FKINP How much does a consumer proposal cost?
A consumer proposal’s total payment commitment is developed for the debtor’s situation and creditors’ consideration; it is different from the administrator’s regulated remuneration.[1][7] Ask the Licensed Insolvency Trustee (LIT) for a written assessment, total funding amount, payment schedule and deduction breakdown. Approval and a particular reduction in debt are not guaranteed.
Keep three figures separate when reviewing a quote:
- Total proposal amount: the full amount you promise to fund. M. Roy identifies income and asset equity as principal factors, while Hoyes Michalos also points to bankruptcy surplus-income exposure, assets that could be surrendered and creditor recovery expectations.[4][5]
- Payment schedule: when and how you fund the proposal through lump-sum or periodic payments. A proposal may pay a percentage of creditor claims, extend the repayment period or do both, but cannot run longer than five years.[1]
- Administration deductions: amounts taken from the proposal fund for administering the file. They reduce what reaches creditors but are not necessarily separate bills added to the total.[3][6]
MNP says total proposal funding covers creditor payments and administration costs. It also says the total will be equal to or less than the debt owed when the proposal is filed, excluding interest and penalties that otherwise would have accumulated. This is MNP’s description, not a statutory pricing formula.[3]
Distinguish regulated fees from the total payment proposal
The Bankruptcy and Insolvency General Rules set the administrator’s fees and expenses. Section 129 provides for $750 on filing with the official receiver, another $750 on court approval or deemed approval, and remuneration of 20% of money distributed to creditors, payable on distribution.[7] The 20% base is money distributed to creditors, not automatically every dollar of the debtor’s monthly payment.
The rule also provides for prescribed counselling and filing costs, the registrar fee and applicable federal/provincial goods-and-services taxes.[7] The schedule’s Division II registrar fee is $50.[2] These amounts are not a universal debtor’s total quote.
Section 123 separately sets the levy for proposals; the applicable first bracket is 5% for payments of $1 million or less.[8] Ask the LIT to show its statutory base and how it appears in the file’s distribution statement. Do not apply a flat 20% plus 5% deduction to the entire payment commitment without reconciling the bases and other amounts.
MNP and BDO describe administration costs as included in proposal funding rather than a separate ordinary bill.[3][6] Have the engagement reconcile total debtor funding, every prescribed deduction, taxes and creditor distributions, and identify any distinct outside charge. A vendor’s shorthand about “acceptance” or “future payments” does not replace the rule’s court-approval trigger and distribution base.[7]
OSB’s published position paper warns about arrangements combining proposal-discount clauses with paid debt-consultant, credit-repair or high-interest-finance services.[9] Compare the full out-of-pocket cost and obligations with the LIT before agreeing to a separate service or financing arrangement; do not treat a marketed discount as a guaranteed saving.
Prepare the financial information needed for a quote
Federal guidance requires a complete list of assets and liabilities. The LIT also reports to creditors on the debtor’s circumstances and causes of financial difficulty.[1]
- Income and benefits: include each income source and government benefit considered in the assessment.[5]
- Debts and obligations: List unsecured debts separately from secured obligations. OSB says keeping secured assets depends on continuing payments to secured creditors.[1] Have the LIT identify how each mortgage, vehicle loan and other claim is treated; do not assume every debt or enforcement right disappears under the proposal.
- Assets and equity: list what is owned, its estimated value and any amount owing against it. Income, equity and assets that could be surrendered in bankruptcy can affect the offer.[4][5]
- Household budget: list living costs and other payment obligations so the proposed schedule can be compared with available cash flow.[3][4]
Ask the LIT to compare the offer with creditors’ estimated recovery in bankruptcy, including any surplus-income exposure and realizable assets. Hoyes says creditors generally expect more from a proposal than they would receive in bankruptcy.[4] Complete information supports the calculation but does not guarantee acceptance or a particular debt reduction.[1][4]
Request a written funding summary showing the total commitment, payment frequency, number of payments, estimated administration deductions and estimated amount available to creditors.
Stress-test the payment schedule
Compare each due date with expected pay, benefit and major bill dates. A proposal may use periodic or lump-sum payments and cannot run longer than five years.[1] Hoyes says it permits weekly, biweekly or monthly pre-authorized payments; confirm the selected frequency in the signed proposal.[4]
- Include costs outside the proposal: budget for household expenses, irregular bills and secured debts. Mortgage and vehicle-loan payments continue outside the proposal if the secured assets are to be retained.[1][6]
- Test a tougher month: recalculate available cash flow with lower income or higher expenses before accepting the schedule.
- Plan for payment trouble: ask whom to contact and how quickly if an income loss or unexpected expense threatens a payment.
Know the annulment rule: A monthly consumer proposal is deemed annulled after three missed payments. With less frequent payments, annulment occurs when the last payment is more than three months overdue. A court order, filed amendment or revival under prescribed conditions may affect the outcome.[1]
Full performance results in a certificate of full performance and legal release from the debts included in the proposal.[1]
Verify the LIT engagement and approval process
OSB describes the consumer proposal as a formal process administered by an LIT and gives a $250,000 debt eligibility threshold excluding debts such as a mortgage secured on the principal residence, with a maximum five-year term.[1] Eligibility and treatment of each debt still need the actual LIT assessment. Confirm the named LIT and have the engagement cover assessment of alternatives, proposal development, filing, creditor communications, administration and the two required counselling sessions.[1]
Creditors have 45 days to accept or reject the proposal. A meeting is called if creditors holding at least 25% of proven claims request one within that period or if the OSB directs one. Without a meeting request, the proposal is deemed accepted regardless of objections. The OSB or another interested party then has 15 days to require court review.[1] Acceptance and a particular debt reduction cannot be guaranteed.[1][4]
What to confirm with the LIT
The OSB guidance and cost pages from MNP, Hoyes Michalos, M. Roy and Allan Marshall do not collectively establish a universal total, debtor-specific monthly amount, mandatory reserve, nationwide after-tax total, exact creditor recovery, exact counselling and filing charges or universal list of supporting documents.
- Your total commitment, payment frequency, number of payments and term.[1]
- Which secured payments continue outside the proposal.[1][6]
- Each administration deduction, its statutory calculation base, applicable tax and estimated creditor distribution, using the regulated fee and levy rules.[7][8]
- The exact supporting documents required for income, benefits, debts, assets, equity and household expenses.
- The estimated amount creditors will receive after deductions.
- What is payable when filing and whether any circumstance could produce a separate invoice.
- How federal court tariffs would be handled if court activity occurs.[2]
- Whether the payment remains affordable under a lower-income or higher-expense scenario.
- The consequences of missed payments and whom to contact if affordability changes.[1]
References
- OSB: Consumer proposals for individuals (canada.ca)
- Bankruptcy and Insolvency General Rules (gc.ca)
- Cost of a Consumer Proposal | MNP LTD (mnpdebt.ca)
- How Much Does A Consumer Proposal Cost? Video | Hoyes Michalos (hoyes.com)
- How much does a consumer proposal cost ? | M. Roy & Associés (roysyndic.ca)
- Consumer proposals in Canada | BDO Debt Solutions (bdo.ca)
- Justice Canada: Bankruptcy and Insolvency General Rules, section 129 (gc.ca, 2026)
- Justice Canada: Bankruptcy and Insolvency General Rules, section 123, levy (gc.ca, 2026)
- OSB: Reasonable and Fair Provisions in Consumer Proposals, 5 December 2016 (canada.ca)
