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Consumer Proposal Annullment

Is it true that where a consumer proposal has been automatically annulled that a court order motion MUST be filed with the original Consumer Proposal Trustee`s recommended Lawyer? Does the fee have to be paid up front? Also, would I qualify for a Division 1 proposal?

Posted from: Ontario

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One Response to “Consumer Proposal Annullment”

A licensed trustee said...

No, it is not. There are a couple of things you need to know:

1) when a consumer proposal is deemed to be annulled (because you have fallen 3 payments into arrears) you have 45 days to bring it current during which time your trustee can simply send notices re-instating the proposal. The problem is bringing it current in 45 days – most people can’t do it so most people aren’t told about thjis option.

2) If more than 45 days have passed since the annullment you may apply to the Court for permission to re-instate the proposal or file a new proposal with the same debts. You can use any lawyer you want to do this – likely cost is $2,000 (everything seems to cost about $2,000 when you hire a lawyer these days…)

3) You may file a Div I proposal, but these procedures are more complicated and therefore more expensive. In addition, if you default on the Division I there are provisions to make you bankrupt. Think carefully before you try this option.

I hope this helps. A word of advice – when a proposal has been annulled for missed payments you should be VERY carfeul before you go into another proposal. You need to make certain you won’t fall behind again in the future…. otherwise, what’s the point?