Filing a Consumer Proposal can be an excellent debt solution if you struggle to repay your debt. Understanding the cost of a Consumer Proposal will help you decide whether it’s a good option for your situation. A critical feature of proposal expenses is that they’re included in your payment, so you won’t have additional charges like set-up or minimum fees.
Consumer Proposals
People who file Consumer Proposals want to pay their debts but often can’t without help. A Consumer Proposal is a formal settlement offering acceptable debt repayment terms to you as a borrower and to your creditors. It is federally regulated by The Bankruptcy and Insolvency Act.
One of its many benefits is that it allows you to avoid Bankruptcy and gives your creditors more than they‘d receive if you filed for Bankruptcy. You need a Licensed Insolvency Trustee (LIT) to file the settlement on your behalf. The Consumer Proposal can proceed if the majority of your creditors agree to your offer.
Repayment terms for Consumer Proposals can vary, but the most common is fixed monthly payments for a set period, such as $360 for 48 months. Once you complete your payment plan, the debts in the Proposal will be paid off.
What’s the cost of a Consumer Proposal?
Your payment includes all the costs. They cover the services of your LIT, the fees the government charges to formalize your Proposal, and two counselling sessions.
There are several ways you can negotiate to repay your payments. Some of the most common payment methods are:
- Fixed monthly payments.
- A lump sum offer.
- Stepped payments.
- Full payment.
- Floating payments.
- Percent payments.
- Sale of assets.
Regardless of how you make your payments, your fees are included. Your LIT will explain how much of your payment covers costs and how much goes to your creditors.
What percentage do you pay in a Consumer Proposal?
Your LIT will review the Consumer Proposal fees with you before you file. The important thing to note is that you do not pay these fees upfront. Instead, they’re included in your payment as part of your Consumer Proposal. So, if your Proposal is over five years, you pay these fees over the five year period. The taxes will vary depending on the province you reside in.
Here’s an example of the amounts you can expect to pay, based on a $30,000 consumer proposal settlement in Alberta, with 5% GST:
After all fees are factored in, $21,120.77 will be distributed to your creditors.
How are Consumer Proposal fees determined?
Consumer Proposal fees are federally regulated. Your LIT will thoroughly explain all the costs associated with filing. Once you understand the cost of a Consumer Proposal and its impact on your financial situation and credit score, you can decide whether to proceed or explore other options for your debt.
Can I afford a Consumer Proposal?
Affordability is a priority when considering any financial decision. If you’re having difficulty making payments now, you might wonder how you can afford the CP payments.
Your LIT will work with you to determine how much of a payment you can reasonably afford. Your LIT will also recommend other debt solutions if the costs aren’t manageable.
Check out our online calculator to give you a better idea of how much you’ll pay in fees.
How much will my monthly payment be?
A Consumer Proposal can lower the amount of debt you owe, freeze the interest on your debt, and stop collection calls and legal action. If you need help managing your payments, please call Allan Marshall & Associates at 1-888-371-8900 or complete our online form. We offer a free consultation and will work with you to find the best debt solution for your situation. We’ll show you what your monthly payment will be if you file a Consumer Proposal, including all costs and fees. Our LITs will help you get out of your debt burden and get back on track financially.
