Will I Lose My House? How to Keep Your House in a Consumer Proposal in Alberta

You're buried in credit card and loan payments. A trustee has mentioned a consumer proposal. And the first question in your head isn't about your credit score. It's about your home.

Here's the short answer. In most cases, you can keep your house in a consumer proposal, as long as you keep paying your mortgage, your property taxes and your home insurance. The proposal deals with your unsecured debts. Your mortgage sits outside it. What your home can change is how much you pay your other creditors, and that's the part most people never hear about until they're in the trustee's office.

Why You Can Keep Your House in a Consumer Proposal

A consumer proposal is a deal with your unsecured creditors. That means credit cards, lines of credit with nothing pledged against them, payday loans, most tax debt and collections. You offer to pay back part of what you owe over up to five years, and the rest is forgiven once you finish.

Your mortgage is a secured debt. The lender holds your home as security, so it isn't in the deal. The federal Office of the Superintendent of Bankruptcy says you can keep your assets as long as you keep making your payments to your secured creditors. It also says the $250,000 debt limit for a consumer proposal doesn't count debts like a mortgage on your principal residence.

So the mortgage carries on as it was. Same lender, same payment, same terms. Where things can get harder is at your renewal date, which we cover in our guide to renewing your mortgage during a consumer proposal.

Will I Lose My House If I Do a Consumer Proposal? What Actually Puts It at Risk

Filing a proposal doesn't take your house. These things can:

• Missing mortgage payments. This is the big one. Your lender isn't bound by the proposal. If you fall behind, it can take the same steps it could take against anyone in default.
• Letting property taxes or insurance slide. Unpaid taxes and a lapsed insurance policy both put the lender's security at risk. Lenders treat them almost as seriously as missed payments.
• Other debts secured on the house. A home equity line of credit or a second mortgage registered on your title is also secured. It stays outside the proposal, so it has to keep getting paid too.
• Falling behind on the proposal itself. If you pay monthly and miss three payments, the proposal is deemed annulled. Your protection ends and your unsecured creditors can go back to collecting what they're owed.

Notice what's missing from that list. The act of filing isn't on it. Federal insolvency law stops a lender from ending your mortgage or demanding the full balance only because you became insolvent or filed a proposal. If you ever do fall behind, our guide to the foreclosure process in Alberta shows how long that process takes and what options stay open along the way.

How Home Equity Changes Your Consumer Proposal

This is the part people miss. You keep your house in a consumer proposal no matter how much equity you have. But your equity can raise the amount you have to offer.

Here's why. Your creditors vote on your proposal, and they compare it to what they'd get if you went bankrupt instead. A trustee sets the offer with that in mind. So the question becomes: in a bankruptcy, how much of your home equity would your creditors get?

In Alberta, the Civil Enforcement Regulation protects up to $40,000 of equity in your principal residence. If you own the home with someone else, that protection generally applies to your share. Equity above the protected amount is what creditors could reach in a bankruptcy. So a homeowner with a lot of equity usually needs to offer more in a proposal than a renter with the same debts.

A simple example. Say you own your home alone and have $100,000 of equity. About $40,000 of that is protected. The other $60,000, less the costs of selling, is what creditors might expect in a bankruptcy. A proposal that offers them much less than that may get voted down. These numbers are only an example. Your trustee does the real math on your file.

That's also why a proposal isn't always the right fix for a homeowner. If you have that much equity, refinancing to pay off the debt may cost you less and leave your credit in better shape. It depends on your income, your credit and your equity, and it's worth comparing before you file. Our post on refinancing to pay off debt in Alberta walks through that math.

Consumer Proposal vs Bankruptcy When You Own a Home

For homeowners, this is often where the choice gets made.

In a bankruptcy, equity above the protected amount belongs to your creditors. You may be able to keep the house by paying that amount to the trustee over time, or by refinancing to pay it out. If you can't, the home may have to be sold.

In a consumer proposal, you keep the home and pay the amount you agreed to, spread over up to five years. The equity stays yours. The trade-off is that the offer has to make sense to your creditors, and your equity is part of how they judge that.

A Licensed Insolvency Trustee is the only professional who can file either one. We're not trustees. But we can tell you what your home is likely worth to a lender, what a refinance could look like, and what it may mean for getting a mortgage later. Bringing both views to the table helps you choose with the full picture.

