Consumer Proposal Annulment

A consumer proposal annulment is the legal term for a consumer proposal being cancelled, which can occur through an automatic annulment or a court order.

Automatic Annulment

An automatic consumer proposal annulment will occur if you have missed too many payments under the terms of your proposal agreement.

This is a very serious situation and should be avoided at all costs.

If you are having trouble making the required payments under your proposal terms you must contact your Trustee (Proposal Administrator) as soon as possible to discuss amending your proposal or other options that could be worked out.

This automatic annulment will occur if you have fallen three months into arrears on your payments.

While most proposals require a monthly payment, you might have a different payment term which means your three missed payments might take longer than 3 months.

Automatic Revival of a Deemed Annulment of a Consumer Proposal (Sections 66.31 (6) and (7) of the Bankruptcy and Insolvency Act (BIA)

The consumer proposal debtor can be given a second chance to make his proposal good.

If the trustee considers it appropriate he will notify the creditors of the intention to automatically revive the consumer proposal in say…60 days, if there is no objection.

Annulment Through a Court Order

A consumer proposal may also be annulled by a court order.

For a court ordered proposal annulment to occur, the court will schedule a hearing to determine if the proposal should be annulled or not.

This is a rare type of consumer proposal annulment and usually happens when a person fails to file their income taxes after they have entered into the proposal.

If your proposal has been annulled it is likely you will file for bankruptcy, although you will not be automatically bankrupt when your proposal is annulled.