How Much Does a Consumer Proposal Cost?
1. What are the costs involved in filing a consumer proposal?
At Blanchard & Company Ltd. there are no up-front costs or retainers required. We believe in removing barriers so that individuals going through financial hardship have access to the programs best suited for them.
2. How much will I end up paying in my consumer proposal?
The end cost of what you will pay during your consumer proposal depend on multiple factors that are unique to you. The principle factors are your income, equity in non-exemt assets, and who your creditors are. In a best-case scenario, your consume proposal can reduce your principal to up to 10% of what you originally owed.
3. Will I be handed a bill for the cost of filing a consumer proposal?
No, all costs associated with your consumer proposal are withdrawn from the proposal fund, meaning they will be reduced from the amount you pay, as outlined in your proposal.
4. Does my Trustee determine the cost of my consumer proposal?
No, your Trustee will review your financial affairs and make a recommendation on what to propose based on your unique situation. Ultimately it is your consumer proposal; therefore, it is your choice in what to offer.
5. Where does the money go?
- The 4 main costs of your proposal are allocated as follows:
- Filing Fee = Office of the Superintendent of Bankruptcy
- Counselling Fees = Your Licensed Insolvency Trustee (LIT)
- Proposal Administration Fees = Your LIT
- Levy = Office of the Superintendent of Bankruptcy
6. When is the money due?
- Consumer Proposals are generally offered as monthly payments and for up to 60 months. Your first payment typically isn’t due for a month after making the proposal.
7. Do I still accrue interest while paying my consumer proposal?
No, interest is paused once your proposal has been filed.
8. Can I file a consumer proposal myself and skip the Trustee fees?
No. In Canada, only Licensed Insolvency Trustees can file a consumer proposal. A consumer proposal is a legally binding agreement between you and your creditors and is intended to benefit both parties when you can no longer repay your debts. LITs are licensed by the federal government and act as an impartial 3rd party to ensure fairness is awarded to both the debtor and the creditors.
9. How much will it cost me to consult a Licensed Insolvency Trustee?
Nothing at all. Here at Blanchard & Company Ltd., we offer free consultations to all our clients.
10. Do I still have to pay the filing fee if my consumer proposal is rejected?
If your initial proposal is rejected, this may not be the end. Your LIT can renegotiate the terms of your consumer proposal with your creditors and find a new middle ground that they will approve. However, if your initial proposal gets denied and you do not want to renegotiate, there will be no cost to you other than any payments made up until that point.
11. Are there any hidden fees in a consumer proposal?
No. Since the fee structure of a consumer proposal is regulated by the Bankruptcy and Insolvency Act, every cost is clearly outlined prior to you submitting your proposal.
12. What are the lasting financial impacts of a consumer proposal?
Your credit report will indicate an R7 for the period of the proposal and for 3 years after the proposal is fully performed or for 6 years in total, whichever period is shorter. It is important to actively rebuild your credit after the consumer proposal is fully performed re mitigate the effect of the R7 placed there.