Cancelling, getting out of, or changing a consumer proposal

When your situation changes after you have already filed

Most people searching for how to cancel or change a consumer proposal are not shopping. They are already in one, and something has changed. Their hours were cut, and the payment they could afford in the spring no longer fits. A raise came through, and they worry it will be clawed back. A collection letter arrived for a debt that was left off the list. Or the relief has worn off, and they want to know whether there is a way out at all.

Here is the honest starting point. Everything below rests on it. A consumer proposal is a formal, legally binding settlement under Canada’s Bankruptcy and Insolvency Act. Once your creditors accept it and the court approves it, it binds every unsecured creditor it covers, whether that creditor voted for it or not. That binding quality is the point of a proposal. It is why the interest stops and the collection stops. It is also why you cannot simply undo it. The exits are real, but they are narrow, and each one has a cost. The rest of this page covers them one at a time.

I can’t afford my payments anymore

Verdict first: the usual fix is not a cancellation but an amendment, a formal change to the terms that can lower your payment while keeping the protection you filed for in place.

This is the tool for the most common situation, where the plan is still right but the numbers no longer are. An amendment is not a quiet adjustment you arrange in a single phone call. It is treated much like a fresh proposal. Your Licensed Insolvency Trustee, the professional who administers the proposal, prepares the amended terms, often a smaller payment spread over a longer period, within the five-year limit that ordinarily caps a proposal’s length. The trustee puts those terms back to your creditors, who consider them again. You cannot rewrite the payment on your own, and neither can your trustee, because a change to a binding settlement goes back to the people it binds. Whether the creditors accept is their decision, not a formality. But it is the proper channel, and it keeps your protection in place while it runs.

The move to avoid is the opposite of acting: letting the payments simply lapse. That does not end the proposal cleanly. It triggers a deemed annulment, the costliest exit of all, because it ends the protection you filed for, brings your original debts back in full less what you have already paid, and lets your creditors resume collection. The consequences hub walks through what that costs, the cost page sets out the arithmetic, and the CRA garnishment guide’s question bank answers the missed-payment questions in detail.

I got a raise

Verdict first: in almost every consumer proposal, your monthly payment does not rise just because your income has.

The standard consumer proposal sets a fixed monthly payment when the proposal is accepted, and a raise, more hours, or a better job does not move it. This is a real difference between a proposal and a bankruptcy. In a bankruptcy, a rise in income can increase what you pay through the surplus-income rules; a standard consumer proposal has no such adjustment. What you can do with the extra money is put it toward an early finish. Because a proposal is a fixed settlement rather than an interest-bearing loan, paying it off early is about clearing it sooner rather than paying less overall, and the cost page works through what an early payoff does and does not save.

A one-time windfall, such as an inheritance or a lump sum, is a separate question from a steady raise. A standard proposal’s fixed payment does not automatically climb to capture a windfall, though some proposals are written with a term that does, so it is worth confirming with your trustee; the CRA garnishment guide’s question bank covers how a windfall is treated during a proposal.

I forgot a creditor

Verdict first: if you already owed the debt on the day you filed, it usually still belongs in the proposal and your trustee can add it; if you ran the debt up after you filed, it cannot go in.

Two different questions sit inside “can I add a debt to my proposal,” and they have opposite answers. If the debt existed on the day you filed and was simply left off the list, it usually still belongs in the proposal. A consumer proposal is meant to deal with the unsecured debts you owed on the filing date, so an approved proposal generally binds your unsecured claims whether or not they made it onto the list. Adding a forgotten pre-filing creditor is usually a correction, not a fresh negotiation. Your trustee amends the statement of affairs and sends that creditor notice and a proof-of-claim package, so they share in what is paid out. A formal amendment is needed only if the terms themselves have to change, or where adding the creditor changes what other creditors receive. Getting disclosure right is worth the care. Leaving a creditor off is not just paperwork, and full disclosure protects the proposal you already have.

If the debt is new, money you borrowed after you filed, it cannot be added. A consumer proposal settles a fixed set of debts. It is not a running account you can keep charging to. New borrowing after the filing date stays fully your responsibility, outside the proposal. A line of credit you drew on both before and after you filed splits the same way. The balance you owed on the filing date is a pre-filing debt, caught by the proposal. Anything you drew afterward is new debt, which you owe in full, and there is no mechanism to move a post-filing draw into the proposal. People often ask this hoping a proposal can absorb a new problem. It cannot.

Can I just cancel it?

Verdict first: usually not by a simple cancellation. Before the court approves your proposal you can withdraw it, but once your creditors accept it and the court approves it, it binds, and getting out then means choosing from a small set of exits, each with a different cost.

Before approval, you have more room. A proposal that has been filed but not yet approved can be withdrawn, any time before the court approves it, which on the ordinary timetable is around day 60. Because a withdrawn proposal never took effect, your debts were never compromised, so withdrawing does not itself bar you from filing again. The one real cost of withdrawing and re-filing quickly is that a second proposal within six months of the first does not get an automatic stay of proceedings, the protection that holds creditors off. Once the proposal is approved, that easy exit closes, and your realistic options are these.

Finish it. The intended and best outcome. Completing the proposal, on schedule or early, is the only option that delivers what you signed up for. An early finish clears the proposal sooner without changing the fixed total, and the cost page works through the economics of paying it off early.

Amend it. Usually the best answer when affordability changes. Where the problem is the payment rather than the plan, the amendment described above changes the terms without losing the protection.

Let it default. Usually the worst outcome. Letting the payments stop triggers a deemed annulment, which undoes the settlement and leaves you worse off than any controlled change: the debts you compromised come back, less what you have paid, and collection can start again. The consequences hub and the cost page walk through what that costs and how it runs.

Have a court annul it. Rare, and not something you choose casually. In narrow circumstances a court can annul a consumer proposal on an application, usually brought by the trustee or a creditor. This is a judicial remedy decided on the facts, not a route you choose for convenience.

Switch to bankruptcy. Sometimes necessary when the proposal can no longer work. Making that move means giving up the proposal’s fixed settlement for a different process with its own rules and consequences. The CRA garnishment guide’s question bank covers moving from a proposal to a bankruptcy midway.

Whether you can file a further consumer proposal after this one ends turns on how it ended. Once a proposal fails, filing a new consumer proposal is generally barred until the earlier claims are dealt with or a court allows it, while other routes, such as a Division I proposal or a bankruptcy, stay open, and in some cases the original proposal can be revived. The second-and-subsequent-proposals page walks through repeat filing in full.

Every exit comes back to the point this page opened with. The settlement binds, so leaving it is a deliberate step with a price. For most of these problems the cheapest answer is an amendment, because it changes the terms while keeping the protection. The most expensive answer is to do nothing, because letting the payments stop chooses the worst exit by default.

Common questions