What Does A Consumer Proposal Cost: FAQ Video

Posted in Consumer Proposals

This video explains how the cost of your consumer proposal is included as part of your monthly payment. No hidden fees. No up-front fees.

Determining your monthly payments is based on several factors, which you can read about in our full article here.

TRANSCRIPT

A consumer proposal allows you to settle your debts for less than you owe. What you pay in a consumer proposal is based on what you and your trustee can negotiate with your creditors.

The golden rule of a successful proposal is that it must work for both you and your creditors. You have to be able to afford the payments, and your creditors have to feel they are getting enough to vote yes.

Typically this means your creditors want a little more than they would receive in a bankruptcy. This would include:

  • Any payments you have to make based on your income;
  • Any equity in your home;
  • Any other assets you might lose in a bankruptcy.

Once all this is added up, you will talk to the trustee about how much you can afford to pay each month. A proposal can last up to five years so you can spread out your payments over a maximum of sixty months.

Let’s look at an example.

Mark meets his trustee and finds a bankruptcy would cost him four hundred and seventy five dollars a month for twenty one months, or almost ten thousand dollars. He decides to offer his creditors two hundred dollars a month for sixty months, or twelve thousand dollars in a consumer proposal.

Mark is happy because he pays less each month than in a bankruptcy and can keep his assets. His creditors vote yes because they earn a little more over time.

And Mark pays only what he agrees to in his proposal. He doesn’t pay extra trustee fees, they come out of his negotiated payments. In effect, Mark's creditors are paying to administer the proposal.

Each situation is different. At Hoyes Michalos we provide you with all of the necessarily information to help you calculate the potential cost of a Consumer Proposal given your specific circumstances. Call us today and we’ll calculate a payment plan for you.

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2 thoughts on “What Does A Consumer Proposal Cost: FAQ Video

  1. Jennifer

    Is it true that any debt that is “joint” doubles because it’s considered owed by both people? And, is it true that you have to give up income tax return money or any unexpected inheritance money during a consumer proposal?

    Reply
    1. J. Douglas Hoyes, CA, Trustee

      Hi Jennifer. The answers are no, no and no.

      With joint debt, you can never owe more than the full amount owing. For example, if a husband and wife have both co-signed a line of credit for $20,000, that’s considered a joint debt. If they file a joint consumer proposal, the line of credit only appears once on their list of creditors, for $20,000. If they both filed an individual consumer proposal, then they would each show the $20,000 debt on their list of creditors, which may be why you are asking if the debt doubles. In that case it may appear to double, but it is still the same debt, and the bank is not allowed to collect more than the full amount owing.

      As for income tax refunds or inheritances, in a consumer proposal you keep all of your assets. So if you receive tax refunds or an unexpected inheritance during the proposal, you can keep it, which is one of the main advantages of a consumer proposal as compared to a bankruptcy (in a bankruptcy you lose your tax refund, and you are required to surrender all inheritances payable to you during the bankruptcy).

      Reply

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