How Much Does a Consumer Proposal Cost in Canada?
Wondering what a consumer proposal will actually cost you each month? In Canada, the cost of a consumer proposal is based on what you can reasonably afford and what your creditors expect to receive—not on an hourly fee from your Licensed Insolvency Trustee (LIT). Trustee fees and government fees are built into your proposal payment, not added on top.
Short Answer: What Is the Cost of a Consumer Proposal in Canada?
There is no single flat price for a consumer proposal in Canada. Instead, your cost is the total amount you offer your creditors, usually spread over up to 60 months (5 years). From that payment:
- A portion goes to your creditors.
- A portion covers mandatory government and trustee fees, which are set by federal regulations.
You don’t pay your LIT separately; their fees are included in the proposal you agree to. For many people, this means a single, affordable monthly payment that is much lower than what they are paying now on high-interest debts.
Several national firms provide breakdowns of how consumer proposal costs work, including:
How Consumer Proposal Cost Works in Canada
A consumer proposal is a legally binding settlement where you offer to repay only a portion of what you owe to your unsecured creditors. The amount you offer—your proposal—is what determines your cost.
Key points:
- Your proposal must be better for creditors than what they would receive in a bankruptcy.
- Your monthly payment must be affordable for you after reasonable living expenses.
- Once creditors accept the proposal, it becomes legally binding on all unsecured creditors included.
- Interest stops on included debts as of the filing date.
Trustee fees and government fees are set by a tariff under the Bankruptcy and Insolvency Act and are taken from the money you pay into the proposal. You do not pay extra fees on top of the agreed payments.
For a broader explanation of proposals, see: Consumer Proposal in Canada and Benefits of a Consumer Proposal.
What Fees Are Built Into a Consumer Proposal?
In Canada, fees in a consumer proposal typically include:
1. Government Filing and Levy
There is a filing fee paid to the Office of the Superintendent of Bankruptcy (OSB), as well as a small levy charged on distributions to creditors. These are not billed to you separately; they are deducted from your proposal payments.
2. Licensed Insolvency Trustee (LIT) Fees
The LIT’s compensation is regulated and usually consists of:
- A basic administration fee (a fixed amount set by regulation).
- A percentage of the funds distributed to creditors.
- Standard counselling fees for your two required financial counselling sessions.
Again, these are included in your single monthly payment. You do not receive a separate invoice for professional fees.
3. No Upfront “Consultation” Fee
Your initial consultation with a Licensed Insolvency Trustee is typically free. During this meeting, they will outline your options—budgeting changes, debt consolidation, credit counselling, personal bankruptcy, and a consumer proposal—and estimate what each option would cost.
How Your Monthly Consumer Proposal Payment Is Calculated
Your monthly payment is based on three main things:
- Your budget: What you can realistically afford to pay after essential living expenses.
- Your assets and income: What creditors would likely receive if you filed bankruptcy instead.
- Your total unsecured debt: The amount you owe on credit cards, lines of credit, tax debt, etc.
Your LIT uses this information to design an offer that:
- Provides better recovery for creditors than a bankruptcy would; and
- Fits your budget so you can comfortably complete the proposal.
The result is a fixed monthly payment (or, less commonly, lump-sum or irregular payments) for a set period, usually up to 60 months.
Factors That Affect the Cost of a Consumer Proposal
Several factors influence your consumer proposal cost in Canada:
- Total unsecured debt: Higher debt usually means a higher total proposal amount, but still less than repaying everything in full.
- Income level: If you have higher income, creditors will expect a larger proposal than someone with very low income.
- Assets and home equity: If you have significant non-exempt assets or home equity, creditors will expect your proposal to offer more than they would receive in a bankruptcy.
- Length of proposal: Spreading payments over 3–5 years can make monthly payments more affordable, but the total amount offered must still be acceptable to creditors.
- Number and type of creditors: Large institutional creditors (banks, CRA) may have specific expectations for what they will accept.
Most reputable firms emphasise that there should be no surprise or hidden fees. Your LIT should show you exactly how your payment is calculated and what is included.
Example Cost Scenarios
These simplified examples show how consumer proposal cost can work in practice. Your actual numbers will differ, but the structure is similar.
