407 ETR Debts Dischargeable in Bankruptcy

In a ruling released on December 19, 2013, three judges from the Court of Appeal for Ontario have ruled that the the practice of denying the license plate renewal for people who owed money to 407 ETR and who have filed a bankruptcy or consumer proposal is contrary to the “fresh start” principles of the Bankruptcy & Insolvency Act.  Although this is an Ontario Court of Appeal decision, the 407 has advised us that they will appeal to the Supreme Court, so we should not consider this decision to be final.  At the moment, it’s “business as usual”, so while 407 debts according to the recent court ruling are dischargeable in a consumer proposal or personal bankruptcy in Ontario, the 407 is not yet recognizing this decision, and therefore even with a bankruptcy you are not currently able to renew your plates if there is a balance owing.

When the 407 was purchased by a private company, the Highway 407 Act in 1998 gave the 407 the right to collect tolls, and if you don’t pay your tolls they have the power to suspend your vehicle permit issued by Ontario’s Registrar of Motor Vehicles.  So, up until this court ruling, if you went bankrupt and didn’t pay your 407 debt, you would not be able to renew your vehicle license plate.

I’ve met with many people over the years who live outside of the GTA and use the 407 to commute to their jobs in the Toronto area, and some of them have built up significant debts to 407.  Unfortunately for them, if they go bankrupt they were faced with either paying the 407, or giving up their car because they could not renew their license plate.

The lower court originally agreed that the 407 had the power to deny a license plate renewal for unpaid charges, but the case was appealed by the Office of the Superintendent of Bankruptcy who said, and I’m paraphrasing here:

Wait a minute!  Under the Constitution, federal laws take precedence over provincial laws, and since the Bankruptcy & Insolvency Act is a federal law, it out-ranks the provincial Highway 407 Act.

It’s like when you were a kid and played rock-paper-scissors: paper covers rock, so paper wins.  The lawyers call it the doctrine of federal paramountcy, and the courts agreed: if you file bankruptcy, your debt to the 407 is just like any other unsecured debt (like a credit card, unsecured bank loan or income taxes): it is discharged when you go bankrupt.

To repeat, at the moment, it’s “business as usual”.

I use the 407 occasionally.  I have a transponder, and I was on it three days ago, so I have mixed feelings about this decision.  The 407 is a toll highway, and it’s only fair that if you drive on it you pay your tolls.  If lots of people get to drive for free, that will ultimately drive up the cost for the rest of us.

However, I also strongly believe that the bankruptcy process exists to give the “honest but unfortunate” person a fresh start.  If you have more debt than you can handle, you should be permitted to get a fresh start from all of your debts, including the 407.  The 407 is a private company, just like a bank, so I agree with the court: they should not get special treatment.

So, if you have more debt than you can handle, including 407 debt, call us at 1-866-747-0660 and we can explain how you can get a fresh start.

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3 comments on “407 ETR Debts Dischargeable in Bankruptcy

  1. Joe C. on

    Can you advise as to what options are available to me on an issue with 407. Old vehicle (has not had a valid plate for 7 years (or even been in our possession for 4 years). Plate was in the name of a corporation. 407 has been dogging me for years now to collect on money that I don’t owe, nor could I have billed to me as the corp ceased existence 5 years ago, and the car is in some scrapyard somewhere if that at this point. Plates won’t ever be renewed. They are now coming after me personally for $3000 via some Law office in London Harrison Pensa LLP. At this point I am willing to pay whatever original back charge existed to make them go away but I won’t even begin to entertain paying $3000. I don’t even consider whatever the original amount is to be mine as I did explain to the 407 people at some point along the way to no avail.

    Is there not some statute of limitations on how long they can pester someone? Am I personally considered Liable for a plate that belonged to a corporation at the time (as president of that now defunkt corp? I just want this all to go away and not reflect on my personal credit bureau (which is isn’t thus far). Any advice would be welcomed. Like I said. I’m willing to pay to make this go away but $3000 is unacceptable.

    I should also note I actually have an account personally at 407 for our two personal cars that is paid up to date, with transponders…..

  2. J. Douglas Hoyes, CA, Trustee on

    Hi Joe. You have two choices. The first choice would be to talk to the law office and make a deal. Tell them you are willing to pay some set amount ($1,000, or whatever you think is reasonable), and that’s it. They may be willing to accept that deal.

    The other option is to do nothing, They can pester you for as long as they want, but the true power of the 407 is to deny your license plate renewal. That does not appear to be an issue in your case, since the car no longer exists, and you personally have other transponders, so there may be nothing more they can do. They could take you to court and sue you, but generally lawsuits must be started within two years, so it’s unlikely they will take that action at this time, but with the 407, you never know.

  3. Rick on


    I do agree with most of what you’re saying in this article. It was very informative with whats happening. However, for those not knowing the back end with how the 407 ETR conducts its unethical business practices. In my case, I had a final owing amount of $500 in 2006. I went through health issues with cancer for many years and I still tried to run my business. I eventually had to file for bankruptcy and I was discharged in January 2012. My most recent bill in January 2016 from the 407 ETR was about $17,000 which is outrageous!! On a daily basis people are being charged absurd interest rates. To my understanding it is a Spanish country that owns the 407 ETR.

    I understand I will be exempted when I do contact the 407 ETR and my plate denial will be lifted. But what are your thoughts of people paying the outrageous interest rates on a daily basis? Yes, I do agree with paying the owing amount so I will be doing that even though I know its not necessary. Since I am an ethical person I will be making that payment.


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