How much does a consumer proposal cost ?
If you are overwhelmed by debt and looking at your credit report gives you anxiety, we have the solutions you need. M. Roy & Associés has the tools you require to regain financial stability without having to declare bankruptcy. For example, the consumer proposal, is a legal alternative to personal bankruptcy that keeps gaining popularity.
Before taking any steps, it’s important to get the facts and consider the costs involved. Your first step should be to meet with a licensed insolvency trustee or “LIT” (formerly known as a trustee in bankruptcy) to determine whether this solution is right for you. Moreover, there is no charge for the first hour of consultation.
In this article, you’ll discover the costs associated with this type of restructuring process. You’ll learn more about how we determine the costs associated with your proposal so you can make an informed decision about what to do next.
The costs associated with a consumer proposal
There are various costs to consider before meeting with an expert to file for a proposal. In a nutshell, the total amount that you will need to pay during the course of the proposal will be determined principally based on your current income and the equity in your assets. Although the cost of a consumer proposal may seem high at first glance, it is often much lower than the monthly interest charges you pay each month.
Also, the trustee’s fees are included in the amount offered to your creditors. Therefore, you don’t have to worry about budgeting for these fees as well: it’s an all-inclusive package!
Before taking any action, you should meet with a LIT to determine the best course of action. In Canada, only a trustee has the authority to file a consumer proposal on your behalf. Beware of uncertified advisors who promise you an equivalent solution: this is often not the case.
Always ready to advise, your LIT will guide you towards a solution that will limit any negative impact. They adhere to the Bankruptcy and Insolvency Act, and, the Office of the Superintendent of Bankruptcy is responsible for regulating trustee fees and disbursements.
At all times, your trustee represents you and acts as a partner in helping you regain your financial stability.
Always ready to advise, your LIA will guide you towards a solution that will limit any negative impact. However, you will have to accept the trustee’s fees. They adhere to the Bankruptcy and Insolvency Act , and determined by a percentage of amounts paid to creditors. A federal agency, the Office of the Superintendent of Bankruptcy, is responsible for regulating trustee fees and disbursements.
For example, you file for a proposal and it calls for the repayment of 30% of your debts. In this scenario, the trustee may set their fees according to this proportion. Rest assured, we will allocate sufficient time to thoroughly review all these fees. Our goal is to ensure you are well informed of all the particulars.
How is a consumer proposal calculated?
Calculating payments is a very important step in the consumer proposal process. It’s the beginning of a new chapter in your financial recovery.
To arrive at a realistic total amount, here’s how we proceed:
Comprehensive assessment of your situation
Together, we will gather a wide range of data to establish a clear picture of your financial situation. This includes :
- Your sources of income
- Your government benefits
- Your assets
- Your debts
- Your credit cards
- And many others
After analysis, this information will tell us your ability to make payments on a monthly basis.
Choosing the term of the proposal
Once we’ve analyzed your financial picture, we’ll need to establish a timeframe for your monthly payments. We need to establish a realistic timeframe to ensure the success of the process.
We’ll try to establish the best payment term based on your ability to repay. Typically, a proposal ranges from 24 to 60 months.
Monthly payment calculation
Based on the information gathered during our discussions, which will take into account your current revenues and the equity in your assets, we will be able to determine your monthly payment amount. We will then distribute these funds in proportion among all creditors, based on the offered and accepted amount.
As a rule of thumb, the amount offered should be higher than what creditors would receive in a bankruptcy.
We know that an adverse event can happen quickly. This is why the monthly budget you will establish with the LIT will have room for unforeseen events.
The aim is to maintain a monthly payment plan that is realistic according to your specific situation. In a consumer proposal, we ensure that the payments made are comfortable and respect your ability to pay.
Are you interested in achieving debt relief, regaining financial stability and start improving your credit score? Contact us for a free consultation and take control of your finances. Our expertise is at your disposal!
Remember that a licensed insolvency trustee is your partner in this process. Your trustee is there to assist and equip you with the appropriate resources to undertake this legal action.