Reviving a Consumer Proposal After It’s Deemed Annulled
How to Revive a Consumer Proposal After It’s Annulled
If you’re going to repay your debt, you need a regular income to do so.
That’s on top of money to buy food, pay bills, and survive.
A consumer proposal is a debt relief plan, and although it can be a huge help to those in debt, you will still need to ensure you have an income so that you can continue to make the minimum payments.
What happens if you experience job loss suddenly, or loss of income for another reason?
You’d no longer be able to make your payments, and the consumer proposal would be deemed annulled.
This can mean extra stress on top of having to deal with a huge life change.
Many people wonder if they could revive the consumer proposal when they have found another job, or worked through the life change, and whether there’s a cut off point at which they won’t be able to do this anymore.
Good news – there is a chance you will be able to revive a consumer proposal after it’s deemed annulled, but how it happens will depend on your unique situation.
More About An Annulled Consumer Proposal
The Bankruptcy Insolvency Act states that a consumer proposal will be deemed annulled if the consumer debtor is more than 3 months of payment behind.
A proposal can be revived automatically within 30 days of the annulment with no issues, but any attempt to revive the consumer proposal after this will require a court visit.
Don’t panic, though – the court is usually understanding and these cases nearly always go smoothly.
All of the creditors have agreed with the proposal to start and it is in everyone’s best interests that the proposal continue the way it was originally intended.
Going to court may seem scary, but more often than not, the proposal can be revived and it is just a formality.
What Are The Steps To Revive A Consumer Proposal?
This is how you would go about reviving your consumer proposal when you have the means to pay again outside of the 30 day automatic revival period:
- Discuss your financial situation – you will need to explain what has changed with your cash flow and overall situation and give the bankruptcy lawyer a statement outlining your income and expenses.
- Request documents from your trustee – this includes the creditor’s package, estate general ledger, and the notice of default.
- Prepare an affidavit and motion materials for court – it will take maybe a month until you go to court. When this happens, you will present your case, and the court will let you know whether your proposal shall be revived.
It is very rare not to have your consumer proposal revived, however, in cases where it cannot be, a second one will be filed in its place.
This may happen when the original one is too late to revive.
If the default happened towards the end of a 5 year proposal and you don’t get help straight away then you may not be able to revive it and a second will need to be filed.
A consumer proposal must provide for its completion within 5 years according to the Bankruptcy Insolvency Act.
Bear in mind that if you are wanting to revive your proposal outside of this time period you will likely need to file a second one.
Defaulting On Your Consumer Proposal
Although it is possible to revive your consumer proposal, you should only default on your proposal if you have no choice.
You may not be able to help losing your job, for example, but with some budget planning you should be able to avoid defaulting.
Your budget is within your control, and if you plan carefully enough you may even continue to pay your consumer proposal during an emergency.
- Ensure the proposal is affordable. It should be much less than what you were paying on all of your minimum debts;
- Pick the start date of the proposal that works best for you. You may need to get a few things in order first;
- Make your payments automatic and ensure they align with the day you get paid. Account for the payment just like any other bill;
- Put extra payments towards your proposal when financially able. For example, if you receive a bonus or a tax rebate, you could put that money towards your proposal. If you start making more money at work regularly, you could even bump up your automatic payment.
Can You Change Your Payments If You Feel You Might Default?
If you feel that you are likely to have a problem making the consumer proposal payments, speak to your Consumer Proposal Administrator as quickly as you can.
A consumer proposal can be amended if the deal you made originally isn’t working for you.
It is your right to ask your creditors to change the deal, and there shouldn’t be any fees for you to pay.
The only risk to doing this is that if you ask your creditors to accept a deal and they reject it, then your proposal will be cancelled.
If your payments are up to date at this time then you will be able to have it automatically revived.
That being said, if the original proposal wasn’t working for you then having it revived may not be the best option.
If you need more advice on how to deal with this situation, Bankruptcy Canada can help you.
Get In Touch With Bankruptcy Canada To Discuss Your Consumer Proposal Today
A consumer proposal is great for people who want to pay off their debts and get a fresh financial start.
With a consumer proposal, you are able to keep assets that you would lose if you filed for bankruptcy, and your monthly payments may be less than they would be in a bankruptcy if you have a high surplus income.
If you’re unsure as to whether debt consolidation, a consumer proposal, bankruptcy, or another solution is right for you, our team of experts can help.
Get in touch with Bankruptcy Canada today.