Consumer Proposal Default and Revival
If you’ve recently gone through the process of establishing a consumer proposal via your licensed insolvency trustee, you are likely in a much better financial position than you were previously.
Whether the amount of debt you owe has decreased or the payment terms have been lengthened so you have more time to pay it back, you should be able to make the appropriate payments based on your income and your budget.
If you have not yet created a solid budget that you can stick to, speak with your credit counselor to make sure you can live within your means.
When you sign your consumer proposal, you’ve gone into a legal agreement with your creditors.
Because of this, it’s absolutely necessary to make the payments every single month.
The reasons that your consumer proposal can go into default are the following:
- You miss the sum of three of the monthly payments, or,
- Your established payments have not been paid for three months. This may happen if your consumer proposal is not set up to be monthly payments, and you miss the equivalent of three months of payments.
What happens if your consumer proposal goes into default?
If your consumer proposal goes into default due to one of the abovementioned reasons, the consumer proposal is annulled.
So, what exactly does that mean?
It doesn’t bode well for you, as the borrower, since it can cause further money problems.
At the point that a consumer proposal is annulled, creditors are able to begin collection activities to recover their debt.
In addition, they may implement collection activities to recover the interest that would have accrued from the date you initially filed the consumer proposal.
If, while you filed the consumer proposal, you were in stages of being bankrupt, you automatically become bankrupt as soon as your default on your consumer proposal.
Can I revive my consumer proposal?
There may be ways to “revive” your consumer proposal.
If your consumer proposal has been deemed annulled, but you were not bankrupt, you may be able to reactivate your consumer proposal by making up the missed payments.
However, the court may decide to change the terms of your consumer proposal at this time.
If the court deems your consumer proposal to be revived, you may continue to have harassing calls for up to thirty days from your creditors.
This is largely due to the fact that your court administrator has 30 days to inform the creditors that your consumer proposal is revived.
There is the chance that a creditor will object, at which point they will meet with your trustee.
If there is any objection at all, the consumer proposal does not become automatically revived.
Bankruptcy Trustees: know your friends
If you have missed one month of your payments, or you are afraid that you can not pay your consumer proposal, take action immediately, before you have missed 3 months and your consumer proposal goes into default.
Contact the licensed insolvency trustee in charge of your proposal to see what he or she advises so that you can take control of your finances again.
When it comes to your consumer proposal, your trustee is your friend.