Example 1: $40,000 in Unsecured Debt
You owe $40,000 in credit cards, lines of credit, and tax debt. You can afford $300 per month after your essential expenses.
- Your LIT proposes a payment of $300 per month for 60 months (5 years).
- Total cost of the proposal: $18,000.
- From that $18,000, the trustee and government fees are deducted, and the rest goes to your creditors.
You avoid paying $40,000 plus future interest, and instead pay a predictable $300 per month.
Example 2: $70,000 in Unsecured Debt
You owe $70,000 in credit cards and CRA debt and can afford $500 per month.
- Your LIT proposes $500 per month for 60 months (total $30,000).
- This may be attractive to creditors because they recover more than in a bankruptcy scenario.
- Your cost is $30,000 spread over time, instead of $70,000 plus interest.
Exact numbers depend on your personal situation and negotiation with creditors.
Consumer Proposal Cost vs Bankruptcy Cost
When people ask, “How much does a consumer proposal cost?”, they are often really asking, “Is it cheaper than bankruptcy?” The answer depends on your income and assets.
Bankruptcy cost in Canada is usually based on:
- Your income (including any surplus income payments).
- The value of non-exempt assets you may lose or need to “buy back”.
- Mandatory duties and reporting requirements.
Your total cost in bankruptcy can sometimes be lower than in a consumer proposal—but the trade-offs are:
- Stronger impact on your credit (R9 rating, longer reporting time).
- Greater risk of losing non-exempt assets.
- Potential longer duration if you have high income or a second bankruptcy.
Many people choose a proposal because the monthly payment is affordable, they keep their assets, and the credit impact is generally less severe. To compare in more detail, see our guides: Bankruptcy Cost in Canada and Benefits of a Consumer Proposal.
Questions to Ask Your Licensed Insolvency Trustee About Cost
When you meet with a Licensed Insolvency Trustee, consider asking:
- “Based on my debts and income, what would my monthly proposal payment likely be?”
- “How does that compare with bankruptcy in my case?”
- “What happens to your fees and the government fees—are they all included in my payment?”
- “Is there any upfront fee or extra charge I should know about?”
- “How long would my proposal last, and what happens if I can pay it off sooner?”
Your LIT should provide clear, written information on your consumer proposal cost, and help you compare it to other options like debt consolidation, credit counselling, or bankruptcy.
Want a Personalized Consumer Proposal Cost Estimate?
Every situation is different. The best way to understand how much a consumer proposal will cost you is to talk to a Licensed Insolvency Trustee who can review your income, debts, and assets and show you exactly what your monthly payment could be—and how it compares to bankruptcy or other debt relief options.
Frequently Asked Questions About Consumer Proposal Cost in Canada
Is there a flat fee for a consumer proposal in Canada?
No. There is no single flat fee that everyone pays. The cost of a consumer proposal is the total amount you offer your unsecured creditors, usually paid over a period of up to 60 months. Trustee and government fees are taken from that amount and are regulated by law.
Do I have to pay my Licensed Insolvency Trustee separately?
No. You do not pay your LIT separately for a consumer proposal. Their fees, administration costs, and the mandatory government fees are all built into your single monthly payment. You don’t receive a separate invoice for professional fees.
Is a consumer proposal cheaper than bankruptcy?
It depends on your situation. Bankruptcy may sometimes cost less overall, especially if your income is very low and you have few assets. However, a consumer proposal can be more attractive if you want to protect assets, avoid bankruptcy, and lock in a predictable monthly payment. A Licensed Insolvency Trustee can calculate both options for you.
Are there hidden fees in a consumer proposal?
There should not be. In Canada, consumer proposal fees are set by federal regulations. Reputable firms will clearly explain that all fees are included in your proposal payments, and that your initial consultation is free. If someone asks for large upfront fees before involving a LIT, be cautious and review the FCAC’s warnings about debt relief and credit repair services.
Can I pay off my consumer proposal early and reduce the cost?
You can usually pay your proposal off faster by making extra lump-sum payments or increasing your monthly amount. This reduces the time you spend in the proposal, but the total amount you agreed to pay remains the same unless a formal variation is approved. Paying it off early can help you begin rebuilding your credit sooner.
