Can You Keep Your House & Car in a Consumer Proposal in Alberta, Canada?

A consumer proposal can affect your debt, but it does not mean you will lose your home or your car. Many people worry about what will happen to their home or vehicle when filing for a consumer proposal. In Alberta, this concern is understandable, as both play an important role in day-to-day life.

If you are considering filing a consumer proposal, you may be asking questions like:

• Can I keep my house in a consumer proposal?

• Will I lose my car?

In many cases, you can keep both your home and your vehicle when filing a consumer proposal in Alberta. A consumer proposal is designed to reduce unsecured debt while allowing you to maintain as much financial stability as possible.

In this article, we will provide you with a clear overview of how consumer proposals work and how they may affect essential assets like your home and car.

What Is a Consumer Proposal?

As outlined under Canada’s Bankruptcy and Insolvency Act, a consumer proposal is a debt relief option in Canada that allows you to reduce what you owe and repay it through a monthly plan. Consumer proposals apply to unsecured debt and do not change secured debts like mortgages or car loans. A consumer proposal helps pay unsecured debts, which often include:

• Credit cards

• Personal loans

• Payday loans

• Lines of credit

• Tax debt

When a consumer proposal is filed through a Licensed Insolvency Professional, several protections typically begin right away.

Immediate legal protection

Once the consumer proposal is filed, you will experience the following:

• Collection calls and letters generally stop

• Interest on unsecured debt is frozen

• Legal actions related to unsecured debt are paused

• You make one structured monthly payment instead of payments on multiple debts

Statistics from the Office of the Superintendent of Bankruptcy indicate that over 100,000 consumer proposals are filed annually. For many people, this is the first point where financial pressure begins to ease away.

Can You Lose Your House in a Consumer Proposal?

In many cases, you can keep your house when filing a consumer proposal.

This is because a consumer proposal essentially helps with unsecured debt, while a mortgage is considered a form of secured debt. Secured debts are tied directly to a specific asset.

What does this mean for Alberta homeowners?

If you continue making your regular mortgage payments, the lender will usually allow you to keep the home.

Your proposal payment is focused on addressing unsecured debts instead of replacing your mortgage obligations.

For many Albertans, this allows them to manage debt without disturbing housing stability.

What If You Have Equity in Your Home?

Having equity does not mean you are required to sell your home.

Equity refers to the difference between the value of your home and the amount that is still owed on your mortgage.

For example:

• Home value: $420,000

• Mortgage balance: $390,000

• Equity: $30,000

When creditors review a proposal, they look at how much equity you have in your home. However, this doesn’t mean you’re going to lose it.

In many cases, the solution is simply to reflect a portion of that equity in your payment plan. This is so that creditors are treated fairly, while you’re still able to stay in your home and move forward with peace of mind.

A Licensed Insolvency Trustee reviews these details carefully to ensure the proposal remains manageable.

How Likely Is It to Lose Your Car in a Consumer Proposal?

In many situations, you can keep your vehicle during a consumer proposal, but the key factor is how it’s financed.

If you are financing your vehicle

If you’re making your car loan or lease payments on time and want to keep your vehicle, you’re often able to continue as you are.

Because the loan is secured by the vehicle, your consumer proposal does not change those payments.

If your vehicle is fully paid off

If your vehicle is fully paid off, it may be protected under provincial asset exemption rules.

Alberta’s exemption guidelines may shield part of your vehicle’s equity, giving many people the ability to retain a car they need for daily living.

Why Consumer Proposals Often Protect Certain Assets

Consumer proposals are designed to help you regain stability while treating creditors fairly.

Rather than forcing you to give up what matters most, the approach is centered on creating a practical way to repay your debts by creating a realistic repayment structure.

This approach helps with:

• Maintaining housing stability

• Keeping transportation needed for work

• Reducing unsecured debt

• Moving forward with a clear financial plan

Financial challenges do not reflect a person’s responsibility or character. It is essential to understand that financial hardship doesn’t define a person’s responsibility. Many people are navigating challenges caused by factors beyond their control with income loss, rising living costs, or family changes.

Every Financial Situation Is Different

Each situation is evaluated individually, taking into account your home equity, vehicle financing, total unsecured debt, income, and obligations.

This is why speaking with a Licensed Insolvency Trustee may be helpful. They can review your full financial picture and explain your options clearly before any decision is made.

Just as importantly, a consultation does not obligate you to file anything. It simply helps you understand the available paths forward.

A Consumer Proposal Can Help You Move Forward With Stability

Debt can bring a lot of uncertainty, especially when your home or transportation feels at risk. The goal of a consumer proposal is to lighten that load by helping you retain those essentials.

A clear plan can make all the difference. Our Licensed Insolvency Trustee is here to help you manage debt, ease collection pressure, and move forward with confidence. You don’t have to give up what matters most. Book a free, confidential consultation with a Licensed Insolvency Trustee to understand your options clearly.

FAQs

1) Can I do a consumer proposal and keep my car?

Yes, in most cases you can keep your car when filing a consumer proposal. As long as you stay current on your loan or lease payments and can afford them alongside your proposal, your vehicle is not at risk.

2) What assets can you keep in a consumer proposal?

One of the main benefits of a consumer proposal is that you can usually keep your assets, including your home, vehicle, and personal belongings. As long as you continue making any required secured payments, those assets remain yours.

3) Does asset value affect my consumer proposal payments?

Yes, the value of your assets can influence your proposal payments. If you have significant equity in assets like your home or car, you can expect a higher repayment amount compared to someone with fewer or lower-value assets.