For you to successfully complete your Consumer Proposal, your main duty and responsibility is to ensure that you make your proposal payments each month as agreed. These payments will be made directly to your trustee through a pre-authorized withdrawal from your bank account. The Trustee will then distribute the funds to your creditors once the accrual has reached a specific level. It is very important that you make these payments. If you run behind three payments without catching up, your proposal will be annulled. This means your creditors will be free to take legal action against you in order to collect the full amount of debt owing to them, plus accumulated interest from the date the proposal was first filed.
Missing a payment here or there is not a huge problem if you replace the payment as soon as possible by scheduling an additional pre-authorized withdrawal, dropping off a replacement cheque, a cash payment or a money order to the Trustee’s office as soon as you possibly can. Then it will be as if you never missed a payment.
The Consumer Proposals we see annulled are usually the result of job loss or a substantial drop in income (for example, a change of employment to a lower-paying job for a different employer or the need to go on long-term disability due to an injury at work). These types of scenarios can make it extremely difficult for a consumer debtor to keep the monthly payments current. And once three payments are missed, annulment is the next step.
Remember: If your Proposal does get annulled you can always opt to file for personal bankruptcy so there is another option available. Your Trustee can move quickly to prepare the bankruptcy paperwork, and have you come in to sign everything. Once filed with the government your court protection from your creditors would be back in place.