Annulling & Amending a Consumer Proposal

 

When you file a consumer proposal, you may end up unable to make the payments, or the proposal may not get accepted in the first place. The good news is that if your proposal is rejected or you fall behind, you can amend it and submit it again for approval.

To better prepare yourself for either situation, here’s what you need to know about consumer proposal amendments and annulments. At David Sklar & Associates, we offer Toronto consumer proposal services, bankruptcy services, and more.

What is a Consumer Proposal?

A consumer proposal is a legally binding agreement made between a debtor and their unsecured creditors. It allows the debtor to repay a portion of their total debts over a maximum of 5 years.

Licensed insolvency trustees like David Sklar & Associates are the only professionals that have the legal authority to conduct a consumer proposal. We specialize in consumer proposal services and personal bankruptcy in Ontario to help you manage your debts and set you up for future financial freedom.  

Can a Consumer Proposal Be Amended?

The short answer is yes.

Amending a consumer proposal means asking creditors to change the terms of the proposal. This is done by the licensed insolvency trustee when a proposal is rejected by the creditors, or the debtor who has filed the proposal is no longer able to honour the previously agreed-upon terms.

We take care to ensure that our clients’ consumer proposals are realistic, and we give them excellent tools to help them better manage their finances. The vast majority of our consumer proposal clients are able to make all of their payments in full and on time.

That said, despite their best intentions, some clients find themselves needing to revisit the grounds of their proposal or unable to fulfill the terms of their proposal and make all the payments in full and on time. Causes for this are often reduced income, job loss, divorce or other major life events. In that case, amending a consumer proposal is a good course of action.

If you have filed for a consumer proposal and you’re unsure whether you can make your next payment, you should contact your trustee and tell them that you want to discuss your consumer proposal right away. Otherwise, you could risk a consumer proposal annulment.

What Is a Consumer Proposal Annulment?

Normally, under the Bankruptcy and Insolvency Act (BIA), a consumer proposal is automatically deemed annulled (cancelled) when three proposal payments are missed. Once the consumer proposal deemed annulment happens, the debtor and creditors go back to where they started, and the protections of the proposal disappear. Click the link to see what protections consumer proposals in Ontario offer to honest debtors.

How Do I Avoid Consumer Proposal Annulment?

How do I avoid consumer proposal annulment? If you have an inkling that you might miss your next payment, the first thing that you should do is talk to your trustee. The more notice they have, the better. They can help you figure out what your next best steps will be. Keeping your problem a secret won’t work out for you.

What they suggest will depend on the severity of your situation.

If your inability to pay is a temporary situation:

  • As a debtor, you can miss up to two payments without having to amend your proposal. You will have to make up these missed payments before the end of your proposal.
  • If the amount that’s unpaid is less than three months of payments, you can also increase the amount of future monthly payments to make up for the missed payments without resorting to an amendment.

If your inability to pay is permanent:

  • If your current income cannot handle the original proposal terms, you can work with the Trustee and submit a consumer proposal amendment to your creditors. This amendment will reduce your monthly payments.
  • If the amendment is rejected by the creditors, you should discuss filing for personal bankruptcy with the trustee.

Why Are Amendments for Consumer Proposals Rejected?

A consumer proposal amendment requires approval from the majority of creditors involved. After all, you are changing the terms of the original agreement. Both sides of the proposal need to accept the change.

So, why are amendments for consumer proposals rejected? The majority of creditors could feel like the amended terms are too low, or they don’t trust that the debtor will follow through. It’s the same reason why consumer proposals are rejected by creditors.

However, creditors tend not to reject the terms of consumer proposals because they know that the decision will push the client into personal bankruptcy. Creditors typically get paid less during a personal bankruptcy than they would during a consumer proposal. It’s often in their best interest for you to continue it.

What Happens If Your Proposal Is Annulled?

If your consumer proposal is annulled, that means that the agreement is no longer in effect. You do not need to make any more payments through the trustee, and the advantages of the proposal are eliminated:

  • Your debt returns.
  • Your debts can accrue interest and penalties.
  • Creditors can revise collection strategies.
  • Creditors can take legal action against you.
  • If wage garnishment was paused, it begins again.

