What Debts Can a Consumer Proposal Include in Alberta?
See how a consumer proposal treats credit cards, CRA balances, student loans, secured loans, joint accounts and business debts, plus what may remain payable.
You are juggling credit card balances, a CRA bill, a couple of loans, and the phone keeps ringing with collection calls. And you have no idea which of these debts you can actually deal with. That uncertainty is stressful.
Here is the good news: a Licensed Insolvency Trustee can review your full debt picture and explain how federally regulated options apply in Alberta. A consumer proposal is one of those options.
This article clarifies which debts you can include, which you cannot, how secured and joint debts work, and when to get advice.
What Debts Are Included in a Consumer Proposal?
A consumer proposal can generally include most unsecured debts, such as credit cards, payday loans, personal loans, unsecured lines of credit, collection accounts, CRA tax debt, and qualifying student loans. These debts are not tied to collateral, which is why they usually qualify. Your individual situation still matters and must be reviewed by a Licensed Insolvency Trustee.
Our own explainer confirms that with a consumer proposal you can be legally released from most unsecured debts.
Common unsecured debts
- Credit cards and retail cards
- Unsecured bank loans
- Payday loans
- Personal loans from finance companies
- Overdraft balances
- Unpaid utility or phone bills sent to collections
- Private debts with no collateral
Collection agency accounts
Once an unsecured debt goes to collections, it does not usually change the nature of the debt. It stays unsecured, so it can generally still be addressed through the formal consumer proposal process.
After filing, a stay of proceedings applies. That means creditors can no longer charge interest, garnish your wages, or contact you about included debts, depending on the circumstances.
Are CRA Tax Debts Included?
Many CRA tax debts can be included, but the exact treatment depends on the type of tax debt, whether required returns are filed, and your full financial situation. CRA is treated as a creditor in the process. To be clear, we are an independent Licensed Insolvency Trustee firm, not affiliated with CRA or the government.
If you have unfiled tax returns, you may need to complete them so the debt can be properly assessed. Business-related trust amounts need more careful review.
Personal income tax balances
Personal income tax owing, plus penalties and interest, may generally be included as unsecured debt, subject to review. In fact, for people who cannot repay in full, we note that a consumer proposal is the only option for repaying less than you owe to CRA. A proposal covers all taxes owing until the previous year, while current-year taxes are handled separately.
Self-employed and business-related tax debts
Tax debt from self-employment or business activity gets more complex. GST/HST, payroll source deductions, and director liability can each be treated as personal, corporate, secured, or trust-related. A Licensed Insolvency Trustee needs to review the details before confirming what can be included.
Are Student Loans Included in Alberta?
Student loans are generally included only if it has been at least seven years since you stopped being a student, though special hardship provisions may apply in limited cases. This rule comes from the Bankruptcy and Insolvency Act. If less than seven years have passed, the loan survives the process and you still owe it.
The seven-year rule
The relevant date is when you ceased to be a full-time or part-time student, not when you received the loan or graduated. Once more than seven years have passed, student loan debt can be consolidated with your other unsecured debts. A 2025 Supreme Court of Canada decision reaffirmed that borrowers within the seven-year window remain ineligible for discharge.
After five years (but less than seven), you may apply to the court for an early hardship discharge if you meet strict criteria. This is a court application, not automatic, and uncommon in practice.
Private student loans
Private student lines of credit or bank-issued education loans are not government student loans. They may be treated as ordinary unsecured debts, so the seven-year rule does not apply to them.
What Debts Are Not Included?
Some debts are not included or may survive the process, including support obligations, certain court fines, fraud-related debts, and student loans that do not meet the required timing rules. A Licensed Insolvency Trustee can explain which of your debts may survive a consumer proposal.
Family support obligations
Child support and spousal support are treated differently. Both ongoing amounts and arrears generally remain payable after the process.
Court fines, penalties, and restitution
Court-ordered fines, penalties, and restitution orders are usually not released. We list court-ordered fines as one of the major exceptions.
Fraud or misrepresentation debts
Debts arising from fraud or false pretenses can survive a consumer proposal. These require careful review and may involve creditor objections or court considerations.
