What are the differences between consumer proposal and debt consolidation?

Tight on money at the end of the month? Here are a few options to consider!

If you’re struggling to make ends meet or your personal debt isn’t decreasing, you might want to investigate the following solutions. Here are two commonly discussed options: debt consolidation and a consumer proposal. What are they, and how do they differ?

Here’s a quick overview of the differences:

Consumer Proposal Debt Consolidation
A Jean Fortin financial reorganization advisor negotiates with your current creditors for a monthly payment that fits your financial capacity, interest-free. You fully repay selected debts through a bank loan with an interest rate typically ranging between 12% and 14%.
The sole eligibility criterion is to be unable to meet payments on personal debts OR to have more debts than assets. Eligibility for a consolidation loan requires a good credit history, a satisfactory debt-to-income ratio, and the ability to meet the monthly loan payment.
The proposal includes all your unsecured debts, ensuring you only have one monthly payment. To ensure you don’t pay more interest than before consolidation, you should only consolidate debts with an interest rate higher than your consolidation loan (between 12% and 14%).
You retain all the assets you want to keep; you can surrender those you no longer want, and no cosigner (endorser) is required as it’s not a new loan. You keep all your assets, but the lender may require collateral or a cosigner for some of them. You cannot surrender (without penalty) assets you no longer want.
The proposal is reported to the credit bureau, but it offers flexibility to pay off early and restore your credit faster, with lower monthly payments. A consolidation loan isn’t explicitly indicated on the credit report, but creditors might consider it if you decide to take on more debt afterward.


Whenever possible, debt consolidation should be prioritized. However, before moving forward with this solution, it’s crucial to ensure that:

  1. You only consolidate debts with a higher interest rate than your consolidation loan, and especially
  2. You’ll be able to honor the monthly consolidation loan payment. To determine the amount, you can use our loan calculator.

If you need help understanding your options, our advisors will take the time to review your financial situation and provide appropriate advice. The consultation is free, confidential, with no obligation, and can be done in person, over the phone, or via video conference.