If you’re carrying thousands of dollars in debt and wondering whether you can actually afford a Consumer Proposal, you’re not alone. Most people who ask this question are exhausted and just want a clear answer. Here it is.
What Is a Consumer Proposal?
A Consumer Proposal is a legally binding agreement between you and your unsecured creditors. You offer to repay a portion of what you owe, over a period of up to five years. Your creditors vote on the offer. If the majority accepts, everyone is legally bound by the terms — including creditors who voted against it.
It is available to individuals with between $10,000 and $250,000 in unsecured debt. It is governed by the Bankruptcy and Insolvency Act (Canada). It is one of the most powerful debt relief tools available in this country.
To understand the full picture of how it works, read our detailed guide on our Consumer Proposal service page.
How Consumer Proposal Costs Actually Work
Here is the most important thing to understand: in a Consumer Proposal, you do not pay fees on top of your offer to creditors. The regulated fees are built into the total amount you pay. There are no hidden charges, and nothing is owed upfront.
The fees that go into a Consumer Proposal are set by the federal government under the Bankruptcy and Insolvency Act. They are paid to the Licensed Insolvency Trustee (LIT) who administers the formal filing and process. Those fees come out of the total pool of money you pay over the term of the proposal.
What this means for you: the number you negotiate with your creditors already accounts for those fees. You are not writing two separate cheques — one to creditors and one to the trustee. It is one monthly payment, split accordingly.
What Fees Are Included in a Consumer Proposal?
Under the Bankruptcy and Insolvency Act, all Consumer Proposals include a set of government-regulated fees. These are standard across Canada and do not vary by province. They include:
- A filing fee paid to the Office of the Superintendent of Bankruptcy (OSB)
- Two mandatory financial counselling sessions
- Licensed Insolvency Trustee fees, calculated on a regulated formula based on creditor distributions
- An OSB levy on funds distributed to creditors
These fees are not negotiable. They apply to every Consumer Proposal in Canada. Because they are built into the process, they do not change what you owe or add a surprise bill at the end.
Key point: All Consumer Proposal fees are regulated by the federal government. No trustee in Canada can charge more or less than what the Bankruptcy and Insolvency Act sets out. You will never be surprised by these costs.
What Does a Consumer Proposal Actually Cost Per Month?
Monthly payments vary. They depend on how much you owe, what your creditors will accept, and what you can reasonably afford. In practice, many Consumer Proposals involve monthly payments that are significantly lower than what someone would pay trying to service the debt through minimum payments.
There is no minimum monthly payment set by law. The proposal is negotiated. Creditors compare your offer to what they would realistically recover if you filed for bankruptcy. If your offer beats that number, most creditors will accept it.
Use our debt repayment calculator to get a rough sense of what your payments might look like based on your debt level.
Consumer Proposal Cost vs. Other Debt Options
Comparing a Consumer Proposal to your other options puts the cost in perspective. Doing nothing, or continuing to make minimum payments on high-interest debt, is often far more expensive in the long run.
| Option | How Much You Repay | Legal Protection | Credit Impact | Timeline |
|---|---|---|---|---|
| Consumer Proposal | A negotiated fraction of what you owe | Yes — automatic stay stops collections | R7 rating; removed 3 years after completion | Up to 5 years |
| Personal Bankruptcy | Based on surplus income; assets may be seized | Yes — automatic stay | R9 rating; remains 6–7 years after discharge | 9 months to 3+ years |
| Debt Settlement | Negotiated lump sum — often 40–60% of balance | No formal legal protection | Varies by creditor reporting | 30 to 120 days |
| Minimum Payments Only | Full balance plus years of interest | None | No negative impact if payments are current | Often 10 to 25+ years |
| Credit Counselling / DMP | Full principal, reduced interest | No formal legal protection | R7 notation during repayment | 3 to 5 years |
A Consumer Proposal is the only option that combines a legally enforceable reduction in your principal balance with formal legal protection from creditors — all without the long-term credit consequences of bankruptcy.
How Our Fee Model Works at Metus Lykos
As a debt law firm, we charge differently than a Licensed Insolvency Trustee. We are not paid from the pool of regulated trustee fees. We are paid a legal fee based on the savings we achieve for you.
Our fee is 33% of whatever we negotiate off your debt. That means:
- If we don’t reduce your debt, we don’t profit.
- The more we save you, the more we earn — and the math always works in your favour.
- Our financial incentive is perfectly aligned with yours.
