Consumer Proposal Annulment

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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 Consumer Proposal 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.

It is very important that you realize that this annulment is really automatic and that no one can overturn this annulment. This rule cannot be waived by your trustee or anyone else. Your proposal will be dead if you miss the equivalent of three payments and you will have lost any payments you have made to the proposal because all of your debts, including any interest charges that could have been charged, will be reinstated in full once your proposal is annulled. You will not be able to make another proposal.

Consumer Proposal 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.