Have you filed a consumer proposal to help you manage mounting debt? As inflation surges, keeping up with payments can be difficult. If you’ve missed several payments, you may be risking annulment. Here’s what you should know.
The Consequences of An Annulment
Should your consumer proposal be deemed annulled due to missed payments or other circ*mstances, your consumer proposal is then no longer in force, and your creditors can resume their collection efforts against you.
What To Do If Your Proposal Is Annulled
If your consumer proposal is annulled, consult a licensed insolvency trustee (LIT) immediately to determine your options. In some cases, you can revive the proposal within 30 days of the annulment. Beyond this period, you must go to court to revive your consumer proposal. You can try renegotiating with your creditors, but it can be risky. Once your proposal is annulled, you lose protection against your creditors.
If you can’t reinstate your consumer proposal, you may need to file for bankruptcy to regain protection against your creditors and settle your debts.
How To Avoid an Annulment
Here are three tips for preventing a consumer proposal annulment:
Negotiate an affordable monthly payment. Ensure your monthly payment is less than your previous monthly bill load. Consider a longer repayment period. A proposal can have a maximum payout period of five years.
Schedule your payments to coincide with payday. This will help to avoid bouncing any cheques and missing payments.
Make extra payments. It’s wise to make additional payments whenever you have the funds and if the terms of your consumer proposal allow for this. For example, if you receive a tax refund or a bonus at work, use a portion of the funds to make an extra payment on your consumer proposal.
If your financial situation changes and you can no longer make your payments, talk to your LIT or Administrator as soon as possible.
Consumer Proposal Annulment Help in Ottawa
If you need help getting your consumer proposal reinstated, the licensed insolvency trustees at D. & A. MacLeod Company Ltd. can help. Our team will take the time to listen to your needs, analyze your financial situation and get to the root of your debt troubles. We now offer virtual appointments for consumer proposals for clients across Canada.
FAQs
What To Do If Your Proposal Is Annulled. If your consumer proposal is annulled, consult a licensed insolvency trustee (LIT) immediately to determine your options. In some cases, you can revive the proposal within 30 days of the annulment. Beyond this period, you must go to court to revive your consumer proposal.
What are the disadvantages of a consumer proposal? ›
Cons of a Consumer Proposal
- If the majority of your creditors vote against the Proposal, you may have to file for Bankruptcy.
- It typically takes four to five years to repay a Consumer Proposal, which is longer than a typical Bankruptcy.
- Your payments are fixed.
Stop making payments on the Consumer Proposal.
If you miss three months of payments and do not file an Amendment to your Proposal, your Proposal will no longer be a legally binding agreement. This means that your creditors will be free to take legal action against you for the full amount of the debt you owe them.
What happens after paying off consumer proposal? ›
All debts included in your Consumer Proposal are considered legally settled. This means you will no longer owe the money, and creditors cannot take any legal action against you to collect those debts.
How do I get out of a consumer proposal? ›
Once your consumer proposal is approved or deemed approved by the court, you can no longer change your mind and withdraw your proposal. You can only get out of a court-approved proposal by completing the proposal payments, letting the proposal become annulled by missing three months or filing bankruptcy.
Can I get a second consumer proposal? ›
Fortunately, the number of consumer proposals you can file in a lifetime is unlimited. But it would be best if you were entirely sure it is the right solution for your financial situation. The following article looks at the benefits of consumer proposals and when it makes sense to file a second one.
What happens if I default on a consumer proposal? ›
Taking on significant new debt while in a proposal can make it difficult to keep up with your required proposal payments. As mentioned, if you miss three payments, your proposal will be annulled. If you filed a proposal to protect your assets, taking on new debts also puts these assets at risk.
What happens if I withdraw from a consumer proposal? ›
Proposal status: The fact that you entered into a consumer proposal and then cancelled it may remain on your credit report for up to three years after the proposal was filed. This means that withdrawing a consumer proposal may impact your ability to secure credit in the short term.
Do you have to get rid of credit cards in a consumer proposal? ›
When you file for a consumer proposal, you will have to hand in any credit cards that are part of the proposal. The creditors will freeze or close the credit card for which you previously qualified. You might have a credit card with a zero balance or a credit balance not included in the proposal.
What happens after 7 years of not paying debt? ›
The debt will likely fall off of your credit report after seven years. In some states, the statute of limitations could last longer, so make a note of the start date as soon as you can.
Improving your credit score after a Consumer Proposal or personal bankruptcy is easier than you might think. In as little as two to three years you may even have a better credit rating than before you started – and you can get a new mortgage, vehicle financing, credit card, bank loan, etc.! Let us explain…
How can I pay off my consumer proposal faster? ›
You've considered the criteria and want to pay off your Consumer Proposal early. You can make this happen by increasing the amount, or the frequency, of your monthly payments. Perhaps you get a raise in salary and decide to increase your monthly payments. You may have saved funds to make a lump sum payment.
Can you redo a consumer proposal? ›
Unlike Bankruptcy, where a second filing results in a longer and more difficult process, including a longer reporting period with credit bureaus of 14 years after discharge, you can file a second Consumer Proposal the same way you filed the first one.
What does it mean to be discharged from a consumer proposal? ›
Your debts are discharged after a bankruptcy or a consumer proposal. It's the last step in either process. This means all the debts you had when you declared bankruptcy or filled a consumer proposal are wiped out, now that you've properly completed all of the steps of the process.
