Until January 2014, any debts owing to 407 ETR could result in a license plate denial – even if you filed for bankruptcy.

Generally, the federal law states that debts that existed prior to an assignment in bankruptcy are erased after your discharge from bankruptcy. This “fresh start” principle allows an insolvent person to get back on their feet and move forward without the crushing burden of their debt. However, that wasn’t the case with 407 ETR debts in Ontario.

The 407 is owned by a private company, and the Highway 407 Act in 1998 gave the company the right to collect tolls. If you don’t pay your 407 ETR bill, then they have the right to revoke the renewal of your driver’s license plate. 407 ETR took the position that they did not have to re-instate your plate after you filed for bankruptcy, and were technically discharged from their debt, as they were not pursuing collection.

One Hamilton lawyer, David Thompson, had been arguing in the courts for over a year that the provincial legislation was unfair to insolvent drivers and contravened the federal Bankruptcy and Insolvency Act. In December of 2013, the Ontario Court of Appeal agreed. The courts ruled that the 407 arrangement with the province was “incompatible with the fresh start or financial rehabilitation purpose” of Canada’s bankruptcy laws.

“Indeed, it frustrates (bankruptcy) legislation’s heart and the very foundation on which insolvency legislation stands,” wrote Justice Sarah Pepall.

There are still a few outstanding issues that need to be resolved so currently (April 2014) nothing has changed – the 407 is not yet recognizing the decision and are in fact appealing the decision to the Supreme Court. So, if you owe money to the 407 and file for bankruptcy you will not be able to renew your plates – yet.

If debt is taking hold of your life and you need a Fresh Start, contact Taylor Leibow Inc. for advice and solutions.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)

I’m sure you’ve heard the radio ads – how a government approved debt settlement company can settle and/or reduce your debts. This is very powerful messaging if you happen to hit on some hard times. But when something sounds too good to be true, it’s usually not what it claims to be.

For some time now these companies have convinced consumers with ambitious plans, and, in many cases, the consumer is worse off in the end and winds up filing for bankruptcy anyway. The Association of Credit Counseling Services has received more than 100 complaints a month about them.  In January, 2012 the Financial Consumer Agency of Canada issued a consumer alert urging consumers to be cautious.

The Ontario government recently decided to regulate debt settlement companies to protect consumers, following in the footsteps of Alberta, Manitoba and Nova Scotia.

So let’s take a look at these debt settlement companies and separate fact from fiction. First of all, the term “government-approved” is misleading. The government does not approve these companies.  It’s true there are regulations in place for the industry; however that doesn’t mean the government approves what a business sells or how they sell it.

The only thing a debt settlement company can do for you is to try and negotiate a settlement before your creditors take you to court. That’s it!  There is no legal protection for you. And all of what they do, you can do yourself.

On top of that they may ask for large fees up front. Some may use methods, which could cause more financial harm to the consumer.

Ontario’s proposed regulations would limit the fee for services and prohibit upfront fees. These companies would also be required to provide, “clear, transparent contracts”, subject to a 10-day cooling off period.

If you decide to work with a debt settlement company make sure to read the agreement carefully.  Question any guarantees. If there is a fee, make sure you are charged after a settlement is made. Check the Better Business Bureau. Do a Google search.

It might be more helpful to work with your local credit counselling service or talk to a Trustee in Bankruptcy to look at all the available options.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)

Amendments to the Bankruptcy and Insolvency Act

Effective September 18, 2009, significant changes were made to the Bankruptcy and Insolvency Act to streamline procedures and to ensure consistency amongst Trustees.  One of these changes is in relation to surplus income payments.  The legislative changes now require that if your income exceeds a base amount set by the Superintendent of bankruptcy, you will be required to make surplus payments for a set number of 21 months for a first time bankruptcy and 36 months for a second time bankruptcy.  The Trustee has no professional discretion in setting the length of time for making surplus payments as under the previous legislation.

Legislative changes also provide additional protection to continue your mortgage or car loan when filing a bankruptcy or proposal.

Please contact one of our Trustees to discuss how the above will affect you and other options available to remedy your financial problems.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)