Amending a Consumer Proposal
A Consumer Proposal is a legal arrangement that you make with your creditors.
The debtor enters an agreement to repay their debts over a period of time.
When the debtor is unable to maintain their consumer proposal payments there are several options available.
Amending a consumer proposal is one of those options.
There are sometimes unforeseen circumstances.
When you made the proposal, you were confident you could keep up with the monthly repayment.
However, despite your efforts to get back on track, you lose your job or some other unforeseen event occurs that puts in jeopardy your monthly repayments.
What can you do?
Dealing With Payment Difficulties
If you’ve filed for a Consumer Proposal but for some unforeseen circumstances find that you cannot keep up with your payments, there are several actions you need to take.
The Bankruptcy and Insolvency Act allows no more than two default payments before annulling your proposal.
This means that if for some reason you do not make a monthly payment, or pay late, the third time that happens your Consumer Proposal is automatically cancelled.
Your creditors will have the right to revert to your initial agreement prior to the proposal.
They can take legal action against you such as a wage garnishment.
Your only solution will be to file for bankruptcy because you are not allowed to file another Consumer Proposal.
Before that happens you should:
- Contact the trustee and inform him or her of your new circumstances.
- Seek to change the proposal (known as an amendment).
Consumer Proposal Amendment
If you’re no longer able to meet the terms of your Consumer Proposal, you should seek an amendment instead of defaulting.
You will need to discuss the issue with the trustee who will assess your new circumstances.
If you’ve already missed two payments and believe that you will be able to make regular payments going forward, then the amendment is not necessary.
The trustee will include the two missed payments at the end of the proposal.
However, if your situation is such that you permanently cannot meet the terms the trustee will revise and make an amendment to your Consumer Proposal.
It’s important to note that an amendment is only possible if you can continue making payments just not under current terms.
For example, your wife becomes pregnant which increases the expenses in the household in expectation for the baby, or she has given birth and expenses increase.
The trustee takes into consideration the new circumstance and amends the proposal accordingly so that you can take care of the needs of the baby.
However, if you permanently cannot meet the terms of the proposal, for example, you’ve lost your job, thus your income, the only solution will be to file for bankruptcy.
Missing two payment term does not have to be consecutive, one month after another.
It could be that you miss a payment in October, and another in December.
These accumulate also as missing two payment terms.
Obviously, the first time, the trustee will contact you and you’ll have to give some explanation.
Sometimes, amending your Consumer Proposal gives you the best chance for a debt free life.
Receiving Your Certificate of Completion
To be able to complete your Consumer Proposal and receive a Certificate of Completion, it is essential to work with the trustee.
In most cases, creditors understand and know that there are unforeseen circumstances that happen in life and will be willing to amend your consumer proposal.
Amending the Consumer Proposal does not mean offering a new proposal.
For example, if part of your debt was forgiven and you had to pay an amount of $10,000 divided in monthly payments for a certain period.
When the amendment is made you will still have to pay the $10,000, but instead of paying $500 monthly, the amendment could be that you pay $300 monthly.