How Much Does a Consumer Proposal Cost: Fees & Trade-Offs

You’re wondering how much does a consumer proposal cost? We outline payments, trustee fees, time limits, credit score hits, and questions to ask your trustee.

When people ask how much a consumer proposal costs, they usually mean the monthly payment. But the real cost is broader than that. It includes your time, the impact on your credit, and what you may need to delay or give up while the process runs its course. Before you decide anything, it helps to see the full picture.

What Does a Consumer Proposal Cost?

There is no fixed price. The amount you repay through a consumer proposal depends on your income, your assets, the total debt you owe, your family situation, and what your creditors are likely to accept. Most people end up repaying a fraction of what they originally owed, often as little as 20% of the original balance.

Creditors vote on the proposal. If more than 50% by dollar value accept it, the proposal becomes legally binding on all creditors, including those who voted against it. Acceptance is not guaranteed, and the terms need to make sense for both sides.

How the Monthly Payment Is Determined

A Licensed Insolvency Trustee reviews your full financial picture before recommending a payment amount. The key factors are your total unsecured debt, household income, assets, and what creditors would likely receive if you filed for bankruptcy instead. The proposal must offer creditors more than bankruptcy would, or they have little reason to accept it.

As a concrete example, a single person earning $3,000 per month might pay $200 per month under a consumer proposal, compared to $470 per month in a bankruptcy. Payments are structured to be affordable for you while still being acceptable to creditors.

Are Trustee Fees Extra?

No. Licensed Insolvency Trustee fees are regulated under federal insolvency rules and are built into your proposal payments. You do not receive a separate invoice for professional fees on top of what you agreed to repay. The full fee structure, including any initial deposit, should be explained to you clearly before you file.

Financial Costs Beyond the Monthly Payment

The maximum repayment term is five years. Payments are typically fixed monthly amounts, though lump-sum arrangements are also possible. You need to keep payments current throughout the term. Missing more than two payments can put the proposal at risk of being annulled, which would allow creditors to resume collection activity.

Not all debts are included. Secured debts like mortgages and car loans remain outside the proposal. Student loans are generally excluded if it has been less than seven years since you last studied. Child and spousal support obligations, court fines, and debts from fraud are also excluded. You would still be responsible for those.

Interest, Collections, and Legal Protections

Once a consumer proposal is filed, a stay of proceedings takes effect under the Bankruptcy and Insolvency Act. This is designed to stop most unsecured creditor collection activity, including wage garnishments and interest charges on included debts. It applies to the debts covered by the proposal and does not extend to secured creditors or support obligations.

Credit Report Impact

A consumer proposal results in an R7 credit rating. This reflects that you settled debts for less than the full amount owed. The notation typically remains on your credit report for up to three years after you complete the proposal, or up to six years from the date of filing, whichever comes first. During that period, accessing new credit may be harder or more expensive. Rebuilding is possible, but it takes consistent effort and time.

The Time Cost You Should Expect

Beyond money, a consumer proposal takes time. You need to prepare before filing, follow through during the term, and meet specific requirements along the way. A proposal that runs the full five years is a five-year commitment to a structured repayment plan.

Before Filing: Gathering Information

Before your Licensed Insolvency Trustee can assess your options, you will need to pull together details on all your debts, your income and monthly expenses, your assets, and your household situation. Tax information is also relevant. The more accurate this information is, the more realistic the options your trustee can present.

After Filing: Creditor Review and Required Counselling

After filing, creditors have 45 days to review and vote on the proposal. You are also required to attend two financial counselling sessions. The first must be completed within 10 to 60 days of filing. The second must follow at least 30 days later. These sessions cover budgeting, responsible credit use, and building long-term financial stability. The cost of these sessions is included in your proposal payments.

During the Payment Term

Throughout the term, you maintain your agreed payments and budget around them. If your financial situation changes significantly, it is worth speaking with your trustee. There is no penalty for paying off the proposal early, which can also shorten the time the notation stays on your credit report.

The Opportunity Cost of Choosing a Consumer Proposal

Opportunity cost is what you give up or delay because your money, credit, or time is committed elsewhere. During a consumer proposal, some financial goals may need to be put on hold.

Delayed Borrowing or Major Purchases

Qualifying for a mortgage, financing a vehicle, or accessing new credit lines can be more difficult while the proposal is active and during the period it remains on your credit report. Lenders may see you as higher risk. That does not mean these goals are off the table permanently, but the timeline may shift. Many people can qualify for a mortgage within two years of completing their proposal if they rebuild credit responsibly.

Comparing It With Other Debt Options

A consumer proposal is one option among several. Bankruptcy typically costs less per month but carries a more severe credit impact (R9 vs R7) and may require surrendering certain assets. Informal debt settlement offers no legal protection and creditors are not obligated to accept. A debt consolidation loan repays the full amount owed with interest, which can mean significantly higher total repayment. Each option has different costs, timelines, and trade-offs worth reviewing with a professional.

The Cost of Waiting

Delaying action has its own cost. Interest continues to accumulate. Collection calls continue. In some cases, wage garnishments can reduce your take-home pay before you have had a chance to address the debt. The longer the situation continues unmanaged, the fewer options may be available. An early consultation does not commit you to anything, but it gives you a clearer picture of where you stand.

How to Know Whether the Cost of a Consumer Proposal Is Worth It

The right option is not always the one with the lowest monthly payment. It is the one that is sustainable, legally appropriate, and aligned with your circumstances and goals. Consider the total amount you would repay, which debts are included, the credit impact, how long the process runs, and whether you can realistically maintain payments for the full term.

Questions to Ask a Licensed Insolvency Trustee

Going into a consultation with specific questions makes the conversation more useful. Consider asking:

• Which of my debts would be included in a proposal?
• What would my monthly payment likely be?
• How long would the proposal run?
• What happens if my income changes during the term?
• How does this compare to bankruptcy or other options?
• Are there debts that would remain outside the process?

Getting Clear Numbers Before You Decide

The cost of a consumer proposal includes the financial payments, the time commitment, the credit impact, and the opportunity cost of delayed goals. None of these are reasons to avoid the option if it is the right fit, but they are all worth understanding before you commit.

If you are in Alberta and want a clear picture of your options, Hudson & Company’s Licensed Insolvency Trustees offer free, no-obligation consultations at three Calgary locations. You can request a consultation online or call any of our offices to speak with someone directly. There is no pressure and no commitment, just a straightforward review of your situation.