How are Consumer Proposal Payments Calculated?

Understanding Consumer Proposal Payments Calculation

When faced with overwhelming debts, a consumer proposal becomes a viable choice for many individuals. However, the burning question for most debtors remains: how are consumer proposal payments calculated? This comprehensive guide aims to answer this question in detail, helping you understand the process of consumer proposal payments calculation.

Consumer Proposal: An Overview

A consumer proposal is a legal agreement set up by a licensed insolvency trustee. The trustee creates a proposal for your creditors where you agree to pay a certain percentage of your debts over a period, not more than five years. The remaining debt is then forgiven.

The Process of Consumer Proposal Payment Calculation

The calculation of consumer proposal payments is an intricate process that involves various factors. It’s not a one-size-fits-all approach, as it depends on your individual financial situation. Here’s a step-by-step guide on how this process unfolds.

Step 1: Evaluation of Debts and Creditors

The first stage in the calculation process involves a thorough examination of your debt situation. This includes identifying who you owe money to and the total amount you owe.

Step 2: Asset Assessment

Your assets play a critical role in the calculation of your consumer proposal payments. The trustee will consider any assets that you own, as these could be sold to repay your creditors in the event of bankruptcy.

Step 3: Personal Budget Analysis

Your ability to make the monthly payment is another significant factor in the calculation. The trustee will review your monthly income and expenses to understand your financial capacity.

Step 4: Considering Creditor Expectations

Creditor expectations also play a role in determining the consumer proposal payments. Some creditors may have internal policies that require minimum payouts.

Step 5: Calculation of Monthly Payment

After considering all these factors, the trustee will calculate your monthly payment. They will divide the total proposed payout by the number of months in your proposal term.

Making a Successful Consumer Proposal

The goal of a consumer proposal is not only to offer relief to the debtor but also to ensure that creditors recover more than what they would in a bankruptcy. Therefore, the offer you make to your creditors should be reasonable and realistic, considering your financial situation.

Offering More Than Bankruptcy Recoveries

To make a successful consumer proposal, you need to offer your creditors more than what they would recover if you filed for bankruptcy. This necessitates a detailed understanding of bankruptcy recoveries and how they are calculated.

Meeting Creditor Expectations

It’s also important to understand your creditors’ expectations. Some creditors may expect more than others, and understanding these expectations can help you craft a proposal that is more likely to be accepted.

Keeping up with Monthly Payments

Lastly, you need to ensure that you can keep up with the monthly payments. This means creating a budget and sticking to it, to ensure that you can afford the monthly payments over the proposal term.


Understanding how are consumer proposal payments calculated is crucial if you’re considering filing a consumer proposal. By considering your debts, assets, income, and creditor expectations, you can create a proposal that is more likely to be accepted by your creditors and that you can afford. Consulting with a licensed insolvency trustee can be a great help in this process.

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