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How much does a consumer proposal cost?

9 April 2020

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This is the most common and always the first question we are asked. The cost of a consumer proposal is quite simply that is must be have a larger benefit to your creditors than a bankruptcy would. However, there are a couple very important thing that need to be kept top of mind:

So, if a proposal must be better than a bankruptcy how do I know what I’d pay in a bankruptcy?

This is far more complicated than a proposal. To simplify: the government sets an income level depending on the number of people living in your home. That threshold can be found here (link to https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br03249.html). If your family income is more than that you must pay 50% of every dollar above the amount for 21 months if it is your first bankruptcy or 36 months if it is your second or greater bankruptcy.

Additionally, there is a list of exemptions for assets, if your assets’ value exceeds that exemption limit, you must pay the amount above the exemption.

Complicated, right? Here’s 2 simple examples.

Example 1

Therefore, her proposal must be for more than $19,853.50. If we round it up to $20,100 and divide the payment over 60 months, she could make a proposal offer for $335.

Although her total payment exceeds the 30% rule, it is still a great offer, and is easier to handle for Jane than a bankruptcy payment would be. Jane saves 60% and pays no interest or penalties.

Example 2

Chris earns $2200 after tax per month. He is single, no kids. He has never been bankrupt before. He has no asset. He owes $27,000.

Therefore, we apply the 30% rule. 27,000*30%/60 months= $150 per month for 60 months. Chris saves 70% and doesn’t pay interest or penalties.

We’re here 24 hours, 7 days a week to help you establish this number. Reach out to us by clicking here or filling in the form below.

Read our guide – Can I Get A Loan While In A Consumer Proposal