How Much Does it Cost to File a Consumer Proposal With a LIT in Ontario?

If you can’t keep up with your debt, you might avoid reaching out for help due to the potential costs. While there are fees associated with a Consumer Proposal, they are all rolled into one affordable monthly payment. The cost to file a Consumer Proposal in Ontario should not stop you from contacting a Licensed Insolvency Trustee. Your first consultation with an LIT at Adamson & Associates is completely free and in this meeting, you can determine if a Proposal is right for you.

This article answers the question, “Can I afford a Consumer Proposal in Ontario?”

What is a Consumer Proposal?

A Consumer Proposal is a legally binding process that can only be administered by an LIT. In a Proposal, you work with your LIT to develop an offer to your creditors where you propose to pay a percentage of what you owe, extend the time you have to pay, or both.

As soon as you file a Consumer Proposal you gain protection from your creditors against wage garnishment, lawsuits, and collection calls. You also get to keep your assets, unlike when you file for Bankruptcy.

Who qualifies for a Consumer Proposal?

To qualify for a Consumer Proposal in Ontario, you have to meet the following criteria:

• You’re a Canadian resident
• You’re insolvent (can no longer pay your bills on time)
• You have debt over $1,000, and not exceeding $250,000 (excluding your mortgage)

What is the Cost to File a Consumer Proposal in Ontario?

The total cost of a Consumer Proposal will vary between individuals since the amount you pay depends on what you and your LIT are able to negotiate with your creditors. Typically, creditors want to see an offer that’s higher than what they would receive if you filed for Bankruptcy.

When creating your proposal, your LIT will look at how much you owe and what you can realistically afford to pay each month. If your Proposal is accepted, you have up to five years to complete your payments.

What are the Consumer Proposal fees in Ontario?

Here are some sample fees associated with a Consumer Proposal in Ontario:

• Administration fee: $100 paid to the Office of the Superintendent of Bankruptcy (OSB)
• Counselling costs: $85 per session for individual credit counselling sessions and $25 per session for group counselling
• LIT fees: $1,500 plus 20% of the money distributed to the creditors
• Levy (tax): 5% deducted from creditor payments for the Superintendent of Bankruptcy

The fees you pay your LIT follow a strict fee schedule outlined in the Bankruptcy and Insolvency Act. All of the LIT fees are rolled up into your monthly payments, so you don’t have to worry about additional charges.

As an example, imagine your creditors have agreed to your proposal where you pay $10,000 over 50 months. Your monthly payments are $200, with $160 going to your creditors and $40 going to your Trustee.

To estimate your monthly payments in a Consumer Proposal, try out our Consumer Proposal calculator.

Ontario Consumer Proposal vs. Bankruptcy: Which is Cheaper?

Like a Consumer Proposal, the cost to file for Bankruptcy can vary. Your income, expenses, assets, and the size of your family all impact the cost. The fees associated with Bankruptcy include:

• LIT fees: $1,800 for a first-time Bankruptcy or $2,000 for subsequent Bankruptcies. These are generally paid out in monthly payments of $200 over nine months.
• Surplus income: If your income exceeds the amount deemed reasonable by the OSB to live off of, you will continue to make payments for 21 months after filing. If your surplus income is more than $200 per month, you have to pay 50% of the amount. In a Consumer Proposal, your payments will stay the same the entire time, even if you start to earn more income.
• Assets: Unlike a Consumer Proposal, in Bankruptcy you may have to sell some of your assets to repay your creditors.

Where to Find an LIT in Ontario

If you’re considering a Consumer Proposal in Ontario and looking for a Licensed Insolvency Trustee, you can check out the Government of Canada’s LIT Directory. You can also call the Adamson & Associates office. With several locations in Ontario, we can explain the debt relief options available in Ontario and support you through your debt issues. You can contact us at one of our Ontario offices by calling 519-310-JOHN, or by completing our online contact form.

The Cost to File a Consumer Proposal in Ontario – Can I Afford it?

Don’t let the cost of filing a Consumer Proposal in Ontario prevent you from reaching out to an LIT to get help. Remember, your first consultation is completely free and an LIT can give you a personalized estimate of how much a Consumer Proposal will cost you.

When you file for a Consumer Proposal, you don’t have to worry about upfront fees. All fees are rolled up into one monthly payment based on what you and your LIT determine you can afford. In addition to reducing the amount of debt you have to pay, a proposal can streamline the debt repayment process by rolling everything up into one monthly payment.

So, what are you waiting for? If you’re tired of dealing with debt alone, reach out to an LIT today and start working towards your fresh financial future.