Understanding How Much a Consumer Proposal Costs in Canada: Fees, Payments, and Real Examples

When debt payments start to crowd out your budget, a consumer proposal can be a practical, government‑regulated way to reduce what you owe and lock in affordable payments. Still, one question usually comes first: how much does a consumer proposal cost, really? This guide explains the costs in plain language, shows how payments are calculated, and shares realistic examples so you can compare your options with confidence.

What is a Consumer Proposal (and why it can cost less than other options)?

A consumer proposal is a legally binding settlement under the Bankruptcy and Insolvency Act (BIA) that lets you repay a portion of your unsecured debt over a fixed term, usually up to 60 months. You file through a Licensed Insolvency Trustee (LIT), and once it’s submitted, collection action and most interest stop under a court‑backed stay of proceedings.

The process and professional fees are regulated by the federal government to protect consumers. You can learn more about federal oversight on the Government of Canada website. For a deeper explanation of the legal pause on collections, see our guide to the stay of proceedings in consumer proposals.

Understanding How Much a Consumer Proposal Costs

There isn’t a single sticker price because your proposal payment is customized to your situation. That said, the structure is consistent across Canada:

• Your total repayment is based on what your creditors are likely to accept—typically, more than they’d receive if you declared bankruptcy.
• Your payment is fixed for the length of your proposal (up to 60 months), and Licensed Insolvency Trustee fees are included in that payment.
• Most unsecured interest stops, which can create substantial savings versus making only minimum payments on credit cards and loans.

No upfront fees

With consumer proposals, you don’t pay anything before filing. Your LIT’s compensation is built into the payments you make after filing and acceptance. For details, see our explainer on how Licensed Insolvency Trustees are compensated.

Term length and total cost

Most proposals run 24–60 months. The longer the term, the smaller each monthly payment—but the total amount you repay is set up front and doesn’t grow with interest the way credit cards do. If you can afford to pay faster, you can complete early without penalties, reducing the time the proposal appears on your credit report.

What Determines Your Monthly Consumer Proposal Payment?

The LIT will assess your entire financial picture and recommend a payment that creditors are likely to accept. Key factors include:

• Total unsecured debt: Credit cards, lines of credit, personal loans, payday loans, old utility bills, and tax debt (in many cases) are counted.
• Income and essential expenses: The payment must be manageable within your budget so you can finish the plan successfully.
• What creditors would receive in bankruptcy: Creditors typically expect to receive more in a proposal than they would if you filed bankruptcy. That “bankruptcy baseline” influences the offer.
• Assets and equity: If you have significant non‑exempt assets, your offer may need to reflect that value to gain creditor support.

The creditor baseline: more than bankruptcy

Creditors vote to accept or reject your proposal. They’ll compare your offer to the estimated recovery in a bankruptcy scenario. Your LIT will calculate this baseline for you so the offer is competitive and realistic.

How income, assets, and household changes affect cost

Changes in income—new job, reduced hours, parental leave—can affect affordability. If your situation changes, proposals can sometimes be amended. For people navigating employment transitions, resources from Employment and Social Development Canada can be helpful.

How Licensed Insolvency Trustee Fees Work (and why you don’t pay extra)

LIT fees in a consumer proposal are set by federal rules and paid out of the money you’re already committing to your creditors. In other words, you don’t pay the trustee on top of your monthly proposal payment—the fees are deducted before funds are distributed to creditors.

In most cases, the LIT’s compensation includes a base amount plus a set percentage of the funds you pay into the proposal. The structure is designed to be transparent and predictable. For a plain‑English breakdown, see our guide to LIT compensation, and for official oversight references, visit the Government of Canada.

Realistic Examples: What Might You Pay?

Every file is different, but these simplified scenarios show how proposals can reduce debt while keeping payments predictable. These examples assume no significant non‑exempt assets and that creditors accept the offer your LIT recommends.

Example 1: $25,000 in credit card and line of credit debt

• Current minimums: ~$625/month (assuming ~2.5% minimums and high interest)
• Proposed settlement: $10,000 total over 48 months
• Monthly payment: ~$210/month
• Estimated savings: ~$15,000 vs. original balance, plus interest savings

Because interest typically stops in a proposal, the $210 payment doesn’t balloon—unlike revolving credit lines where interest can offset your progress.

