Consumer Proposal Cost Canada 2026 - What Will You Actually Pay?

Consumer proposal fees are set by federal tariff at $1,800-$2,500 total—including $750 filing fee, $750 approval fee, $170 for two mandatory counselling sessions, and 20% of funds distributed to creditors—all paid from your monthly proposal payments over 3-5 years with zero upfront or out-of-pocket costs.

The federal tariff structure ensures transparency and consistency across all Licensed Insolvency Trustees in Canada. You cannot shop for lower fees because the Bankruptcy and Insolvency Act mandates uniform pricing.

How Much Does a Consumer Proposal Cost

Total consumer proposal cost equals 20-40% of your original unsecured debt paid over a maximum of 60 months. If you owe $50,000 and your Licensed Insolvency Trustee structures a proposal at 30%, you pay $15,000 total over 3-5 years. Of this $15,000, approximately $3,000 goes to LIT fees and $12,000 goes to creditors.

The federal tariff breaks down into five components. Filing fee is $750 plus applicable HST or GST. Approval fee is $750 plus tax upon creditor acceptance. Two mandatory financial counselling sessions cost $85 plus tax each, totaling $170. The Office of the Superintendent of Bankruptcy charges approximately $100 filing fee. Finally, the LIT receives 20% of all funds distributed to creditors.

All Licensed Insolvency Trustees charge the identical tariff. There is no ability to negotiate lower fees or find cheaper alternatives. The federal structure protects consumers from excessive fees while ensuring LITs are compensated fairly for their work.

Review complete details about what a consumer proposal is and how the federal filing process works.

Consumer Proposal Fee Breakdown by Component

The $750 filing fee plus tax covers the Licensed Insolvency Trustee’s initial work including the free consultation, document gathering and verification, financial assessment, proposal drafting, and electronic filing with the Office of the Superintendent of Bankruptcy. This fee is paid from your proposal payments, not upfront.

The $750 approval fee plus tax is paid upon creditor acceptance of your proposal. This covers the LIT’s work during the 45-day voting period including creditor communication, attending the meeting of creditors if requested, and obtaining court approval. Like the filing fee, it comes from your monthly payments.

Two mandatory financial counselling sessions are required by law. Each session costs $85 plus tax for a total of $170. The first session typically occurs within 90 days of filing and covers budgeting, credit management, and avoiding future debt problems. The second session occurs before you complete your final payment and focuses on rebuilding credit and maintaining financial stability.

The 20% distribution fee means the LIT receives 20 cents for every dollar paid to creditors. If creditors receive $10,000 from your proposal, the LIT receives an additional $2,000. If creditors receive $25,000, the LIT receives $5,000. This fee incentivizes LITs to maximize creditor recovery while keeping proposals affordable.

The OSB filing fee of approximately $100 is paid directly to the federal Office of the Superintendent of Bankruptcy and covers administrative costs of maintaining the insolvency database and regulating Licensed Insolvency Trustees.

Monthly Payment Calculation and Examples

Your monthly payment is calculated by dividing your total proposal amount by the number of months in your chosen payment term. You control the payment term between 1-60 months based on what you can afford. Longer terms mean lower monthly payments but extend the duration of your R7 credit rating.

For a $20,000 debt with a 30% offer totaling $6,000, a 5-year term results in monthly payments of $100. A 4-year term increases payments to $125. A 3-year term requires $167 per month.

For a $40,000 debt with a 30% offer totaling $12,000, a 5-year term results in monthly payments of $200. A 4-year term increases payments to $250. A 3-year term requires $333 per month.

For a $100,000 debt with a 40% offer totaling $40,000, a 5-year term results in monthly payments of $667. A 4-year term increases payments to $833. A 3-year term requires $1,111 per month.

Your Licensed Insolvency Trustee helps you choose a payment amount and term that fits your monthly budget. The proposal offer must exceed what creditors would receive if you filed bankruptcy instead, typically by 10-30%.