We only make money when we save you money. That is the core of how we work. It is not a slogan — it is the actual structure of our fee arrangement.
This is a fundamentally different model from a Licensed Insolvency Trustee. A trustee is paid regulated fees whether the outcome is good or bad for you. Our fee goes up only when your savings go up. That alignment matters.
What Factors Affect the Total Cost of a Consumer Proposal?
Several factors shape what you ultimately pay through a Consumer Proposal:
- Total unsecured debt. The higher your debt, the larger the pool creditors are comparing your offer against.
- Your income. Creditors compare your offer to what they would receive in a bankruptcy, which is partly based on your income. A higher income generally means a higher offer is needed to satisfy creditors.
- Your assets. If you own assets that would be available in a bankruptcy, creditors use that as a floor for what they expect to receive in a proposal.
- Number and type of creditors. A majority of creditors by dollar value must vote in favour. More creditors — or creditors with aggressive positions — can affect negotiations.
- Proposal term. Spreading payments over a longer term (up to 5 years) can lower your monthly amount, even if the total repaid stays the same.
What Debts Can Be Included in a Consumer Proposal?
A Consumer Proposal addresses unsecured debts only. Secured debts — like a mortgage or car loan — are handled separately.
Debts That Can Be Included
- Credit card balances
- Personal loans
- Unsecured lines of credit
- Income tax debt (CRA)
- Payday loans
- Student loans (if more than 7 years since last studying)
- Medical bills
- Utility arrears
Debts That Cannot Be Included
- Mortgages
- Car loans
- Secured lines of credit
- Child support or spousal support arrears
- Court-ordered fines
- Student loans (if less than 7 years since last studying)
- Debts arising from fraud
Does a Consumer Proposal Have Any Upfront Costs?
No. There are no upfront fees required to start a Consumer Proposal. You do not pay anything before the process begins, and you do not owe lump sums during the process unless your proposal terms include one.
This is one reason Consumer Proposals are accessible to people who are already in financial distress. You do not need savings or a lump sum to get started. You need a plan — and that is what we help you build.
How a Consumer Proposal Compares to Bankruptcy on Cost
Many people assume bankruptcy is cheaper than a Consumer Proposal. That is not always true. Bankruptcy cost depends on your income. If your income is above a government threshold, you must make surplus income payments for the duration of your bankruptcy — which can extend it from 9 months to 21 months or more, and sometimes longer.
Beyond the financial cost, bankruptcy carries a heavier credit consequence. A first-time bankruptcy stays on your credit report for 6 years after discharge. A Consumer Proposal’s R7 notation is removed 3 years after you complete it. For many people, the Consumer Proposal ends up costing less and recovering faster.
Our blog post on Consumer Proposal vs. bankruptcy walks through this comparison in detail.
Why Work with a Law Firm Instead of Going Directly to a Trustee?
A Licensed Insolvency Trustee plays a specific role in the Consumer Proposal process: they administer the formal filing and are required by law to act impartially between you and your creditors. They do not work exclusively for you.
We are a law firm. Our legal duty runs entirely to you. We advise you on your legal rights, help structure the strongest possible offer, and represent your interests throughout the process. If creditors push back, we push back on your behalf.
This distinction matters most when creditors reject an initial offer or when your situation is complex. Having legal representation means you have an advocate, not just an administrator.
See how that difference plays out in our comparison of a Licensed Insolvency Trustee vs. a debt lawyer.
How the Consumer Proposal Process Works (Step by Step)
- Free legal consultation. We review your debts, income, and assets. We explain your legal options and what a Consumer Proposal would realistically look like in your situation. There is no cost for this call.
- Offer is structured. Based on what your creditors are likely to accept, a repayment offer is prepared. The goal is to offer the minimum that creditors will approve — not more than necessary.
- Stay of proceedings takes effect. Once the formal process begins, an automatic legal stay stops all collection calls, wage garnishments, and creditor legal actions.
- Creditors vote. Your creditors have 45 days to vote. A majority by dollar value must accept the proposal for it to pass. If they do not vote, they are counted as voting in favour.
- Payments begin. Once accepted, you make fixed monthly payments over the agreed term. No interest accrues during this period.
- Completion and discharge. When all payments are made, any remaining eligible unsecured debt is legally discharged. You are legally free of it.
What Happens If Creditors Reject the Proposal?
If creditors vote against the proposal, there is typically a 15-day period to renegotiate. A creditors’ meeting may be called to discuss revised terms. In most cases, a well-structured offer gets accepted before it comes to that.
