Amending Consumer Proposal

What if I can’t keep up the payments?

What happens if you can’t make a payment in your consumer proposal? For example, you may have lost your job or had your hours cut back at work. Now, the payments you originally agreed to aren’t working for you.

Two payments could be rescheduled

The law allows you to miss or defer two payments without triggering any consequences. More than that, and your proposal will automatically fail.

To be more precise, the law says that if you fall into arrears by the equivalent of three monthly payments, then on the day that your third payment came due, your proposal is deemed to be annulled. In other words, miss three payments and your proposal will be automatically cancelled.

What can I do about it?

If a change in your circumstances affects your ability to make the payments, it is possible to amend the proposal.

At the first sign of trouble, you should contact the proposal administrator. Don’t wait until you have missed one or two payments, if you know you have a problem. The sooner the administrator knows about it, the easier it will be to work out a solution. The administrator will meet with you to review your options.

Determine if your problems are temporary or permanent. For example, if you have lost your job, may be a permanent change in your circumstances and, therefore, you will probably be in the situation where you cannot afford the payments for a longer period of time. If you have only been temporarily laid off, your change in circumstances may be only temporary.

Your options at this point include:

  • Leave the proposal as is and make sure you don’t miss any future payments. The administrator will add the missed payments to the end of the payment schedule.
  • Make a change to your proposal terms (called an Amendment). This will require your creditors’ approval again.
  • Deliberately miss a third payment to cause your proposal to be automatically annulled.
  • File an assignment in bankruptcy.

As long as you do not fall three months behind in your payments, your consumer proposal can continue. If you are current in your payments and then are laid off for one month, you can probably defer a payment and get back on track. If it is an unexpected car repair, then perhaps you can work out a plan with the administrator to “catch-up” the missed payments over the next 6 months or a year.

You may discuss amending the proposal with your administrator, if your change of circumstances is permanent. For example, a proposal that was originally $300 for five years may be amended to $200 for the remaining months of the proposal, due to your reduced income.

If your change is catastrophic (e.g. “the plant where you work is moving to China”), you may have to consider bankruptcy.

The point of this page is to remind you that you filed a consumer proposal to solve your financial problems. If things change during your consumer proposal, don’t hesitate to get the administrator’s help to assess whether your solution also needs to change.

For a free consultation on whether a consumer proposal is right for you, contact a Licensed Insolvency Trustee near you.