Common Myths About Consumer Proposals and Your House

"My bank will call my mortgage the day I file." Not for filing alone. As long as your payments, taxes and insurance stay current, the mortgage carries on. A renewal isn't automatic, though, so plan ahead for your maturity date.

"My spouse will lose the house too." A proposal is personal. If your spouse is on title but not in the proposal, their share isn't part of it. But any debt they co-signed with you can still be collected from them, so talk about joint debts early.

"I'll never get a mortgage again." Not true. Many people qualify again after a proposal. The timing depends on whether it's paid, how you've rebuilt your credit and which type of lender you use. Our guide to getting a mortgage after a consumer proposal covers the timelines.

"I should pay off my family loan first, then file." Be careful. Moving money, selling things cheaply or paying one creditor ahead of the others right before you file can cause problems in the proposal. Tell your trustee about every debt and every recent payment before you act.

Your Mortgage Options During and After a Consumer Proposal

Sometimes you need to borrow against your home while the proposal is running, or right after. Maybe your term is ending, you want to pay the proposal off early, or you need to buy out a former partner. There's more than one path, and the right one depends on the file.

Banks and credit unions (A-lenders). Most want the proposal paid in full and some time to pass, with fresh credit built up. Debt-service ratios usually land around 39/44, and new mortgages go through the stress test. For many people, this is the goal a few years out rather than the first stop.

Alternative lenders (B-lenders). Many will look at a file with an active or recently paid proposal. A credit score below 600 can still work depending on the whole file, and debt-service ratios can stretch toward roughly 50/50. Expect to need around 20% equity and to pay a lender fee. Terms are often one to three years, used as a bridge back to a bank.

Private lenders. They focus on the equity in your home more than your credit. You'll usually need 20% to 25% or more in equity, the cost is higher and the term is short. It can work when nothing else fits, as long as there's a written plan to get out of it.

One useful move: some homeowners use a B-lender or private refinance to pay the proposal off early. Once it's paid, the clock on your credit report starts sooner. It isn't right for everyone, and the costs have to make sense, but it's worth asking about.

How Gold Lion Mortgages Can Help

Files with a consumer proposal on them are a normal part of our week. Surinderpal and the Gold Lion team work with banks, credit unions, alternative lenders and private lenders, so we can look at your home and your debts from every angle.

If you haven't filed yet, we can show you if your equity could clear the debt through a refinance, so you can compare that with what the trustee proposes. If you're already in a proposal, we'll help you plan for your renewal, an early payoff or your next mortgage, and we'll tell you plainly what each option costs. You can see more about how we handle tougher credit files on our bad credit mortgage page.

Call (587) 740-0048 or visit goldlionmortgages.com/apply.

Frequently Asked Questions

Will I lose my house if I do a consumer proposal?

Usually not. Your mortgage is a secured debt, so it isn't part of the proposal. As long as you keep paying your mortgage, property taxes and home insurance, you can normally keep your home.

Does home equity affect a consumer proposal in Alberta?

Yes. You keep the house, but your offer has to beat what creditors would get in a bankruptcy. In Alberta, up to $40,000 of equity in your principal residence is protected, so equity above that can raise the amount you need to offer.

Can my bank take my house because I filed a consumer proposal?

Not for filing alone. Federal law stops a lender from ending your mortgage only because you filed. If you miss mortgage payments, though, the lender can act just as it could with any borrower in default.

Is a HELOC included in a consumer proposal?

No, not when it's registered against your home. A home equity line of credit is a secured debt, like your mortgage, so you need to keep making those payments during the proposal.

Can I refinance my house to pay off a consumer proposal?

Often, yes. Many alternative and private lenders will refinance a home with an active proposal if there's enough equity, usually around 20% or more. Paying the proposal off early can start the clock on your credit report sooner.

If you own a home and a consumer proposal is on the table, call Gold Lion Mortgages at (587) 740-0048 or apply online at goldlionmortgages.com/apply.

Published: September 24, 2026. Mortgage guidelines, lender programs, and qualifying requirements change. Contact Gold Lion Mortgages to confirm current requirements for your file. This article is general information, not legal or insolvency advice. Speak with a Licensed Insolvency Trustee about your proposal.

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