If you are suffering financial hardship, you could voluntarily seek the services of a licensed insolvency trustee in Ontario and voluntarily assign yourself into personal bankruptcy.
Having said that, it might surprise you to learn that there are actually two types of bankruptcy in Ontario: ordinary and summary administrations. Over 90% of all bankruptcies in Ontario today are summary administrations.
The general concept of both ordinary and summary administrations is the same; you assign control of certain assets and your income to a trustee, in exchange for protection from your creditors, the elimination of your debt and a fresh start.
The majority of legislation that governs ordinary bankruptcies was drafted in the early 20th century when, at the time, it was typically only businesses that declared bankruptcy. Ordinary bankruptcies have characteristics of what many believe is the stereotypical type of bankruptcy. There is a mandatory meeting you have to attend with your creditors, an advert is placed in your local newspaper announcing your bankruptcy and a court hearing is required to obtain your discharge.
In 1970’s, credit cards were made available to individuals. Throughout the 1970’s and 1980’s when they gained popularity, more individuals started to incur more debt, more people started to turn to bankruptcy trustees when they ran into trouble repaying them.
It was found that treating individuals, the same way as a business was treated was cumbersome, time consuming and costly. As a result, in the late 1980’s the government introduced new legislation streamlining the bankruptcy process for individuals. This led to the introduction of summary administration bankruptcies.
In a summary administration bankruptcy:
- the meeting with your creditors is now only required if the government or the creditors specifically request it;
- there’s no advert in the local newspaper; and
- you can be eligible for an automatic discharge without having to go to court.
These little changes made the process much more streamlined and cost effective for everyone involved.
Corporations cannot file summary administration bankruptcies, only ordinary administration bankruptcies that are typically filed by a trustee.
An individual could still file an ordinary bankruptcy, but these cases are very rare. It would usually only happen where the trustee expects the amount available to creditors from the sale of an individual bankrupt’s assets to be over $15,000. It’s rare, because if an individual has that much in assets, they’d usually file a consumer proposal instead to keep control of the assets.
If you are considering bankruptcy, speak with a licensed insolvency trustee to find out which option is right for you.
Is there a “statute of limitations” on credit card debt? My 98-year old mother is still being hounded by the bank 20 years later. She has dementia and is in a continuing care home and I am her power-of-attorney.
In Ontario we have a statute called the Limitations Act. It gives creditors two years from last time you confirm the existence of a debt to commence legal action, or the Court may decide the debt is uncollectible if the debtor requests the Limitations defence. So, without knowing when your mother may or may not have said she owes the debt we can’t know if the Limitations apply. I suggest you send them a registered (or couriered) letter requiring them to “cease and desist or take your mother to Court”. If they continue to pursue after that you may lodge a complaint with the Ministry of Consumer Affairs against their licence. If they decide to try Court make sure someone attends to explain your mother’s side and the Court should dismiss the action.