Debt help in Ontario: consumer proposals, bankruptcy and the rules that differ here

If you live in Ontario and can’t keep up with your debts, the two formal ways out, a consumer proposal and bankruptcy, are federal processes that work the same across Canada. What changes in Ontario is the detail around them: which belongings you keep, how much of your pay a creditor can garnish, how long a creditor has to sue and how collection agencies must behave. This guide covers those Ontario rules and keeps the federal basics short.

Ontario is also where the largest number of Canadians file. In the 12 months to August 2026, Ontario residents made 56,333 consumer insolvency filings, roughly 38.5% of the 146,135 filed nationally, according to the Office of the Superintendent of Bankruptcy (OSB).¹

How many Ontarians file for insolvency?

Source: Office of the Superintendent of Bankruptcy, annual statistics for 2025 and monthly statistics for August 2026.²¹

Proposals made up about 79% of Ontario’s consumer filings over the latest 12 months, slightly above the national share of 78.0%, while bankruptcies grew faster. For the national numbers, see our story on the August 2026 OSB data; for who tends to file and why, see what the OSB’s debtor profile shows.

The federal basics, briefly

Both options come from the federal Bankruptcy and Insolvency Act (BIA), and only a Licensed Insolvency Trustee (LIT) can administer them.

• Consumer proposal. You offer your unsecured creditors part of what you owe, more time to pay, or both, over no more than five years. It is open to individuals whose debts, not counting a mortgage on their home, are $250,000 or less, and you generally keep your assets if you keep paying secured debts such as a mortgage.³ See our consumer proposal guide.
• Bankruptcy. The trustee sells assets that the law doesn’t protect, and a first bankruptcy usually ends after 9 months, or 21 months if you have surplus income to pay.⁴ See our guide to bankruptcy in Canada.

Where you live matters most in a bankruptcy. Section 67 of the BIA leaves out of the bankruptcy any property that is exempt from seizure under the law of the province where you live and where the property is located.⁵ In Ontario, that law is the Execution Act.

What can you keep in an Ontario bankruptcy?

Section 2 of the Execution Act lists the property a debtor can choose to protect, and a regulation, O. Reg. 657/05, sets the dollar limits.⁶⁷ The figures below apply as of Dec. 19, 2025, when O. Reg. 393/25 raised every limit, and were current on e-Laws when this guide was published.⁸

Source: Execution Act, s. 2; O. Reg. 657/05, s. 1, as amended by O. Reg. 393/25.

The home equity limit is small. Only $12,997 of equity in your principal residence is protected, so a homeowner with more equity will generally find the excess exposed in a bankruptcy. That is one reason homeowners often look at a consumer proposal first.

Being over a limit is not the end of the analysis. Under the Execution Act, if a sheriff seizes a vehicle worth more than the limit, it can be sold and you are paid the exempt amount from the proceeds. In a bankruptcy, how an over-limit asset is handled, including any loan against it, is something to work through with a trustee before you file. To compare Ontario’s list with other provinces, see Harris & Partners’ overview of bankruptcy exemptions across Canada.

Are RRSPs protected in an Ontario bankruptcy?

Mostly, yes. The rule is federal, so it applies in every province. Under section 67(1)(b.3) of the BIA, money in a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or registered disability savings plan (RDSP) stays out of the bankruptcy. The exception is anything you contributed in the 12 months before you filed.⁵

Neither the federal rule nor Ontario’s Execution Act mentions a tax-free savings account (TFSA) or an ordinary bank account, so don’t assume those are protected.

How much of your pay can be garnished in Ontario?

When a creditor garnishes wages through the Ontario courts, section 7 of the Wages Act protects 80% of your wages. “Wages” here means pay after the deductions your employer is legally required to make, such as income tax, so in most cases a creditor can take up to 20% of your net pay.⁹

The rules have three wrinkles worth knowing:

• Support is different. When the debt being enforced is a support or maintenance order, only 50% of your wages is protected.
• A judge can change the percentage. A creditor can ask the court to lower your protected share, and you can ask the court to raise it, based on your finances and the nature of the debt.
• Disability benefits count as wages. Insurance payments meant to replace income lost to a disability are treated as wages for these limits.

If your income has recently dropped, our story on the September job losses and what they mean for debt covers the first steps.

How long can a creditor sue you in Ontario?

Ontario’s Limitations Act, 2002 gives a creditor two years to start a lawsuit, counted from the day the claim is “discovered.”¹⁰ The law presumes the creditor knew of its claim on the day of the default, such as a missed payment, unless shown otherwise. For a debt payable on demand, the clock starts the first day you fail to pay after a demand. An outer limit of 15 years applies to most claims.

