Office of the Superintendent of Bankruptcy and Recent Updates

Office of the Superintendent of Bankruptcy

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By Bromwich+Smith Staff | 1052 words | Reading Time: 5 minutes, 15 seconds | Date: 2022/06/09

First of all, who is the Office of the Superintendent of Bankruptcy?

The Office of the Superintendent of Bankruptcy (OSB) is responsible for supervising all estates and matters to which the Bankruptcy and Insolvency Act (BIA) applies, as well as certain matters under the Companies' Creditors Arrangement Act (CCAA). The OSB licenses and regulates the insolvency profession; supervises the administration of estates in bankruptcy, commercial reorganizations, consumer proposals and receiverships; maintains a public record of BIA and CCAA filings; records and investigates complaints from debtors and creditors regarding the insolvency process; and ensures compliance through maintenance and enforcement of the regulatory framework. 
So we are pleased to let you know that the OSB recently made a change to a form that is required to be filled out and signed when someone issues a Bankruptcy or Consumer Proposal filing. The changes ensure individuals are aware of their rights so that they are not subjected to unnecessary fees.
Let us explain how:
1. The form now clarifies the debtor’s responsibilities (or lack thereof) for future payments to any debt consultant who may or may not have referred them to a Licensed Insolvency Trustee (LIT). 

It‘s still a common misconception that an individual must pay a debt consultant (sometimes referred to as a credit counselor, debt counselor, or debt advisor) when they need relief from their debt such as that offered by a Consumer Proposal or Bankruptcy. However, we want you to be aware that only a Licensed Insolvency Trustee (LIT) can provide you with the option of a Consumer Proposal or a Bankruptcy, but often when people see a debt consultant first, that person ends up agreeing to pay the debt consultant a significant amount of money, while the debt consultant refers them to a LIT to do the actual filing.

The OSB recognizes that the choice to pay a debt consultant is often a result of confusion, most likely due to a result of advertising by debt consultants, and/or by the use of debt consultants as a referral source for LIT(s).

As a result of this change to the form, an individual now making a Consumer Proposal or Bankruptcy filing with a Licensed Insolvency Trustee must sign an acknowledgement that any amount of money they’ve committed to pay to a debt consultant is optional and not required in order to file a Consumer Proposal or Bankruptcy, and they are not required to make any additional payments for financial advice already received. In fact, it states that those charges can instead be discharged through the Consumer Proposal or Bankruptcy.

We feel this is an excellent improvement as your LIT will ensure you are aware of the actual requirements when choosing to proceed with a Consumer Proposal or Bankruptcy. Since only a Licensed Insolvency Trustee can provide you with the option of a Consumer Proposal or a Bankruptcy this change will help you avoid incurring extra costs initially. 

What else you should know

There are many companies that will tell you they can help you with your debt.  Don’t be fooled by those that state they can help you with your debt but do not have the legislation to provide options through a Licensed Insolvency Trustee.  Ultimately you will be charged hefty fees and still not get the debt relief you need.

Credit Counseling Services

There are both for profit and not for profit credit counseling services available across Canada. While these companies will tell you that they are local and have your best interest at heart beware.

These companies will only offer full repayment of your debt and while some creditors will stop interest, some will not.  Unlike Licensed Insolvency Trustees, they are not legislated by the federal government to offer a repayment of a portion of your debt and cannot guarantee a creditor will stop interest or accept a program.  They also charge fees for their service.  These companies also claim that you will have a better credit rating by using their service rather than that of a consumer proposal but that is simply not true.         

Stay Sharp about Debt Consultants

These companies are not Licensed Insolvency Trustees and will charge you a large amount of money only to refer you to a trustee in bankruptcy to complete a Consumer Proposal or Bankruptcy.  Do not be fooled by lofty promises and low repayment plans. They are not legislated and in the end, you will pay large fees for your service only to be referred to a trustee in bankruptcy.

These companies advertise heavily on the internet stating they can reduce a consumer’s debt by up to 80%.   Their advertising is very alluring and debt consultants continue to gain market share in Canada.  

These consultants are not Licensed Insolvency Trustees and cannot file a legislated regulated consumer proposal for a consumer.  In essence they gather financial information such as assets, debts and income and then calculate a repayment to creditors. You need to be aware that you can go straight to a Licensed Insolvency Trustee and not pay any fee to a debt consultant thereby saving yourself as much as $5000 in fees.                             

Legislated Consumer Proposal

Only Licensed Insolvency Trustees such as Bromwich+Smith can provide this option to you. This is how a consumer proposal can help you:

  • Stay of proceedings meaning creditors cannot sue you whilst in a consumer proposal
  • Fees of $1500 spread over the lifetime of the proposal
  • All creditors must stop interest
  • Proposal can last 5 years but you can pay it off sooner if your circumstances change and you will have a R7 rating for three years after you complete the proposal
  • Assets cannot outweigh the amount being proposed to the creditor except in the case of RSPs in which any contribution made a year prior and beyond the filing of a consumer proposal can be kept
  • Budgeting and money management counseling tools
  • Administered by a licensed insolvency trustee appointed by the government of Canada.

We hope this knowledge has empowered you to take action when it comes to your debt. We also want you to know you are not alone. If you are facing overwhelming debt, Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page. We want to see you flourish!

 

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