What Happens to Secured Debts Like a Mortgage or Car Loan?
Secured debts such as mortgages and car loans are usually not included if you keep the asset, but any shortfall after surrendering collateral may become an unsecured debt that can be addressed. Secured debts are tied to collateral, which is why they are handled differently.
Keeping the secured asset
To keep a financed vehicle or mortgaged home, you continue your regular payments and stay current. The secured creditor keeps its rights to the collateral. Our advantages page explains that assets like your car and home can be included in the terms of the consumer proposal so you keep possession and pay for them.
Surrendering the collateral
If you surrender a vehicle or your home is sold and a shortfall remains, that shortfall may become unsecured. Timing matters: the asset must be surrendered before or as part of the filing for the deficiency to be addressed.
What Happens to Joint Debts or Co-Signed Loans?
Joint debts and co-signed loans may be included for the person filing, but the co-signer or joint borrower can remain responsible for the unpaid balance. Your filing deals with your liability, not theirs. Get advice before filing where family members or business partners are connected to your debts.
Co-signers and guarantors
A parent, spouse, relative, business partner, or friend who signed loan documents remains liable. Creditors may pursue them for the full balance unless they also file their own solution.
Joint credit cards and lines of credit
Joint account holders are both legally responsible, while an authorized user usually is not. Identifying who legally owes the debt matters before you file.
Can Business Debts Be Included?
Business debts may be included when you are personally liable, but incorporated company debts require a separate review because the corporation is a separate legal entity. Personal guarantees and director liability can change that picture.
Sole proprietor debts
A sole proprietorship is not legally separate from you. Business credit cards, supplier debts, tax balances, and loans you personally owe may be reviewed as part of your situation.
Corporation debts and personal guarantees
Company debts can become personal through personal guarantees, director liability, or personally incurred credit. If you need a deeper review, our business bankruptcy information may help.
How Does a Licensed Insolvency Trustee Decide What Can Be Included?
A Licensed Insolvency Trustee determines what can be included by reviewing the type of debt, who is legally responsible, whether collateral is involved, and whether any legal exclusions apply. This process is federally regulated and can only be administered by a Licensed Insolvency Trustee.
Full creditor review
Accuracy matters, so we review a full list of your creditors: credit cards, collection agencies, CRA balances, loans, and informal debts. We look at your total debt, income, secured assets, and family size.
Legal classification of each debt
Not all debts are treated the same way. We classify each as unsecured, secured, excluded, joint, contingent, or disputed.
Personalized options discussion
We then explain your options, which may include bankruptcy, a proposal, debt settlement, or consolidation. No single option is right for everyone, so the choice depends on your circumstances.
Frequently Asked Questions
Can utility bills be included?
Unpaid utility bills may generally be included if they are unsecured debts. Your current service arrangements may need separate attention to avoid disruption.
Can medical or dental bills be included?
Private medical, dental, or clinic bills may generally be included if they are unsecured and legally owed. They are treated like other everyday unsecured debts.
Can ICBC or Alberta traffic-related debts be included?
Some accident-related or traffic-related debts may be treated differently depending on whether they are fines, penalties, restitution, or civil debts. Because of that, they require review by a Licensed Insolvency Trustee.
Can debts to friends or family be included?
Personal loans from friends or family may be included if they are legitimate debts. But you must disclose them like any other creditor.
Will all creditors have to accept the consumer proposal?
Creditors vote by the dollar value of their claims, and if creditors representing at least 50% accept, the consumer proposal is approved. Once accepted, it binds all included unsecured creditors, even those who voted against it.
Take the Next Step With Clear Information
Many unsecured debts can be included in a consumer proposal, while secured debts, student loans, support obligations, court debts, fraud-related debts, and joint debts need careful review. Every situation is different, and outcomes depend on your circumstances.
If you want a clear answer about your own debts, book a free, no-obligation consultation with Hudson & Company Licensed Insolvency Trustees. We serve clients across Calgary and Southern Alberta and can review your full picture with you.