Ontario Barrister and Solicitor Practice Exam

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What happens if there is a default in payments under a BIA proposal?

The court may extend the proposal period
The debtor is given a warning
The court may annul the proposal and the debtor becomes automatically bankrupt
The proposal is renegotiated automatically

The correct answer is: The court may annul the proposal and the debtor becomes automatically bankrupt

If there is a default in payments under a BIA proposal, the court has the power to annul the proposal and the debtor will automatically become bankrupt. This means that the debtor's assets will be seized and used to repay their debts, and they will no longer have the protection and benefits of the BIA proposal. Options A and B are incorrect because they do not address the consequences of a default in payments. Option D is incorrect because the proposal cannot be renegotiated automatically. It would require the debtor to file a new proposal or make a motion to the court for a change to the existing proposal.