In a consumer proposal you generally keep your property, including your home, as long as you keep paying secured debts such as the mortgage. You can still sell, but talk to your licensed insolvency trustee first. In a bankruptcy, your property passes to the trustee, so you cannot sell the home on your own.
If you are weighing a consumer proposal or bankruptcy, you are probably tired of juggling payments. Wanting to protect the equity in your home makes sense. The order you do things in matters a lot here, so it is worth pausing before you sign anything.
Consumer proposal vs. bankruptcy: the home at a glance
| Consumer proposal | Bankruptcy | |
|---|---|---|
| Who owns the home? | You keep it, as long as you pay secured creditors | Your property passes to the trustee |
| Can you sell on your own? | Generally yes, but tell your trustee first | No; the trustee deals with the property |
| Mortgage | You must keep paying it | The lender can generally still enforce its security |
| Equity | Affects what creditors expect in the proposal | Can be used to pay creditors |
| Who administers it? | A licensed insolvency trustee | A licensed insolvency trustee |
Selling during a consumer proposal
A consumer proposal is a legal offer to your unsecured creditors to pay part of what you owe, or to take more time. According to the Office of the Superintendent of Bankruptcy, it is available if your total debts are not more than $250,000, not counting a mortgage on your principal residence. It can last up to five years. Once filed, it stops most collection actions by unsecured creditors, such as wage garnishments and lawsuits.
You keep your property as long as you keep paying secured creditors. The mortgage is not part of the proposal, so it has to stay current.
Selling during a proposal is possible, but a few points need care:
- Equity matters. Creditors often compare a proposal with what they might get in a bankruptcy, and home equity is part of that picture. A sale can change the numbers.
- Read your proposal terms. Some proposals deal with the home or with a sale directly.
- Tell your trustee before you sign. Your trustee can explain how a sale affects your proposal and your payments.
What happens to your house in a bankruptcy
Under section 71 of the Bankruptcy and Insolvency Act, once you go bankrupt you no longer have the ability to sell or otherwise deal with your property. It passes to the trustee. The trustee then decides how to deal with the home, depending on the equity, the mortgage and any exemptions under provincial law.
Ontario's Execution Act protects only a modest amount of equity in a principal residence. When the exemption took effect in June 2023, the Office of the Superintendent of Bankruptcy reported it as $10,783. The amount is set by regulation and can change, so ask your trustee for the current figure. If your equity is above that amount, your trustee can explain what that means for the home and what options you have.
Bankruptcy stops most creditors from pursuing you. It generally does not stop a secured creditor, such as your mortgage lender, from enforcing its security, although a court can postpone that for a limited time, generally no more than six months. So a mortgage in arrears can still lead to enforcement. See our guide to selling before power of sale.
Should you sell before filing?
Sometimes selling first is the better plan. If the house has enough equity, a sale can pay the mortgage, liens and other debts, and may make a filing unnecessary. In other cases, a proposal lets you keep the home and pay a manageable amount.
Be careful with sales or transfers made shortly before filing. A trustee can review earlier transactions, especially transfers to family members or sales for less than the property is worth. Selling to a relative for a low price, or signing the house over "for safekeeping," can create serious problems.
If you do sell, get a realistic value, compare offers on their net result and keep records of how the price was reached. Our guide to cash offer vs. listing can help. If there are liens on title, see selling a house with a lien.
Who to talk to, and in what order
- A licensed insolvency trustee. Only licensed insolvency trustees can administer consumer proposals and bankruptcies. The Office of the Superintendent of Bankruptcy explains what they do and how to find one.
- A real estate lawyer for title, payouts and the sale agreement. The Law Society Referral Service can help.
- Your mortgage lender, especially if payments are behind.
- An accountant if the sale could create tax, for example on a rental property.
Be wary of anyone who is not a licensed insolvency trustee offering to "settle your debts" in exchange for fees upfront or a transfer of your home.
Sources we checked
We checked these government, court and legal-information sources on September 26, 2026. Rules and amounts can change, so confirm the details for your situation with a lawyer, accountant or licensed insolvency trustee.
- Office of the Superintendent of Bankruptcy — Consumer proposals
- Office of the Superintendent of Bankruptcy — What is a licensed insolvency trustee?
- Office of the Superintendent of Bankruptcy — Ontario residence exemption
- Bankruptcy and Insolvency Act, s. 71 (vesting of property in trustee)
- Bankruptcy and Insolvency Act, s. 69.3 (stay of proceedings; secured creditors)
- Law Society of Ontario — Law Society Referral Service
Common questions
Can I sell my house while in a consumer proposal in Ontario?
Generally yes, because you keep your property in a proposal. Talk to your licensed insolvency trustee before signing, since the sale and your equity can affect the proposal.
Will I lose my house in a consumer proposal?
Not usually, as long as you keep paying your mortgage and other secured debts. The mortgage is not included in a consumer proposal.
Can I sell my house after declaring bankruptcy?
Not on your own. Under the Bankruptcy and Insolvency Act, your property passes to the trustee when you go bankrupt. The trustee deals with the home. Ontario protects only a modest amount of home equity in a bankruptcy, so ask your trustee what applies to you.
Does a consumer proposal stop my mortgage lender?
A consumer proposal stops most collection by unsecured creditors. It does not remove your obligation to keep the mortgage current. Ask your trustee how it applies to you.
Should I sell my house before filing for bankruptcy?
Sometimes, if the equity can pay your debts. Avoid transfers to family or sales below value before filing, because a trustee can review them. Get advice from a licensed insolvency trustee first.
Prepared by our team for Ontario homeowners. This is general information, not legal, tax or financial advice on a particular transaction. Editorial approach and corrections.
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