Consumer Proposal Payment Terms Examples

Bankruptcy Canada
Reviewed by
A Licensed Insolvency Trustee
on May 29th, 2023 07:13 pm

When you file a consumer proposal, you are not bound to a generic repayment plan. Rather, together with a Licensed Insolvency Trustee, you are creating a repayment plan with proposal payment terms that are specific your circumstances.

In order to give you an idea of the many options available to you, here are some of the more common credit proposal examples. These examples of payment terms will help you understand how your proposal can be designed to fit your personal situation.

When considering filing a consumer proposal, you will want to talk to a Licensed Insolvency Trustee – make sure that proposal payment terms are on your list of items to discuss with the Trustee.

The “Standard”

The most common type of consumer proposal, also the most straight-forward. Together with a Licensed Insolvency Trustee, you will review a set amount of money that you can afford to pay back to your creditors each month over a reasonable period of time. This type of repayment term works best if your income and expenses are fairly regular and tend not to fluctuate each month.

Payment term example: $300 per month for 48 months to repay $14,400.

“Back-end loaded”

In this credit proposal sample the payments change over the course of the proposal. The payments start out at a lower amount and then increase over time. This type of proposal is often used by people who expect a much higher income in the future, such as those just starting new jobs. They are also used by folks who need lower payments at the beginning of their proposal, to allow them to catch up on their secured debts (mortgage, cars, etc). In this type of proposal it is important not to assume your income will increase or hope that you will get a better paying job, as you do not want to default on your consumer proposal as that creates other ramifications. You want to ensure that the proposal will help fix the problem, not add to or create a bigger financial problem.

Payment term example: $200 per month for 12 months, followed by $300 for 24 months and finally $400 for the final 12 months to repay $14,400.

“Front-end loaded”

The opposite of the back-end loaded proposal. In this type of proposal, the payments start at a higher monthly amount and decrease over time. This credit proposal sample is often used by people who know their income is going to drop.

Payment term example: Pay $400 a month for the first 24 months and then $200 a month for the next 24 months to repay $14,400.

“The Seasonal” payment terms

If your income fluctuates, a consumer proposal can be drafted to have different monthly payment amounts terms depending on the time of year. This type of proposal is often used by seasonal workers – people in the construction industry are a good example of folks who can benefit from this type of proposal as they generally have higher incomes in the warmer months.

Payment term example:Pay $200 per month January and February, pay $300 per month March and April, pay $400 per month May through August, pay $300 per month September and October and pay $200 per month November and December and continue for 4 years to repay 14,400.