FAQs about Consumer Proposals

Frequently Asked Questions about Consumer Proposals

How Much Does A Consumer Proposal Cost And How Do You Get Paid?

Good question (and an important question)!!

The costs of filing your consumer proposal is paid out of your single monthly payment to the consumer proposal administrator.

• All costs of filing the documents
• Sending the documents to the creditors
• Fees of the Trustee that acts as the proposal administrator and
• The amount that is paid to your creditors.

The single monthly payment covers everything.

How much do I offer in my proposal (does everyone pay the same amount)?

The amount that you offer in your consumer proposal is generally determined by some common factors (though this list is not all inclusive) such as:

• How much do I earn each month
• If I were to file for bankruptcy, would I have to make Surplus Income Payments? If so, how much would I need to pay?
• What assets, if any, do I own?
• Are my assets, exempt or not-exempt assets?
• How much do I owe my (unsecured) creditors
• How much can I reasonably afford to pay?
• Other factors (unique to individual factors).

A general rule of thumb that is often used as a starting point is “are they getting more than they would in a bankruptcy?”

Each person is unique and so are the reasons for their debt challenges. Want to know what the “right” amount that you should offer to your creditors? Give us a call and we will go over your situation in a personal, no pressure, consultation and let you know what the amount you should offer, in your consumer proposal, to your creditors so that it is accepted by them.

Will A Consumer Proposal Affect My Spouse or Partner?

It will not if the debts are only yours. However, if your spouse (or partner) co-signed your debts, the completion of your proposal won’t release your spouse’s/partner’s liability if he or she was a co-signer or guarantor of your debts.

What Happens If I Miss My Consumer Proposal Payments?

During the course of a consumer proposal, it is important that monthly payments are made on time. If you miss three (3) payments during the term of your proposal, you will be in default and the proposal will be annulled. This means that your proposal has been brought to an end. The debts owing to unsecured creditors will not be discharged and your creditors can begin to seek payment from you directly, as the protection from creditors is lifted.

What Happens to My Credit Rating?

After the completion of your Consumer Proposal, you will have an R7 credit rating for 3 years. This is better than the R9 credit rating that stays on your credit report for 7 years after declaring bankruptcy.  

An R7 indicates that a person is making regular payments through a special arrangement to settle their debts. As a result, debts settled through a consumer proposal will be rated as a R7.

Can I Include Tax Debts in a Consumer Proposal?

Most people are surprised to learn that the answer to this question is YES. Tax debts are like any other unsecured debts. CRA tax debts include:

• Personal income tax amounts owing
• HST / GST
• Unremitted source deductions
• Business tax debts from an unincorporated business