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Filing a consumer proposal is a big decision, especially if you own a home in Ontario. A consumer proposal is a legal option to manage unsecured debts like credit cards or personal loans by paying back a portion over time. A big question comes up: Can you keep your house if you file one? Yes, usually—but if you’ve got equity in your home, there’s a better way to tackle debt.

What Is a Consumer Proposal?

A consumer proposal is a deal you make with your creditors through a Licensed Insolvency Trustee (LIT). You offer to pay back part of your unsecured debts—think credit cards or payday loans—over up to five years. If creditors agree, you make monthly payments, and the rest of that debt is wiped out. Your mortgage, tied to your house, isn’t included because it’s secured debt. As long as you keep up with mortgage payments, your home stays safe. But equity in your home can complicate things—more on that soon.

Can You Keep Your Assets in a Consumer Proposal?

In a consumer proposal, your assets—like your house, car, or savings—are evaluated by the trustee. Unsecured debts don’t directly put your home at risk, but equity does. Equity is the difference between your home’s value and your mortgage balance. For example, if your house is worth $600,000 and you owe $400,000, you’ve got $200,000 in equity.

Ontario law gives you a $10,000 equity exemption as of 2025. If your equity is $10,000 or less, it’s protected—no extra payments needed. But if it’s higher—say, $50,000—you’d have to account for the extra $40,000. The trustee might ask you to pay that amount into the proposal to keep your home, either through higher monthly payments or a lump sum. Other assets, like a car, have a $7,000 exemption; anything above that could also increase your proposal costs. Essentially, the more equity or valuable assets you have, the more you might pay to protect them.

The True Costs of a Consumer Proposal

Filing a consumer proposal has downsides. It dents your credit score, staying on your report for three years after you finish paying (or six years from filing, whichever is longer). That can make borrowing—like renewing your mortgage—harder later. You’ll also pay trustee fees, usually a percentage of your debt plus admin costs. If you’ve got significant equity, those extra payments to cover it can push your monthly burden higher than expected. It’s a solid option if you’re asset-light, but if you own a home with equity, it might not be the cheapest or easiest route.

Using Home Equity to Consolidate Debt Instead

Here’s an alternative: use your home’s equity to pay off debt outright. If you’ve got $50,000 in credit card debt and $100,000 in equity, you could refinance your mortgage, get a home equity loan, or a HELOC. You’d borrow $50,000, clear your high-interest debts (often 19% or more), and roll that amount into your mortgage at a lower rate—say, 5%. Your monthly payments drop, interest costs shrink, and you avoid trustee fees or credit damage.

For example, $50,000 at 19% interest with minimum payments could take decades and cost over $60,000 in interest. At 4% over 20 years via a mortgage, you’d pay about $300 monthly and $22,000 in interest total. You keep your home, eliminate debt faster, and skip the consumer proposal process.

How Can a Mortgage Broker Help?

A mortgage broker simplifies this. We’ll:

Check Your Equity: Calculate how much you can borrow safely.

Find Rates: Compare lenders to get you the best deal.

Customize a Plan: Whether it’s a refinance, HELOC, or private mortgage, we’ll match it to your needs.

Cut Costs: Lower rates and no trustee fees save you money.

You’re not just managing debt—you’re clearing it while keeping your home secure.

When a Consumer Proposal Still Works

If your equity is under $10,000 or your mortgage is maxed out, a consumer proposal might be better. It stops creditor pressure fast—think collection calls or wage garnishments—and works well if you’ve got minimal assets. But with equity, debt consolidation often wins by solving the problem, not just delaying it.

Can You Keep Your House in a Consumer Proposal?

Yes, you can keep your house with a consumer proposal if you cover excess equity and maintain mortgage payments. But if you’ve got equity, why settle for a drawn-out plan with credit hits and fees? A mortgage broker can show you how to use that equity to erase debt, save money, and protect your home’s value.

Let’s talk. We’ll look at your numbers—home value, debts, goals—and find what fits. Your home’s equity could be your ticket out of debt. Why not use it?