The Rebecca Martyn Bankruptcy Windsor Blog

The short answer is that is means the consumer proposal has ended.

When a consumer proposal is filed it is based on the assumption that the debtor’s income and expense will remain the same during the term of the proposal. Unfortunately, things can change. It is next to impossible to predict what will happen in the future. In these tough economic times, hours are getting cut back and people are losing their jobs. In many cases, this means that the debtor can no longer pay the amount under the original consumer proposal. What can be done?

If there is still a source of income it might be possible to file an amendment to consumer proposal. With an amendment the creditors are offered a new payment for the remainder of the term. The creditors vote on the amendment and determine whether or not they will accept it. We review each file on a case by case basis and share our experience with the debtor about the chance of success.

I would like to share 2 cases. In both cases I have not used their real names. Mary filed a consumer proposal 3.5 years ago and offered $200 a month for 48 months. 5 months ago her hours were cut back. She stopped paying into her proposal and didn’t respond to any of our calls or letters to discuss her proposal. Her proposal was annulled and it wasn’t until that point that Mary came in to see us to see what she could do. We explained that the proposal was over and what her options were. Now here is what Mary should have done: she shouldn’t have ignored us. She had $1,000 left to pay. We found out that she could have afforded to pay $125 a month. She could have offered to pay $125 for the remaining 5 months on her proposal, or she could have offered to pay $125 a month for 8 months to still pay the same amount, just extending the term. Instead Mary is looking at the prospect of filing for bankruptcy.

Linda was in a similar situation as Mary. Her hours were cut back 3 years into a 4 year consumer proposal. Her original proposal was to pay $300 per month for 48 months. She contacted us right away to advise us of the change in situation. She offered an amendment of $250 per month for the remaining 12 months of her proposal. The amendment was accepted and Linda is very happy to be able to continue with her consumer proposal.

If you are in a consumer proposal and your situation has changed, please contact us before it’s too late. We will reassess your situation and discuss whether an amendment is the best course of action. Call me at 310-PLAN or email me.

I met with a debtor in Windsor last week who had been unable to make all of his payments in his bankruptcy and wanted to know what would happen next.

When debtor’s meet with me at the start of their bankruptcy, we review various paperwork including their duties and responsibilities. One of these duties is making payments based on their income. If the payments are not made, the debtor is no longer eligible to receive an automatic discharge and the file is sent to bankruptcy court.

The court wants to see that we have worked out a payment plan with the debtor and we attempt to do so prior to the court hearing. At court, a court order is issued detailing the payment plan. It is very important that the debtor comply with the court order. We don’t have the power to override the court order, so if a debtor doesn’t do what the court ordered, we are required to close the file. When a bankruptcy file is closed it means that the debtor remains in bankruptcy, but he no longer has the protection. Creditors can then pursue him, take him to court and garnishee wages. If you are having problems making your payments, it important to speak with us so we can try to work out a reasonable payment plan. You can call us at 310-PLAN or email me.