The federal government has passed two laws to help people in financial trouble, but for some unknown reason the government refuses to bring the laws into force.

Bill C-55 makes it easier to file a consumer proposal, and was given Royal Assent on November 25, 2005, and Bill C-12, which makes it easier for bankrupts to keep their cars and house, was passed and received Royal Assent on December 14, 2007. Even though these laws have received Royal Assent, they 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.

We all know that we are currently in a very severe recession . Every day I meet with honest, hard working people who have had their hours cut back at work, or they are laid off, and they worry about having their car repossessed and their house foreclosed. They are using credit to survive, and they can’t afford it.

Numbers don’t lie. Last year, and so far this year, we are seeing a massive increase in the number of personal bankruptcies in Ontario. There is a feeling of hopelessness during these tough times; we don’t know when the economy will recover.

The average person with significant debt does not want to go bankrupt. They want to find a way to deal with their debts. That’s why many people want to file a consumer proposal. A consumer proposal is great alternative to bankruptcy. You offer to repay some of your debt, and if the creditors agree, the rest of your debt is wiped out. It’s a “win-win” situation: you deal with your debts without going bankrupt, and your creditors get more money than if you went bankrupt.

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).If you want to read it, you can read the transcript of our appearance on the Senate of Canada web site. Here is an excerpt from my introductory remarks:

• Mr. Michalos and I and our bankruptcy trustees spend each day meeting with people in financial distress. These are real people who, in many cases, have lost their jobs, gone through a marriage breakup or suffered through an illness; and after these personal tragedies, they are faced with insurmountable debt.
• These are not bad people. We believe it is important that when parliamentarians draft bankruptcy legislation, they remember that real people are affected.
• The only obvious amendments that will make the insolvency process better for debtors are the new exemption for certain RRSPs, the new rule that prevents a lender from cancelling a security agreement simply because a bankruptcy or a proposal has been filed and the increased debt limit on consumer proposals.
• We believe that the debt limit for the filing of a consumer proposal being increased from $75,000 to $250,000 will encourage even more people to take advantage of the consumer proposal option, and we strongly support that amendment.

As I mentioned in my introductory remarks, there is another rule that would help debtors. Under current law a bank or leasing company can repossess your car, even if your payments are up to date, simply because you went bankrupt or filed a proposal. Under the proposed new rules they can’t repossess simply because you went bankrupt. That’s important, because many people want to continue making their car payment while bankrupt so they can use their car to get to work.

Here’s my point: the federal government has passed last to help people, but they haven’t implemented them. Bringing these laws into force will cost the government nothing. Creditors will get more money under the new rules, so they would be happy. People in financial trouble would also be happy, since they would know that a plan is in place to deal with their debts. It’s a win for everyone if the new rules are implemented.

I’m just one person. I have no friends in high places that I can call on to influence the government. But I’m doing my part. In addition to testifying in Ottawa last year (at my own expense), I have also written to Industry Minister Tony Clement, and to Prime Minister Stephen Harper.

I have yet to receive a response, but when I do I’ll immediately post it here, so stay tuned.