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Our Experts Explain the Costs Associated with Filing a Consumer Proposal

If you’re struggling to pay off unsecured debt, you may be interested in learning more about your debt relief options. Making a consumer proposal is one possible solution. This offer from a debtor to their creditors reduces the amount of money owed and allows a repayment period of up to five years with no interest. This sounds compelling, but you might still be wondering—how much does it cost to file a consumer proposal?

The team at J. Bottom & Associates Ltd. is here to answer your questions and help you find the right debt consolidation method for you. We offer several solutions to debtors in New Westminster, North Vancouver, and Port Coquitlam, BC, drawing from more than 55 years of combined experience for your peace of mind. Our financial trustees provide simple, accurate, and actionable solutions to help you overcome your financial challenges. Call us today for help starting the consumer proposal process.

the girl writing exam's using calculator at New Westminster, BC What is the Cost of Filing a Consumer Proposal?

Debtors do not owe any consumer proposal costs. Instead, all the fees involved come out of the sum you pay your creditors each month as agreed upon in the proposal. For example, if your creditors agree to accept $300 per month, then that is all you pay. Any fees that go to your Licensed Insolvency Trustee, the government, and others are subtracted from this total. So in effect, your creditors cover the cost to file a consumer proposal as part of the agreement.

Be aware that only a Licensed Insolvency Trustee who has been endorsed, regulated, and authorized by the federal government can prepare and negotiate the terms of a consumer proposal. The fees paid to this financial professional are established by federal law and government tariff. They include:

  • $100 filing fee paid to the Office of the Superintendent of Bankruptcy
  • $85 counselling fees for each of two mandatory counselling sessions offered as part of the consumer proposal process
  • $1,500 proposal fee to the Licensed Insolvency Trustee, plus 20% of creditor distributions
  • 5% levy of creditor distributions paid to the Office of the Superintendent of Bankruptcy

Rest assured that you will never be invoiced for these fees because they are set by tariff. As a result, your creditors receive the balance from your monthly proposal payments after these fees have been deducted from the total.

How are Consumer Proposal Payments Decided?

You begin making monthly proposal payments once you sign the official consumer proposal documents. The settlement amount your trustee offers your creditors depends on several factors, including your income and overall debt. In many cases, debtors can eliminate up to 70 percent of their debt by making a consumer proposal.

Say, for example, you owe $45,000 in unsecured debt. Your Licensed Insolvency Trustee may negotiate a settlement of $18,000. If you choose to repay this amount over 60 months, your monthly payment will be $300. Remember, once you file a consumer proposal, your creditors stop charging interest and penalties, allowing you to repay a much lower debt interest-free.

Most people choose a fixed, predictable monthly payment spread out over three to five years. Still, you have some control over how you pay off your proposal, including:

  • Making a lump sum payment to pay off the proposal immediately
  • Paying off the proposal early with no penalty
  • Adjusting the repayment schedule to reflect changes in your financial situation
  • Deferring up to two payments if your financial situation changes for the worse, being aware that missing three payments causes your total debts to return and allows creditors to take legal action against you
  • Filing for bankruptcy if your situation changes dramatically and you can no longer make your proposal payments
Consolidate Debt with J. Bottom & Associates Ltd.

With solutions like consumer proposals available, there’s no need to flounder in ever-growing debt. And remember, you can begin the filing process without owing any setup fees. In fact, you don’t make a single payment until your proposal is officially filed.

The financial experts at J. Bottom & Associates Ltd. are eager to review your debt relief options with you. We are a Licensed Insolvency Trustee with offices in New Westminster, North Vancouver, and Port Coquitlam. With our help, you’ll regain control of your finances and enjoy a fresh start as you look to the future. Contact us today to get started with a free, no-obligation consultation. We look forward to hearing from you!