retain assets such as a home or vehicle
• Avoid more severe financial consequences

A Better Fit for Middle-Income Households

The updated threshold better reflects the financial reality of:

• Dual-income households
• Homeowners with unsecured debt
• Professionals managing multiple credit sources

This is particularly relevant in regions where living costs have increased significantly.

Understanding Your Options Matters

It’s important to understand that not all debt solutions are equal.

Licensed Insolvency Trustees vs Other Options

Licensed Insolvency Trustees are:

• Federally regulated
• Authorized to administer consumer proposals and bankruptcies
• Required to provide impartial, professional guidance

Other organizations, including some non-profit credit counselling agencies, can assist with budgeting and repayment plans—but they are not authorized to offer consumer proposals.

Additionally, some private “debt advisors” charge significant upfront fees to provide guidance that ultimately leads individuals to a Licensed Insolvency Trustee. Understanding your options from the outset can help you avoid unnecessary costs and delays.

Current Status of the Proposed Changes

As of early 2026:

• The Office of the Superintendent of Bankruptcy has completed stakeholder consultations
• The proposed changes are moving through the regulatory and legislative process
• A final implementation timeline is expected following approval

While not yet fully enacted, these changes are widely anticipated and reflect a strong direction toward modernization.

How Adamson & Associates Can Help

We focus on helping individuals understand their options clearly and confidently.

We provide:

• Personalized debt assessments
• Clear explanations of consumer proposals and bankruptcy
• Support through every step of the process

Our goal is to help you make informed decisions that align with your financial situation and long-term goals.

Common Questions About the New Threshold

Who will benefit most from the new consumer proposal limit?

Individuals with unsecured debt between $250,000 and $325,000 will gain access to consumer proposals, expanding their options beyond bankruptcy.

Does this change apply immediately?

As of March 2026, the changes are still in the approval process but are expected to be implemented following regulatory updates.

Will the limit increase again in the future?

Yes. The proposed changes include indexing the threshold to inflation, allowing it to adjust over time.

Can couples file together under the new rules?

Yes. Joint consumer proposals are expected to increase proportionally, potentially allowing combined debts up to approximately $650,000.

Is a consumer proposal better than bankruptcy?

It depends on your situation. A consumer proposal allows for repayment over time and may help you retain assets, but the right option varies for each individual.

Moving Forward with Confidence

The proposed increase to the new threshold for consumer proposals is a positive step toward making debt relief more accessible and realistic for Canadians. It reflects the financial pressures many people face today and provides more flexibility in finding a path forward.

If you’re feeling overwhelmed by debt or unsure of your options, speaking with a Licensed Insolvency Trustee can provide clarity. We’re here to help you understand what’s possible and to support you in taking the next step with confidence.