Calculate your estimated monthly payment using your actual debt amount and preferred payment term.

Zero Upfront Cost: How Fees Are Paid

Consumer proposals require absolutely no upfront payment. The first consultation with any Licensed Insolvency Trustee is free and confidential with no obligation. During this meeting, the LIT reviews your complete financial situation, explains your options, and answers questions at no cost.

If you decide to proceed with a consumer proposal, the LIT gathers documents, drafts your proposal, and files electronically with the OSB without charging you any separate fees. All work is done on credit, meaning the LIT is paid from your future proposal payments.

Your single monthly payment to the LIT covers both creditor distributions and trustee fees. You never write separate checks for LIT services. The payment structure is fully transparent: your total proposal amount divided by your payment term equals your monthly payment.

For example, if your proposal totals $12,000 paid over 60 months at $200 per month, that $200 covers everything. The LIT deducts fees according to the federal tariff and distributes the remainder to creditors. You make one payment monthly and the LIT handles all distributions.

This zero-upfront structure makes consumer proposals accessible to Canadians facing immediate financial crisis. You can file and stop wage garnishment without needing thousands of dollars in cash.

Learn the complete filing process and timeline from initial consultation to binding acceptance.

Can You Pay Off a Consumer Proposal Early

You can pay off your consumer proposal at any time with no penalty or prepayment charges. Making lump sum payments from tax refunds, work bonuses, salary increases, or inheritance accelerates completion. Many Canadians complete 5-year proposals in 2-3 years by making extra payments.

Paying off early does not reduce the total amount owed or LIT fees. The federal tariff applies regardless of how quickly you pay. However, early completion shortens the duration of the R7 credit rating on your report.

The R7 credit notation is removed 3 years after completing all payments or 6 years from the filing date, whichever comes first. If you file in February 2026 and complete payments in February 2029 (3 years), the R7 is removed in February 2032 (6 years from filing). If you file in February 2026 and complete in February 2028 (2 years), the R7 is still removed in February 2032 (6 years from filing).

For proposals completed in less than 3 years, the 6-year-from-filing rule applies. For proposals taking 3 or more years, the 3-years-after-completion rule typically applies. Either way, early completion means faster credit recovery.

Your Licensed Insolvency Trustee accepts extra payments at any time. Simply contact them to arrange additional payments or a lump sum payoff. Once paid in full, you receive your Certificate of Full Performance within 30-60 days.

Understand the complete credit rebuilding timeline and strategies for recovery after completing your proposal.

Consumer Proposal Cost vs Bankruptcy Cost

Consumer proposal costs differ from bankruptcy costs in structure and total amount. Consumer proposals charge the federal tariff described above, with total fees typically ranging from $1,800-$2,500 plus 20% of creditor distributions. Bankruptcy charges a similar tariff for base fees but adds mandatory surplus income payments if your income exceeds federal thresholds.

First-time bankruptcy with no surplus income costs approximately $1,800 in base trustee fees. The bankruptcy discharges in 9 months. However, if your monthly income exceeds approximately $2,543 for a single person, you must pay 50% of the excess to the bankruptcy estate. This extends discharge to 21 months and can add $10,000-$20,000 or more in surplus income payments.

For example, if you earn $4,000 per month, your surplus income is $1,457 per month ($4,000 minus $2,543 threshold). You must pay 50% of this surplus, or $729 per month, for 21 months. Total surplus income payments equal $15,309 plus base trustee fees of $1,800 for a total bankruptcy cost of $17,109.

In contrast, a consumer proposal for the same individual might cost $300 per month for 5 years, totaling $18,000. Of this $18,000, approximately $3,500 goes to LIT fees and $14,500 goes to creditors. The proposal keeps all assets and results in a less severe R7 credit rating versus bankruptcy’s R9.

Consumer proposals make more financial sense for individuals with steady income and assets to protect. Bankruptcy makes sense for individuals with no income and no assets who need the fastest possible discharge.

Compare consumer proposals versus bankruptcy in detail including credit impact, asset protection, and timeline differences.