Two things can reset the clock on a debt for a fixed amount, as long as they happen before the two years run out: a written acknowledgment of the debt that you sign, or a partial payment. Some debts have no limitation period at all, including the enforcement of an existing court order, government student loans, and amounts owed to the Crown for taxes, fines and penalties.¹⁰

An expired limitation period stops a creditor from starting a lawsuit. It doesn’t erase the debt. Ontario’s consumer protection website puts it plainly: you remain responsible for what you owe “regardless of the conduct of the collection agency or how long ago you incurred the debt.”¹¹ If you are sued over an old debt, get legal advice promptly.

What are Ontario’s rules for collection agencies?

The Collection and Debt Settlement Services Act requires collection agencies working in Ontario to register with the province and sets the rules they follow.¹² The province’s consumer protection pages summarise the main rules:¹¹

• Notice first. The agency must send you a written notice about the debt, by mail or by email if you agree, then wait six days before contacting you to collect.
• Limits on contact. Once it has spoken with you, an agency can’t contact you more than three times in seven days about the same creditor’s debt without your consent. Calls aren’t allowed on statutory holidays, on Sundays outside 1 p.m. to 5 p.m., or on other days between 9 p.m. and 7 a.m.
• Family and employers. An agency generally can’t contact relatives, friends or neighbours except to confirm your contact details, or if they guaranteed the debt or you asked it to. It may contact your employer once to confirm your job, and otherwise only in limited cases, such as a court order.
• No pressure tactics. Harassment, threats and misleading statements are prohibited, and an agency can’t threaten a lawsuit the creditor hasn’t authorized in writing.
• How to make the calls stop. Contact must end if your lawyer or licensed paralegal tells the agency, by a verifiable method, to deal only with them, or if you notify it that you dispute the debt and would like a court to decide it. The second route may prompt a lawsuit.

You can complain to Consumer Protection Ontario if an agency breaks these rules. Fee-charging debt settlement companies must register under the same Act and can’t take more than $50 up front before you sign an agreement or make a first payment.¹¹¹³ These companies are not the same as Licensed Insolvency Trustees, and a private settlement arrangement does not bring the legal protection that a BIA filing does.

How filing stops garnishments and collection calls

Filing a consumer proposal or a bankruptcy triggers what the law calls a stay of proceedings: an automatic legal pause that stops unsecured creditors from suing you, continuing a lawsuit or enforcing a judgment for debts covered by the filing (BIA sections 69.2 and 69.3).¹⁴ In practice, the OSB says, wage garnishments stop, creditors’ lawsuits are halted and you stop paying unsecured creditors directly, because the trustee deals with them for you.³⁴

The stay has limits. A secured lender, such as your mortgage lender, keeps its rights over the property that secures the loan, so keep those payments up if you want to keep the asset.

How an Ontario filing affects your credit report

The OSB says anyone who goes bankrupt or files a consumer proposal is generally given the lowest possible credit score. A proposal usually stays on your credit report for the length of the proposal plus a few years afterwards, depending on your province, and a first bankruptcy generally stays for six or seven years.³⁴

Ontario adds its own rules through the Consumer Reporting Act. Once seven years have passed since your discharge, a credit bureau can no longer report the bankruptcy, unless it was not your only one. You can check your report online once a month at no charge, and credit repair firms can’t charge you until their work has actually improved your report.¹⁵

How to find a Licensed Insolvency Trustee in Ontario

Licensed Insolvency Trustees are licensed and overseen by the OSB, and their consumer fees are set by federal rules. You can confirm that a trustee is licensed in the OSB’s Licensed Insolvency Trustee registry. According to the OSB, LITs typically do not charge for a first consultation.¹⁶

The contributors to The Paydown are Licensed Insolvency Trustees at Harris & Partners, which lists its Ontario offices, from Windsor to Ottawa to Thunder Bay. Whichever trustee you see, bring a list of your debts, recent pay stubs, any garnishment or court papers, and rough values for your home, vehicle and other assets, so the two options can be compared under Ontario’s rules.

Frequently asked questions

Can I keep my house if I file for bankruptcy in Ontario?

Ontario protects only $12,997 of home equity in a bankruptcy, and any excess is generally available to creditors. In a consumer proposal you generally keep your home as long as you keep paying the mortgage.

Does a consumer proposal stop a wage garnishment in Ontario?

Yes. Once a proposal is filed, the BIA’s stay of proceedings stops garnishments and most collection action by unsecured creditors. The same applies when you file for bankruptcy.

Is a debt older than two years still owed in Ontario?

Usually, yes. Once the two-year limitation period has run out, the creditor generally can’t start a new lawsuit, but the debt still exists. Court judgments, government student loans and certain debts owed to the Crown have no limitation period.

If I move to Ontario, which province’s exemptions apply?

The BIA looks to the law of the province where you live and where the property is located, so a trustee will check both when you file.