Who is responsible for paying consumer proposal fees?

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In Canada, tackling a consumer proposal primarily falls on you, the debtor. The fees are a percentage of the debt and are capped by the watchdog for bankruptcies. Once approved, you make regular payments to the Licensed Insolvency Trustee, who ensures your creditors get the agreed amounts over 3-5 years.

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Question

Who pays for consumer proposals? I’m a bit confused about the costs involved and who ends up footing the bill for these proposals. It’s important for me to have a clear picture of what I’m getting into financially. How does payment work in this scenario?

From: Anonymous Question, British Columbia (BC)

Debt Insiders Answer

In Canada, tackling a consumer proposal mostly falls on the debtor. The fees are a slice of the total debt you’re looking to settle. Don’t sweat it, though—they’re capped by the official watchdog for bankruptcies. Once your proposal is approved by your creditors, you start making regular payments to the Licensed Insolvency Trustee, who plays middleman, ensuring your creditors get what was agreed upon. Essentially, you’re covering the costs through these monthly payments, which are generally spread over about 3 to 5 years.

From: Anonymous Question

Office of the Superintendent of Bankruptcy (OSB) Answer

In Canada, the costs associated with a consumer proposal are typically the responsibility of the debtor. When you file a consumer proposal, you propose a payment plan to your creditors, and the proposal must outline the terms, including how much you intend to pay and the duration of the payments.

The specific fees related to a consumer proposal are governed by the Bankruptcy and Insolvency Act, particularly in section 66. A licensed insolvency trustee (LIT) administers the proposal and charges a fee for their services, which is deducted from the payments you make as part of the proposal. The fees are regulated and must be disclosed in the proposal, ensuring transparency about the costs involved.

If approved by creditors, the proposal will typically lead to a reduction in the overall amount owed, allowing you to pay off your debts over a manageable timeframe. Therefore, you will be the one paying for the consumer proposal through the payments you agree to in the plan submitted to your creditors.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

Here are the top 5 most frequently asked questions related to the costs and payments of consumer proposals, formatted in markdown:

1. How much does it cost to file a consumer proposal?

The total cost includes a filing fee, financial counselling fees, and administration fees, with no additional cost beyond the proposal payments.

2. Who pays the administrator’s fees in a consumer proposal?

The administrator’s fees are deducted from the payments made into the proposal.

3. Do I have to pay interest on a consumer proposal?

No, the payments made on a consumer proposal are completely interest-free.

4. Can I pay off my consumer proposal early?

Yes, you can pay off your consumer proposal early and begin the recovery process sooner.

5. What happens if I cannot make my monthly consumer proposal payments?

If you cannot make your payments, your legal creditor protection ends, and your creditors can pursue you for payment again. You may need to renegotiate the terms or consider other debt relief options.

References

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