Consumer Proposal Cost vs Debt Settlement Fees

Debt settlement companies charge significantly higher fees than consumer proposals while providing no legal protection. Settlement fees typically range from 15-25% of enrolled debt, charged whether or not settlements are successful. For $40,000 in enrolled debt, fees range from $6,000-$10,000.

If debt settlement achieves 50% reduction on $40,000, you pay $20,000 to creditors plus $6,000-$10,000 in fees for a total cost of $26,000-$30,000. This exceeds the typical consumer proposal cost of $12,000 for the same debt amount.

Debt settlement provides no stay of proceedings. Creditors can continue collection calls, wage garnishment, and lawsuits during the negotiation process, which typically lasts 2-4 years. Many consumers cannot complete settlement programs because garnishment or lawsuits deprive them of funds needed to pay settlements.

Forgiven debt from settlement may be considered taxable income. The Canada Revenue Agency can issue T4A slips for forgiven amounts, creating tax liability. Consumer proposals involve no tax consequences on forgiven debt under bankruptcy law provisions.

Consumer proposals offer 97-99% creditor acceptance versus no guarantee with settlement. Settlement requires creditor-by-creditor negotiation with no obligation for creditors to accept. Proposals bind all unsecured creditors once a majority by dollar value accepts.

The federal regulation of Licensed Insolvency Trustees ensures ethical conduct and transparent pricing. Debt settlement companies are largely unregulated. The Financial Consumer Agency of Canada warns that settlement companies cannot guarantee results and may charge fees even when unsuccessful.

Review debt settlement versus consumer proposals to understand why proposals are superior for most Canadians.

Consumer Proposal Cost vs Debt Consolidation Interest

Debt consolidation requires repaying 100% of principal plus interest, making it significantly more expensive than consumer proposals despite having no upfront fees. Consolidation loans typically charge 6-15% annual interest depending on credit score. For $40,000 consolidated at 8% over 5 years, total cost is approximately $48,480 including $8,480 in interest.

Debt consolidation requires good credit, typically a minimum score of 650 and ideally 700 or higher for favorable rates. Consumers with poor credit facing collections and potential garnishment usually cannot qualify for consolidation.

Consumer proposals require no credit score minimum and work for individuals with severely damaged credit. Proposals reduce debt by 60-80%, so for $40,000 in debt, a 30% offer totals $12,000 paid over 5 years with zero interest. This saves $36,480 compared to debt consolidation.

Consolidation provides no legal protection. Creditors not included in the consolidation loan can continue collection actions including garnishment and lawsuits. Consumer proposals trigger immediate stay of proceedings stopping all collection activity.

Debt consolidation works best for debts under $25,000 when you have good credit and can afford full repayment at reduced interest rates. Consumer proposals work best for debts of $10,000-$250,000 when you cannot afford full repayment or need legal protection from creditors.

Compare all debt relief options including proposals, bankruptcy, consolidation, settlement, and credit counselling.

---

Bottom Line

Consumer proposal fees are federally regulated at $1,800-$2,500 total, paid entirely from your monthly payments over 3-5 years with zero upfront cost. The tariff includes $750 filing fee, $750 approval fee, $170 for two mandatory counselling sessions, $100 OSB filing fee, and 20% of funds distributed to creditors. All Licensed Insolvency Trustees must charge the same tariff—you cannot shop for lower fees but can compare service quality and communication styles. For a typical $40,000 debt reduced to $12,000 at a 30% offer, LIT fees total approximately $2,500 with $9,500 going to creditors over 60 months at $200 per month. This structure costs significantly less than debt consolidation’s 100% principal repayment plus 8-15% interest, and debt settlement’s 15-25% fees charged on top of negotiated amounts. Calculate your estimated monthly payment and total cost based on your current debt level and preferred payment term.

This article provides general information and should not be considered legal or financial advice. Consult a Licensed Insolvency Trustee for advice specific to your situation.

Last updated: February 2, 2026