At this point, you may want to talk to your trustee about filing for personal bankruptcy to manage your debts.

However, if your financial situation takes a sudden turn for the better, you could try to reinstate the consumer proposal. You should only inquire about this if you’re sure that you can commit to the payment plan. After all, you don’t want to annul the agreement the second time around.

Sometimes, your proposal payments don’t go according to plan. If you’re having trouble honouring the terms of the proposal and making your payments in full or on time, you need to let your trustee know as soon as possible. There are ways that you can rectify the situation and get back on track.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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Ready to live debt free?

I have to say, I never thought that such process could have been so quick and easy. But then again I guess that's what happens when you deal with professionals. I dealt personally with Rodha Lewis, who was very attentive to my personal issue and very professional on her work. She's someone who will actually take her take and talk to you about the process and help you as much as she can. I am very grateful to her and very appreciative of her work. I couldn't have dealt with someone better. Thank you very much Rodha for your work.
fidel Cruz
14:35 24 Jun 21
I just completed my proposal and I am thrilled. Rhoda was delightful to work with. She helped me end the phone calls and start rebuilding my life. I highly recommend the services here and will always recommend to anyone who asks. Definitely seek out their services if you are in need of some help.
Maria Curbelo
13:43 23 Jun 21
Very professional and fast service! Also, personable!.. they don't treat you like a number, but like a person.From the time I first contacted them, until I was set up there has been not more than 7 days.I dealt with Jackie, she was great!
Jelena Petrovic
18:06 20 Jun 21
I would just like to say thank you to David Sklar & associates for helping me out in this difficult time I was in way over my head, I was introduced to Jackie Stanley, at that moment things got better the calls stop. Jackie was so professional helpful, trusting answered all my calls all my Text, and emails professionally and respectful!! I can’t believe it, and now I’m gonna build my credit rating back up and have my life back Thank You, Jackie Stanley at David Sklar& associates, for doing an outstanding Job!!!!
Mark Simmonds
21:50 16 Jun 21
I am not very good at putting words together especially when your speechless for all the help from such a friendly happy non judgemental team. From being financially stressed and depression hitting all at once I connected with Jackie Stanley💯❤❤ from David Sklar team in a whole other level,she is an absolutely joy to deal with and very informative let me know there is light at the end of the tunnel.. despite my struggle the amazing lady Jackie Stanley was able to put a smile on my face and make me laugh super happy and grateful 🙏I was able to connect with her from David Sklar &Associates team I 💯 percent recommend her (Jackie Stanley) and will continue to recommend her. To any one looking to get out of debt or have any questions belive me when I say you will not be disappointed with Jackie she's such a great person and I'm lucky to have been able to recieve the help and guidance from such a wonderful person and you will be also...look no further no where but up from here ...Thank you So so much Jackie much appreciated
Richelle Barriault
17:57 16 Jun 21
Reached out to Jackie, who was very cordial and professional. Highly recommended.
The Lit Lion
16:54 16 Jun 21
I must admit that I am so glad I called! I spoke to Rhoda Lewis who right away made me feel at ease. She's so caring and supportive I highly recommend her. Thanks to her my life is now on track! Thank you David Skylar & Associates Inc!
Grace Muller
17:55 25 May 21
Very professional and courteous. Jackie was very helpful and understanding. She was happy to answer any questions I had and we were able to process everything quickly with no hassle.
Nicholas Burnett
17:07 19 May 21
I would say my experience with David Sklar was spectacular, they made it really easy for my through the whole process and now 9 months later my bankruptcy is discharged.i would recommend David Sklar to anyone.
HN
23:00 06 May 21
I had a nagging defaulted student loan that was holding me back. There were a few smaller issues that were compounding. The lockdowns really forced me to look into building back my credit and starting fresh.Ashley at David Sklar & Associates at the Keele and Finch location was a blessing. She was thorough in her explanations and answered any concerns I had. She gave me the options and let me decide what was best. After conferring with her, I decided bankruptcy was the best option. She made the process of filing for bankruptcy easy.There's nothing to be afraid of. Stigma attached to bankruptcy but you can reset if you work hard to make it happen.I highly recommend speaking with Ashley if you have any concerns about debt solutions.
A M
14:39 04 May 21