The Process of Consumer Proposals: How Payments Calculated?

There are established rules and calculations that all licensed liquidators must strictly follow when handling a personal or consumer bankruptcy filing.

Raju Choudhary

Process of Consumer Proposals

There are established rules and calculations that all licensed liquidators must strictly follow when handling a personal or consumer bankruptcy filing. The trustee’s fees are calculated and deducted from the funds deposited in each bankruptcy estate (proceeding) or consumer petition. Licensed liquidators cannot simply set their own rates and fees.

Process of Consumer Proposals

For most bankruptcies and all consumer filings, the authorized liquidator’s fee is based on a fee established by federal bankruptcy and bankruptcy law. The federal government licenses and regulates trustees as the sole debt professionals. This implies that the Office of the Superintendent of Bankruptcy Canada, a part of Industry Canada, a branch of the Federal Government, regulates trustee fees, among other things.

No Trustee may charge more than just the amounts set forth in the Bankruptcy and Insolvency Act’s General Rules, which may be read here. The trust accounts of trustees, as well as our files, are audited on a monthly basis to verify that they are being managed in compliance with the Bankruptcy and Insolvency Act. Other debt collectors are not subject to these limits.

For example, in the case of summary bankruptcy, if the bankruptcy income is $ 1,800, the trustee will be entitled to fees of $ 1,333.75 in excess of the number of payments and taxes. In case of administering a consumer proposal, in summary, the trustee will receive 100 percent of the first $ 1,500 of the proceeds of the Proposal to pay 20 percent of the funds on the first $ 1,500 distributed to creditors.


If the assignment requires the application of general principles, the expenses and fees of the insolvency administrator vary according to the mandate and the type of case. However, the trustee may in any case, after examining the circumstances, clarify the costs of your claim and agree with the debtor on the various solutions to consider for the reorganization of your financial situation.

Process of Consumer Proposals

“How Are Consumer Proposal Payments Calculated?”

As part of the process of calculating your payments before writing and filing your proposal, your trustee will conduct the following procedures.

Step 1: Calculate Expected Recoveries

For starters, your trustee will need to figure out how much money your creditors will get if you file for bankruptcy. In bankruptcy, creditors, for example, would be entitled to any equity you have in your home.

Depending on the amount of your income during the bankruptcy, you may be required to pay more money to your creditors. More the money you make, more the money you’ll have to pay. You may be acquainted with it, but the Bankruptcy and Insolvency Act refers to it as Surplus.

Step 2: Recognize the Expectations of Creditors

You’ll also need to know who your creditors are since some will have higher expectations than others. You must guarantee that they are pleased with your efforts.

Creditors may have internal regulations demanding minimum payouts, or they may examine your budget plan in the proposal more closely and scrutinize particular expenses to accomplish this aim.

In most situations, payments in a consumer proposal are cheaper than those in other debt-relief choices.

Step 3: Calculate Your Monthly Payment

The third and last stage will be to assess your financial needs to ensure that you can afford the monthly payment necessary to persuade the creditors to approve your proposal.

Your trustee will split the proposed total payout by the number of months in the term of your plan, depending on projected realizations and creditor obligations.

In a consumer proposal, payments might extend up to five years or 60 months.

Raju Choudhary

Article by Raju Choudhary Raju has written 810 articles. If you like This post, you can follow CAknowledge on Twitter. Subscribe to CAknowledge feed via RSS or EMAIL to receive instant updates.


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