If the proposal is ultimately rejected and no resolution is reached, the process may be deemed a bankruptcy. This is why the structuring of the initial offer matters so much — and why legal counsel helps.
The Real Cost of Doing Nothing
It is worth putting the cost of a Consumer Proposal next to the cost of inaction. Carrying high-interest unsecured debt indefinitely means:
- Interest continuing to compound — often at 19–29% on credit cards
- Growing risk of wage garnishment if creditors obtain a judgment
- Worsening credit while the debt grows
- Ongoing emotional and psychological stress
A Consumer Proposal stops interest from accruing on the day the stay of proceedings takes effect. You stop the bleeding immediately. To understand what wage garnishment looks like and why stopping it matters, read our guide on wage garnishment in Canada.
Frequently Asked Questions
Is there a minimum or maximum amount you can offer in a Consumer Proposal?
There is no legislated minimum dollar amount for a Consumer Proposal offer. The practical floor is whatever creditors would receive in a bankruptcy. If your offer beats that number, creditors have financial incentive to accept. The maximum debt covered is $250,000 in unsecured debt (not including a mortgage on your primary residence). If your unsecured debt exceeds $250,000, a Division 1 Proposal may be appropriate instead.
Do I have to pay the full amount of my Consumer Proposal upfront?
No. Consumer Proposals are paid in monthly installments over the agreed term, up to five years. There is no requirement to pay a lump sum unless your proposal terms include one. Most proposals are structured as equal monthly payments spread across the full term.
How long does a Consumer Proposal take to complete?
The term can be anywhere from a few months to five years. Most people choose a term that balances an affordable monthly payment against completing the process as quickly as possible. Once all payments are made and two financial counselling sessions are completed, the remaining eligible debt is legally discharged.
Does a Consumer Proposal affect my credit score?
Yes. A Consumer Proposal results in an R7 credit rating on any debts included in the proposal. The R7 notation is removed from your credit report 3 years after you complete the proposal, or 6 years from the date the proposal was filed, whichever comes first. This is a significantly shorter negative impact compared to bankruptcy, which carries an R9 rating and remains for 6 years after discharge.
Can the CRA be included in a Consumer Proposal?
Yes. Income tax debt owed to the Canada Revenue Agency (CRA) is an unsecured debt and can be included in a Consumer Proposal. The CRA votes like any other unsecured creditor. In many cases where CRA debt is a significant portion of what is owed, a Consumer Proposal is an effective way to resolve it without the CRA pursuing collection action.
What happens to interest on my debt during a Consumer Proposal?
Interest stops accruing on the day the stay of proceedings takes effect. From that point forward, your balance is frozen. You repay only the negotiated amount — no additional interest, no penalty charges. This is one of the most significant financial benefits of the process.
Can my spouse or partner be included in the same Consumer Proposal?
Spouses can file a joint Consumer Proposal if they share the same debts. If their debts are separate, they would each need their own proposal. A joint proposal is filed as a single process, which can simplify the experience and reduce the overall administrative burden. We can advise you on whether a joint proposal makes sense in your situation during a consultation.
What if I cannot make my Consumer Proposal payments?
If you miss three monthly payments during the term of your Consumer Proposal, the proposal is annulled. That means it is cancelled, and creditors are free to pursue collection action again. If your financial situation changes during the term, it is important to contact us immediately. In some cases, the proposal can be amended with creditor consent before it reaches annulment.
Is a Consumer Proposal the same as debt consolidation?
No. Debt consolidation combines your debts into a single loan — you still owe the full amount, just to one lender. A Consumer Proposal legally reduces the total amount you owe. You repay a fraction of the original balance, and the rest is discharged at the end of the term. There is no new loan, no interest rate on the proposal balance, and no bank approval required.
Do I qualify for a Consumer Proposal if I am self-employed?
Yes. Self-employed individuals qualify for a Consumer Proposal under the same criteria as anyone else: between $10,000 and $250,000 in unsecured debt. Business-related unsecured debts, such as unpaid supplier invoices or business credit card balances, can often be included. If your business debt is more complex or exceeds the Consumer Proposal threshold, our business debt restructuring service may be more appropriate.
Want to Know What a Consumer Proposal Would Cost You Specifically?
Every situation is different. Book a free, confidential consultation and we will walk through your numbers with you. No pressure, no obligation, and no fee unless we save you money.
