My Consumer Proposal Was Annulled: Now What?

 

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Here’s the bad news: if your consumer proposal is annulled, you’ve lost any protection from your creditors.  Their rights are re-instated and they can pursue you for your debts again.

Here’s the good news: other than doing nothing, you have five options to still get relief from your debts and a fresh start.

Don’t Panic.  You Still Have Options.

1. Revive the Proposal – If you can meet with your trustee within 30 days of the proposal annulment and convince the trustee that you have the ability to bring your proposal back into good standing.  The trustee will determine if it’s reasonable to assume that you’ll be able to complete the remaining proposal terms, if the creditors agree to the revival of the proposal.

If your trustee agrees to allow you to attempt to revive the proposal, your creditors are notified that the proposal will automatically be revived unless they raise an objection with 60 days.  If they don’t object, you continue on with the original terms.

2. Ask the Court to Revive the Proposal – If you can’t submit an application to have the proposal automatically revived within 30 days of the proposal annulment, or the trustee does not believe that such an application is reasonable, then you could make an application to the court to ask the court to authorize the revival of the proposal.  This is likely going to be more cumbersome, costly and likely won’t happen very quickly.

3. File Bankruptcy – If your proposal was annulled because your circumstances changed for the worse since the filing of the proposal, it might now be more prudent to think about filing a personal bankruptcy.  A bankruptcy would re-instate the creditor protection that you lost when your proposal was annulled. Meet with your trustee to discuss the cost and duties of filing bankruptcy for your personal situation.  That way you can make an informed decision as to whether bankruptcy is right for you.

4. File a Debt Management Plan – If you cannot revive the proposal and want to avoid a bankruptcy, you could contact a local not for profit credit counselling agency that might be able to help you with the filing of a plan to repay your debts in full, if your situation improves.

5. Negotiate with your Creditors – After receiving notice of the annulled proposal, some, or all of your creditors will eventually start contacting you again for repayment.  If you have the ability to do so, you could try making your own informal offers with your creditors to settle the debts on your own.  Opportunities such as selling your assets to raise funds for debt repayment could be one way to eliminate a debt once and for all.

Unless your financial situation has improved since the annulment of the proposal, for many the most logical option would be to attempt to revive the proposal or file a bankruptcy, if protection from creditors is still needed.  Either way, be sure to discuss the circumstances surrounding the annulment with your trustee, along with reviewing your financial future; that way the trustee can help you to evaluate which option might be best for you.

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12 thoughts on “My Consumer Proposal Was Annulled: Now What?

    • J. Douglas Hoyes

      Hi Chris. When a consumer proposal is annulled the creditors will, eventually, “re-activate” your accounts and commence collection action against you. They will then report to the credit bureau that the amounts are owing, but they will now be past due so that will negatively impact your credit score.

      There is no consistent method that the credit bureaus use for an annulment, but in most cases they will report, in the legal items or “registered items” section of your credit report the date the consumer proposal was filed, and the date it was annulled. The annulment itself doesn’t have a significant impact on your credit score; of greater importance is all of the debts returning.

      Reply
  • Omar

    I have two questions:

    1) If a consumer proposal is annulled then how long will it remain on the credit reports?

    2) If after the annulment of a consumer proposal, a separate arrangement is made with the creditors to satisfy their debts then is the credit report cleared of the proposal and the annulment?

    Reply
    • J. Douglas Hoyes

      Hi Omar.

      In general, the note in the Registered Items section of your credit report advising that you filed a consumer proposal will remain for three years from the date the proposal is completed or annulled.

      If you make a separate arrangement to pay the creditors after the consumer proposal is annulled, there is no change in the status of the consumer proposal on your credit report, so it would continue to remain for the three year period as noted above. Each individual creditor would presumably report that the debt is now satisfied, but that does not impact the note about the consumer proposal itself.

      Reply
  • Murray

    Hi – quick question. When the proposal has been revived, what happens in case of a missed payment?

    Thanks!

    Reply
    • J. Douglas Hoyes

      If you miss three months worth of payments, your proposal is automatically annulled. If a proposal is subsequently revived, you are back at “square one”, meaning again you can miss two months worth of payments, but if you miss three months it will be annulled.

      Reply
  • Lorenzo

    how do I know that the consumer proposal is the same that the Trustee is sending to my creditors?
    I have a consumer proposal that is almost the same amount than the owing balance to my creditor, can this be a mistake or is there a minimum/ maximum amount on the proposal how can I be sure?

    Reply
    • J. Douglas Hoyes

      Hi Lorenzo. I would suggest you contact your trustee and ask them to send you a copy of the your proposal (including the paperwork you signed) so that you can confirm that the amounts are correct. If there are any errors or omissions, you can discuss them with your trustee.

      Reply
  • Bash

    I filed for a proposal in 2006 but got annulled in 2008 due to recession I could not continue making payments.

    I did not seek revival for the proposal and left it alone. How do I settle it now as my financial position has improved and I do own a house as well, so the bankruptcy is not an option?

    Thank you,

    Reply
    • J. Douglas Hoyes

      Hi Bash. You cannot make a second proposal on the original debts without court approval, but if those debts are over 10 years old it is likely that the creditors have written them off, and they probably don’t appear on your credit report. I would suggest you consult with a licensed insolvency trustee to review your options, since the rules surrounding a second proposal are somewhat complex.

      Reply
  • trina

    Question
    Currently under the proposal.
    Once completed will it reflect on credit bureau as “discharge/complete/settled?

    Reply

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