Example 2: $60,000 in mixed unsecured debt (credit cards, tax debt, utilities)

• Current minimums: $1,500+/month (assuming multiple accounts with varying rates)
• Proposed settlement: $24,000 over 60 months
• Monthly payment: $400/month
• Estimated savings: ~$36,000 vs. original balance, plus interest savings

The LIT sets the offer to exceed what creditors might recover in bankruptcy, making acceptance more likely while keeping the plan affordable.

Example 3: $90,000 in unsecured debt with steady income

• Current minimums: $2,250+/month
• Proposed settlement: $40,000 over 60 months
• Monthly payment: ~$667/month
• Estimated savings: ~$50,000 vs. original balance, plus interest savings

If you later receive a bonus or tax refund, you can make lump‑sum payments to finish early—no penalty—reducing the time the proposal appears on your credit report.

Other Potential Costs and Savings to Know

• Missed/NSF payments: If a payment bounces, your bank may charge an NSF fee. Too many missed payments can annul the proposal—your LIT will explain the rules and solutions if you hit a rough patch.
• Counselling: Two financial counselling sessions are included in your proposal and already factored into the payment structure.
• Interest relief: Most unsecured interest stops once you file, which is often the single biggest source of savings.
• Early payoff: Paying off the remaining balance early can shorten how long the proposal affects your credit file.

How Proposal Costs Compare to Bankruptcy and Consolidation Loans

Understanding how much each option costs over time helps you make a confident choice:

• Versus bankruptcy: Bankruptcy may cost less in some cases but has different implications for assets and income reporting. Creditors will expect your proposal to offer them more than bankruptcy would. Compare details in our Bankruptcy vs. Consumer Proposal guide (2025).
• Versus consolidation loans: Consolidation replaces several debts with one new loan, but interest still accrues. If your credit score or debt ratio prevents a favourable interest rate, a proposal can provide deeper relief. For interest‑trend context inside proposals, review our Consumer Proposal Interest Rates guide.

According to Statistics Canada, Canadians’ household debt burdens and debt‑service costs have remained elevated in recent years. If high interest rates or inflation have stretched your budget, understanding total cost—not just monthly payment—matters more than ever.

How Inflation and Interest Conditions Affect Affordability

Inflation raises everyday costs, and higher interest rates make revolving debt more expensive to carry. While your proposal payment doesn’t fluctuate with interest, these economic forces still affect what feels affordable month to month. Get practical context and strategies in our explainer on how inflation affects consumer proposals in Canada.

Is a Consumer Proposal Right for You?

A proposal can be a good fit if you’re struggling with unsecured debt, want to protect assets, and can commit to a steady, budget‑friendly payment. It’s not one‑size‑fits‑all—your decision should consider your income stability, assets, family needs, and long‑term goals. For policy background and consumer protections, the Government of Canada provides authoritative information, and Statistics Canada publishes trends that may influence household finances.

If you’re comparing options or worried about job stability, our complete comparison of bankruptcy versus consumer proposal can help you weigh both cost and consequences.

The Process and When Costs Start

Step 1: Filing to creditor acceptance

Your LIT prepares your file and submits the proposal. Creditors have a set period to review and vote. During this time, the stay of proceedings typically pauses collection activity. You don’t pay anything upfront; payments begin after acceptance and court approval.

Step 2: Making monthly payments

Payments are made to your LIT, who deducts regulated fees and distributes the remainder to creditors. Your LIT will also schedule two financial counselling sessions—already included in your plan—and manage any creditor questions.

Step 3: Completion and discharge

Once you make the final payment (or an approved lump sum), you receive a Certificate of Full Performance. Your obligations under the proposal end, and any remaining eligible unsecured balances are legally discharged.

Ways to Reduce the Overall Cost of Your Proposal

• Offer a realistic, shorter term if possible: A higher monthly payment can shorten how long the proposal appears on your credit report.
• Make lump‑sum payments when feasible: Tax refunds, bonuses, or gifts can bring your balance down faster without penalties.
• Avoid missed payments: Prevent NSF fees and keep your proposal in good standing; talk to your LIT early if your income changes.
• Right‑size the offer from day one: Your LIT will benchmark your offer against bankruptcy outcomes so creditors are more likely to accept without delays or costly amendments.

Conclusion

Understanding how much a consumer proposal costs comes down to three moving parts: what creditors would receive in bankruptcy, what you can afford each month, and the federally regulated LIT fees that are already built into your payment. For many Canadians, proposals reduce total debt by a meaningful margin, stop most interest, and convert an uncertain financial future into a clear, fixed plan. Use the examples and checklists above to weigh total cost—not just monthly payments—so the option you choose supports both your budget and your long‑term goals.