As a bankruptcy trustee my job is to ensure that the bankruptcy process is fair to everyone. I don’t work directly for you, the person in financial trouble, but I also don’t work for the creditors (the people you owe money to). I’m like the referee in a hockey game; my job is to make sure that everyone follows the rules. If you go bankrupt, my job is to ensure that you make the required payments, and fulfill your other duties. If a creditor attempts to garnishee your wages or harass you while you are bankrupt, I’ll go to court to stop them if required.
Fairness is my number one priority, because without a fair process it’s impossible to get a fresh start.
This may get me into trouble, but today I’m writing to tell you that I don’t believe the federal government is being fair to everyone. Here’s why:
On November 25, 2005 Bill C-55 was passed, making it easier for you to file a consumer proposal. On December 14, 2007 Bill C-12 was passed which makes it easier for you to keep you car or house if you go bankrupt.
However, even though both of these laws were passed by all members of Parliament, these laws are not yet in force!
Yes, you read that correctly. Almost three and a half years have passed, and laws designed to help people sit there gathering dust.
What’s the government waiting for? I have no idea.
As readers of this blog will know, we experienced a significant increase in the number of personal bankruptcies in Cambridge in 2008, and 2009 has started with even higher bankruptcy rates. Most people don’t want to go bankrupt, so a consumer proposal is the perfect solution.
Here’s the catch: you can only file a consumer proposal if your total debts, not including the mortgage on your house, are $75,000 or less. If your debts are more than $75,000 you can only file a proposal under Division 1 of the Bankruptcy & Insolvency Act, which is more complicated, more costly, and less likely to be successful. For many people with bank loans, credit cards, lines of credit and car or truck loans, the $75,000 limit is simply not high enough.
The good news is that the government recognized this, and in December, 2007 passed new consumer proposal rules raising the limit to $250,000. I strongly support this new rule, and Ted Michalos and I even went to Ottawa last year to testify before the Senate Banking Committee about the importance of consumer proposals. (You can watch our testimony by clicking on the video, or you can go to our Senate Video page to see our entire testimony).
Unfortunately, they have not implemented the new rules, which is of no help to anyone. (You can read the transcript on the Senate of Canada web site, or you can watch the video of my introductory remarks).
Raising the limit on consumer proposals is great, but if the government doesn’t actually bring the new rule into effect, it’s of no use. I have dealt with a number of people in Cambridge, and throughout Ontario recently, who have had to file bankruptcy or a more complicated Division 1 proposal simply because their debts are too high. That is in no-one’s best interest.
I also meet with many people who have car loans through a bank; the loans are up to date, and they want to keep the car, and keep making payments, since they need the car for work. Unfortunately two of Canada’s biggest banks automatically repossess cars in a bankruptcy. (Sorry, I can’t print who they are; I don’t want to get sued, but if you call my office at 310-PLAN my staff can tell you which banks are the problem banks). Again, there is a rule to prevent that problem, but unless the government implements the rule, it’s not helping anyone.
I’m doing my part. Over the last week I have sent e-mails to the Minister of Industry, and to the Prime Minister, asking them to implement these two new rules immediately. It will cost the government nothing, and everyone supports it, so there is no downside.
I’m still waiting for a response. If I get one, I’ll report it here.
In the meantime, if you have financial problems, call me in Cambridge at 519-622-3773 or 310-PLAN, or e-mail me, and we’ll get started on a plan for year, with or without the new rules.
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