How Much Does a Consumer Proposal Cost in Alberta?

Unraveling the Cost of a Consumer Proposal in Alberta

Canada, a country known for its high standard of living, has seen a significant rise in consumer debt levels, with Alberta leading the way. As a result, many Albertans are turning to debt relief options like consumer proposals. But how much does a consumer proposal cost in Alberta? This article aims to provide a comprehensive answer to this question.

Understanding Consumer Proposals

A consumer proposal is an alternative to bankruptcy, negotiated through a Licensed Insolvency Trustee (LIT). It’s a legal agreement that allows debtors to pay back a portion of their debts over a specified period (up to five years), thus providing significant savings.

Eligibility for a Consumer Proposal

To be eligible for a consumer proposal in Alberta, one must:

  • Be unable to meet debt obligations as they fall due
  • Have debts less than $250,000 (or $500,000 for married couples)
  • Possess assets insufficient to cover the debt

Cost Components of a Consumer Proposal

The cost of a consumer proposal in Alberta is contingent upon several factors such as your income, assets, and the nature of your creditors. Here, we delve into these factors in detail.

Income and Surplus Income

Your income plays a pivotal role in determining the cost of your consumer proposal. The proposal must be affordable and reasonable, considering your financial situation. Creditors will want to receive more than what they would recover if you were to file bankruptcy.


The assets you own that would be surrendered in a bankruptcy also contribute to the cost of your consumer proposal. The more valuable your assets, the higher the cost of your consumer proposal is likely to be.

Nature of Creditors

Different creditors have different expectations from a consumer proposal. While each situation is unique, a consumer proposal can commonly reduce principal repayment to as low as 25% of the original amount owing.

Estimating Your Consumer Proposal Payment

To understand how much you would potentially need to pay in a consumer proposal, consider the following example:

A debtor who owes $40,000 in unsecured debt may be able to negotiate a settlement as low as $14,000. If they choose to repay this amount over 60 months, their monthly proposal payment would be $233.

Remember, the amount you pay in a consumer proposal is based on what you and your trustee can negotiate with your creditors. The final amount must work for both you and your creditors.

Negotiating the Consumer Proposal

Negotiating a consumer proposal involves your Licensed Insolvency Trustee (acting as the administrator of the proposal), you, and your creditors. The trustee will review your budget and debts during your debt assessment and recommend how much to offer your creditors. Your proposal amount can be paid over a period of up to 5 years, interest-free.

Most people choose a fixed monthly payment, spreading their settlement offer over three to five years. However, options for lump sum payments or adjusting your repayment schedule to match your pay period are also available.

What if Your Financial Situation Changes?

If your income may increase before you file a consumer proposal, you can adjust your payment plan accordingly. You can arrange for smaller payments at the beginning of the proposal and larger payments towards the end.

However, if your financial situation worsens, you may defer up to two payments during a consumer proposal. If you miss three payments, the proposal fails.

Non-Financial Implications of a Consumer Proposal

A consumer proposal can significantly impact your budget, lower your monthly debt payments, and allow you to build some savings. However, it also has other consequences. You will be required to surrender your credit cards, and a consumer proposal will initially hurt your credit score.

A note of the consumer proposal will appear on your credit report and remain for up to 6 years from the date of filing. However, you can begin rebuilding your credit rating soon after you file the proposal.

Trustee’s Payment in a Consumer Proposal

The cost of administering your proposal is included in your single monthly payment. You do not pay the consumer proposal fee upfront, and no costs are added to your settlement offer.

Trustee fees are set by legislation and are the same across all trustees in Canada. The amounts paid to a Licensed Insolvency Trustee for a consumer proposal include a filing fee, counselling fees, proposal fees to the administrator (trustee), and a levy payable to the Office of the Superintendent of Bankruptcy.

Get a Free Quote Based on Your Situation

Licensed Insolvency Trustees understand that each situation is unique. They can help you calculate the potential cost of a consumer proposal given your specific circumstances. Their services often include convenient, flexible, pre-authorized payments to help make managing your payments easier.

A consumer proposal in Alberta can help you achieve financial freedom. But each person’s financial circumstances are different, and it’s important to carefully consider your options before choosing this path. Be sure to consult with a licensed professional to determine if a consumer proposal is the right option for you.

More Information on Consumer Proposals in Alberta

To learn more about consumer proposals in Alberta, you can refer to various blogs and articles available online. They provide insights into calculating payments in a consumer proposal, making a lump sum consumer proposal, what creditors expect in a consumer proposal, and how to make a consumer proposal work with your budget. You can also find out how to file a consumer proposal in Canada or contact local offices for a free consultation.

Final Words:

The cost of a consumer proposal in Alberta can vary greatly depending on your specific situation. But understanding the factors that contribute to this cost can help you make an informed decision about whether this is the right debt relief option for you. Always remember to seek professional advice and thoroughly research your options before making such an important financial decision.

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