To revive an annulled consumer proposal in Canada, you must act within 30 days of the annulment by paying all missed payments to your Licensed Insolvency Trustee (LIT). If more than 30 days have passed, you must file a formal application with your provincial bankruptcy court.
Having your consumer proposal annulled can feel like a devastating financial disaster. The moment it fails, all your original debts, including backdated interest, return in full force. Creditors who were legally restricted from contacting you can suddenly resume aggressive collection tactics, including wage garnishments. 😱
Fortunately, Canadian insolvency law provides a specific legal mechanism to breathe life back into your agreement. This process is known as an automatic revival, but it operates on incredibly tight deadlines. If you miss the initial window, you will need to navigate the legal system and potentially hire a specialized law firm to argue your case before a judge.
Step-by-Step Process to Revive a Proposal in Canada
Reviving your proposal requires immediate action and prompt access to funds. The longer you wait, the more complicated and expensive the procedure becomes. The process generally follows these crucial steps regardless of whether you live in Ontario, Alberta, or British Columbia. 🚨
Step 1: Contacting Your Licensed Insolvency Trustee
The very first thing you must do is contact your LIT. Do not ignore their letters, calls, or emails. Your LIT is the only professional authorized by the federal government to administer or revive your proposal within the initial timeframe. You need to confirm the exact amount of arrears required to cure the default. 📞
Step 2: Paying the Arrears and Default Amounts
To trigger an automatic revival, you must pay all outstanding amounts in full. You cannot negotiate a partial payment or offer a post-dated cheque at this stage. If you missed three payments of $400 CAD, you must provide your LIT with a lump sum of $1,200 CAD immediately. 💰
Step 3: Filing a Notice of Revival
Once your LIT receives the cleared funds within the 30-day window, they will issue a formal Notice of Revival. This document is sent to the Office of the Superintendent of Bankruptcy (OSB) and all your creditors. A 60-day waiting period begins where creditors can legally object to the revival, though this is relatively uncommon if the money has been paid in full. 📄
Step 4: Applying to the Bankruptcy Court (If Past 30 Days)
If you miss the 30-day window, your LIT loses the power to automatically revive the proposal. You must now apply to the bankruptcy court in your province, such as the Superior Court of Justice in Ontario or the Court of King’s Bench in Alberta or Manitoba. You will likely need to hire a local lawyer to file a motion explaining why the default occurred and proving you now have the financial stability to maintain future payments. ⚠️
How Much Does it Cost in Canada?
The cost to fix a failed consumer proposal depends heavily on how quickly you take action. Resolving the issue early will save you thousands of dollars in legal and administrative fees. 💵
- Automatic Revival (Within 30 Days): You only need to pay the exact amount of your missed payments. The LIT does not typically charge extra administrative fees for issuing the Notice of Revival.
- Court Application Fees: If you must go to court, provincial filing fees range between $150 CAD to $350 CAD depending on your jurisdiction.
- Lawyer Fees: Retaining a Canadian insolvency lawyer for a court revival motion generally costs between $1,500 CAD and $3,500 CAD, depending on the complexity of your case and the law firm’s hourly rate.
How Long Does the Process Take?
Timelines are the most critical factor in this legal procedure. Missing a federal deadline by even one day can drastically alter your legal options. ⏳️
- The Golden Window: You have exactly 30 days from the date of the deemed annulment to pay your arrears for an automatic revival.
- Creditor Objection Period: Once the Notice of Revival is sent, creditors have 60 days to officially object. If no objection is filed, the proposal is fully revived.
- Court Timelines: If you must apply to the court, obtaining a hearing date can take anywhere from 2 to 4 months due to significant provincial court backlogs.
Frequently Asked Questions (FAQ)
Can creditors object to an automatic revival?
Yes. Creditors have 60 days to object after receiving the Notice of Revival. If creditors holding more than 50% of the value of your debt object, the revival fails, and the annulment remains in place permanently.
What happens if the provincial court denies my revival application?
If a judge refuses to revive your proposal, the annulment is permanent. Your creditors retain the right to sue you, and you may need to strongly consider filing for personal bankruptcy to seek legal protection.
Can I just file a new consumer proposal instead?
In Canada, you cannot legally file a second consumer proposal while the first one is annulled and outstanding without special permission from the court. Reviving the existing one or filing for bankruptcy are usually the only practical paths forward.
Will reviving my proposal fix my credit score?
Reviving the proposal reinstates your legal protection from creditors, but the fact that it was annulled and revived may still be temporarily noted on your credit report. However, successfully completing the proposal will eventually allow you to rebuild your credit history.
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