How Can I Avoid a Consumer Proposal Annulment?
Canadians are likely to prefer a consumer proposal as an alternative in filing for bankruptcy. This is because a consumer proposal enables you to benefit from the pros of bankruptcy while letting you retain your assets. Unlike in bankruptcy, you are not urged to give in your property to a trustee in a consumer proposal.
When exercising an efficient consumer proposal, you can come out debt-free by decreasing the principal of your debt including the interest fees. This way, it would be easier for you to eliminate your debts and compensate your creditors. Moreover, making up to date payments monthly and complying with the agreed arrangements can prevent the annulment of a consumer proposal. This way, you can prevent any consequences that may occur.
What Will Transpires if My Consumer Proposals Is Annulled?
There are critical outcomes if your consumer proposal is annulled. The following are the consequences of an annulled consumer proposal:
- When your consumer proposal gets annulled, you can no longer take back the money you paid to your creditors.
- The penalties, charges and the interest that you’ve paid on your debt will also be restored as if you haven’t undergone a consumer proposal. This what makes a consumer proposal different from debt consolidation and other debt-relief options that do not require your payments on your former debts but solely at your incapacity to satisfy payment in your debt consolidation loan.
- It would be hard for you to get a consumer proposal again once it’s annulled. However, the court will allow you for a new consumer proposal for the debts that are reckoned to be compensated through the annulled proposal.
Why Are Consumer Proposals Annulled?
There are certain reasons that causes the annulment of consumer proposals. Whatever the causes maybe, it will all boils down to your negligence in following what is being stipulated in your consumer proposal. The annulment of your consumer proposal can be due to the following reasons:
Through a Court-Ordered Annulment
Courts can exercise their rights to mediate in consumer proposals if you failed to comply with the arrangements. Luckily, this is unlikely to happen for a court to annul a proposal but for reasons pertaining to your failure to file pay taxes.
If you fail to comply with the arrange payment terms, it can be a reason for the annulment of your consumer proposal. Your failure to pay your consolidation loan can result in you being forwarded to collections. However, if you fail three payments in a consumer proposal, it will be annulled instantly.
Are There Provisions if My Financial Status Changes?
If you are in trouble with your finances and losing your income, which makes it hard for you to pay your monthly obligation, you must reach out to your trustee right away. You must then seek help to your bankruptcy trustee for what possible options you can do to anticipate the annulment of your consumer proposal. The key is to proactively reach out to your trustee and communicate your current financial crisis.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.