Avoiding a Consumer Proposal Annulment
A consumer proposal can be an excellent way of managing your finances and reducing your debts.
When your consumer proposal is accepted, your debts can be reduced by up to 75% and creditors can be stopped from any subsequent interest to your accounts.
Offering many of the benefits associated with bankruptcy without the need to relinquish your interest in your assets, it’s one of the most popular ways to deal with excessive debt.
When you make a consumer proposal, however, there will be certain stipulations you need to agree to.
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Although your debts will be reduced, you will still be liable to make payments, usually on a monthly basis.
In addition to this, you may be required to attend credit counselling or financial education sessions.
If you fail to undertake the requirements of your consumer proposal it can be annulled.
If a consumer proposal is cancelled, the agreement you made is no longer enforceable and you will be liable for the entirety of your debts.
Furthermore, all of the interest and charges which would have been applied without the consumer proposal will be added to your outstanding debt.
Due to this, it’s essential that you avoid a consumer proposal annulment.
To ensure you meet the relevant terms and manage your finances appropriately, take a look at these top tips and remain committed to meeting the requirements of your consumer proposal agreement:
1. Understand your consumer proposal agreement
Dealing with debts can be extremely stressful, particularly if the situation becomes unmanageable.
Due to this, people are sometimes quick to sign documents if they feel it will enable them to resolve their debt problems.
However, it’s vital you understand the exact terms of your consumer proposal so that you know what’s expected of you.
If you’re unsure about what the requirements are or what you need to do to meet the terms of the proposal, ask your Licensed Insolvency Trustee (LIT) for advice.
2. Consider alternative provisions
If your financial situation changes during the course of your consumer proposal, it may be possible to have the provisions of the agreement modified.
If you lose your job and no longer have an income, for example, you may be unable to make your monthly repayments in accordance with your consumer proposal.
In such cases, it’s vital to talk to your licenced insolvency trustee straight away.
Although creditors will often accept requests for alternative provisions if they are backed up by evidence, simply not making payments or ignoring the situation could result in your proposal being annulled.
3. Explore other options
If you don’t feel you can stick to the terms of a consumer proposal, consider alternative debt solutions instead.
A consumer proposal is intended to provide you with a realistic and long-term solution to your debt issues but that doesn’t mean they’re the right choice for everyone.
With plenty of other debt resolution options available, you may find that another form of debt management is more suited to your needs.
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Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal
