Can a Consumer Proposal Be Rejected?
When you have filed a consumer proposal, there are many reasons why the Trustee may reject it. One of the most common reasons is that you did not include all of your debts. Another reason might be because you claimed assets that do not belong to you.
For example, if you obtained an advance on your wages or employment insurance payments through fraud or deception, these funds cannot be used as part of your consumer proposal. If this was an error and the Trustee discovers it during their verification process, they will reject your proposal. This rejection will likely cause serious problems since the money you owe will come due immediately.
Another way that your consumer proposal may be rejected is if you did not include all of your creditors or if you failed to disclose an asset that has significant equity (for example, a second property). The Trustee will interview your creditors and review your financial records to determine this. If they discover any potential problems, they may ask to meet with you for an interview. At this meeting, they can clarify any issues. If there are still unresolved issues after this meeting, the Trustee could recommend that the debtor reject the proposal.
The Trustee's decision must be in writing and give reasons for it. If the Trustee rejected your proposal because you did not list all of your creditors, you should make sure that you add all of them to your next proposal. Suppose it was rejected because of a discrepancy in the information provided (for example, an undeclared asset), and you believe this is not a major problem (such as one dollar in your bank account). In that case, you should consider submitting another proposal that deals only with these issues.
The Trustee will mail you a copy of their decision regarding the consumer proposal. It will tell whether they recommended it be approved or rejected and what reasons led to their decision (if applicable). This letter will also explain how to ask for a review if there are any errors in the Trustee's decision.
Another reason why your consumer proposal may be rejected is that you could not make the required payments. If this is the case, the Trustee will provide you with a brief explanation as to why it was rejected and what your options are now. For example, if you were unable to pay during the first year of your proposal, then they will recommend that you resubmit a new one once you have enough money saved up. You can then submit a new proposal to either begin paying again or extend the length of time over which your repayments are spread out.
If there are major errors in your consumer proposal, such as the total amount owed being incorrect or forgetting to list some creditors, then you should submit another proposal. This time, make sure that the total debt amount is correct and that you have included all of your creditors. The Trustee will then review this new proposal before deciding on whether to accept it or not.
If your consumer proposal was rejected by the Trustee, then there isn't much you can do except resubmit a new one with accurate information. The sooner you can fix any problems, the better since interest continues to accrue even when your proposal is being reviewed.
You might want to contact an authorized trustee if they recommend rejecting your current proposal because of debts that are not yet due. You may be able to work out a deal with them to pay these debts off over time.
The Trustee's decision regarding your consumer proposal is final and cannot be overturned. If you wish to appeal a decision, you must do so within 30 days of receiving their written decision. You would have to submit a new proposal if your current one was rejected because there were major errors or because the Trustee believes that the creditors would not accept it.
If you have already made payments to creditors under your proposal, another creditor may try to garnish or seize payment from you after your proposal has been rejected. If you believe this has happened because of an error on the part of the Trustee, then you should contact them immediately to resolve the issue. You may need to begin making payments under your proposal again or submit new ones for these creditors in order to avoid garnishments and seizures.
Please keep in mind that any amounts which are not wiped out by a consumer proposal will become debts once again, but interest will continue to accrue on them during this time. Once they are discharged by bankruptcy, they cannot be collected anymore.