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| Your consumer proposal payment depends on your income, expenses, assets, total debt and what creditors are likely to accept. Payments are made through a Licensed Insolvency Trustee, and the proposal cannot last more than five years. The goal is a payment that is affordable and better for creditors than bankruptcy. |
There is no one standard proposal payment
A consumer proposal is built around your specific situation. Two people with the same amount of debt may have very different payments because they have different income, assets, family expenses and creditor profiles.
The purpose of the proposal is to make an offer that you can afford and that creditors may accept. Official information is available from the Office of the Superintendent of Bankruptcy on consumer proposals.
What creditors look at
Creditors usually compare the proposal to what they may receive if you filed bankruptcy. If the proposal gives creditors a better result and the payment looks realistic, they may be more likely to accept.
This means your assets, income and bankruptcy comparison matter. See the official Office of the Superintendent of Bankruptcy comparison of debt solutions.
What the trustee reviews
A Licensed Insolvency Trustee will review several factors:
- Total unsecured debt.
- Monthly income.
- Household size.
- Essential expenses.
- Assets and equity.
- Any recent transactions.
- Creditor type and collection pressure.
- Whether tax debt is involved.
The trustee uses this information to help estimate a proposal amount. You can also try the free David Sklar & Associates Debt Calculator for a rough estimate.
Proposal payments are made through the trustee
If the proposal is accepted, you make payments to the Licensed Insolvency Trustee. The trustee distributes funds to creditors according to the process.
This can be much easier than managing many separate payments to different creditors.
The proposal term cannot exceed five years
The Office of the Superintendent of Bankruptcy explains that a consumer proposal term cannot exceed five years. Some proposals are shorter. Some are designed for the full five years to keep the monthly payment affordable.
You may also be able to pay a proposal faster if your situation improves, depending on the terms.
What makes payments higher
Proposal payments may be higher if you have significant income, assets with equity, a home, a vehicle with equity or creditors who require a stronger offer.
Payments may also be affected by the amount creditors would receive in bankruptcy.
What makes payments lower
Payments may be lower when income is modest, assets are limited and bankruptcy would not return much to creditors. The payment must still be fair enough for creditors to accept.
Why affordability matters
A proposal that is too high can fail later. That is why a realistic budget is essential. Your trustee should help review income and living expenses before recommending a monthly payment.
The best proposal is not simply the lowest number. It is a realistic and affordable number based on a number of factors that has a reasonable chance of being accepted and completed. Review the full range of debt relief options.
The main takeaway
Your consumer proposal payment is based on your personal financial situation, not a fixed formula. To know what your payment could look like, speak with a Licensed Insolvency Trustee and complete a full review.
Frequently asked questions
Can I pay a consumer proposal early?
In many cases, yes. Your trustee can explain how early payment works under your proposal terms.
Do I pay creditors directly?
No. Proposal payments are made through the Licensed Insolvency Trustee.
What happens if I miss proposal payments?
Missed payments can put the proposal at risk. Contact your trustee immediately if you are struggling.
Speak with a Licensed Insolvency Trustee
Speak with David Sklar & Associates for a confidential review of your debt, income, assets and monthly budget. A Licensed Insolvency Trustee can explain your options and help you choose a realistic next step. Book a free consultation today.
