Your monthly consumer proposal payment includes all fees and taxes. You make one, all inclusive, payment, which is based on what you negotiate with your creditors. It is as simple as that.
So how does the Trustee get paid? The government sets up a tariff allowing the Trustee or Consumer Proposal Administrator to be paid out of the funds collected for your creditors. You don’t pay the Trustee any extra payments, no up-front fees either. In effect, the creditors are paying for the cost to administer your proposal.
There are other options for paying off your creditors, but they will cost you more.
Understanding the Relative Cost of Debt Relief
If you qualify for a consolidation loan, you will be repaying your debts in FULL, at an interest rate that is while lower than what you are paying now, will still probably be higher than a low interest mortgage. That means choosing a debt consolidation loan option will cost you extra in terms of principal payments and interest.
Debt settlement companies often use high pressure sales tactics to sign you up, making promises they may not be able to keep. They usually charge large up-front fees before taking any action on your behalf. I would recommend you avoid these companies. While they may offer to settle your debt for 30 cents on the dollar, the cost of failure can be quite high.
A debt management program can be reputable and legitimate, especially when they are run by qualified counsellors and not-for-profit agencies. While interest balances may be reduced or waived, you will have to pay your debts in full and there are costs involved. Costs can include an initial set up fee and monthly administration fees.
Another cost: not all debts will be covered through a debt settlement or debt management plan.
There are no hidden costs or fees to you when filing a consumer proposal. All the fees of a consumer proposal administrator are included in your monthly payment. These fees are regulated by the Federal Government. And your consumer proposal is binding on all your creditors. There is no ongoing interest charged. You will be paying back less than the full amount you owe.
Want to learn more about how your payments will be calculated in a consumer proposal? Feel free to read an article by J. Douglas Hoyes about how your payments may be calculated.
Sounds too good to be true? It isn’t. Book a no cost consultation to review this option with a trustee near you. You’ll be glad you did.