Bankruptcy in Canada is very regulated. Bankruptcy law is governed by federal legislation known as the Bankruptcy & Insolvency Act. All Licensed Insolvency Trustees are registered and monitored by the Office of the Superintendent of Bankruptcy (OSB).
That’s a good thing. It ensures that when you file for bankruptcy, or make a proposal to your creditors, you, and all stakeholders are treated fairly. To ensure the integrity of the insolvency process, the OSB mandates a lot of rules that trustees must follow during the bankruptcy process.
Until recently, guidelines required that anyone filing a bankruptcy or consumer proposal meet in-person with a Licensed Insolvency Trustee for an assessment of their situation. Also, specific duties and requirements during a bankruptcy or proposal required the debtor to attend at the trustee’s office in person, including attending any necessary examination and credit counselling.
In order to support the necessary social distancing required by COVID-19, the OSB issued updated guidelines permitting trustees to adopt new practices to allow for phone and online video-conferencing, as well as electronic signatures, when administering a bankruptcy or proposal.
What does that mean for someone struggling with debt?
If you think a bankruptcy or proposal is necessary, as always, you should consult a Licensed Insolvency Trustee directly.
Assessing Your Situation and Bankruptcy Alternatives
The first step will be to arrange a free one-hour initial consultation and assessment by phone or video-chat with one of our licensed professionals. The purpose of this consultation is to talk about your personal situation, explain the options available to you, and make a recommendation as to what solution may be best for you.
At Hoyes Michalos, we never assume you will file bankruptcy. Every situation is unique, and it is essential that we learn about your budget, your debt situation, and your needs to provide the best debt advice available. There is no one-size-fits-all solution for anyone. We will ask you questions like who do you owe money to, what is your monthly income and expenses, what assets do you have, what are your primary financial concerns right now?
From there we can present some options, including:
- Can you qualify for a debt consolidation loan? This will depend on factors including: the stability of your income, if you have any assets to pledge as collateral, and what your credit score looks like.
- Could you repay all your debts through a debt management plan? Credit counsellors offer a debt consolidation program that can help people with small debt obligations work out a repayment plan with their creditors. To qualify, however, you must be able to afford to repay 100% of your debts plus the 10% fee charged by the credit counselling agency.
- If neither of these options is viable, we will discuss a debt settlement through a consumer proposal. A consumer proposal is a negotiated debt restructuring program that allows you to offer to pay a portion of what you owe, and your creditors forgive the remaining balance. Settlements can be paid out over up to five years. To qualify, you will need enough income to support your proposal payments.
- Only after these debt relief options have been explored, will we consider personal bankruptcy as an alternative.
This consultation may be supplemented by email discussions and further chats to answer any questions you may have and to collect the documentation necessary to prepare your bankruptcy documents.
Once your documents are prepared, we will send you a copy of your documents by email and arrange a video-conference to review these documents with you. This meeting is to ensure that you fully understand the terms of the bankruptcy or consumer proposal, answer any further questions you may have, and ensure that the information provided is accurate. If you are ready to proceed, you will sign these documents digitally via HelloSign.
Once you sign your documents, Hoyes Michalos electronically submits these forms to the government and the court. This begins your insolvency proceeding and your stay of proceedings, which prevents creditors from pursuing you.
Duties During Bankruptcy Including Credit Counselling Sessions
Even payments are arranged electronically. We offer a pre-authorized payment plan which can be arranged to fit your income schedule.
During your bankruptcy, you will be required to attend two credit counselling sessions. These sessions will be conducted by video-conferencing as well and can be arranged at a time that fits your schedule.
Currently, to ensure social distancing, any examinations and creditors’ meetings, while rare, are also conducted by phone or video.
Rest assured, when you contact Hoyes Michalos, the level of service we provide has not changed. While we can certainly take advantage of online tools like video-conferencing and electronic signatures, our mission remains the same:
We believe that financial problems can happen to anyone, at any time.
Our mission is to help you get back on track so that you can get on with your life.
Our vision is to be known throughout Ontario as the most knowledgeable and trustworthy insolvency professionals to help you build a successful plan to become debt free.