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WHAT HAPPENS WHEN YOU FILE FOR BANKRUPTCY IN CANADA BUT CANNOT SPEAK BASIC ENGLISH?

what happens when you file for bankruptcy
what happens when you file for bankruptcy

What happens when you file for bankruptcy? Introduction

Canada has two official languages: English and French. Canada’s cultural diversity means that our citizens speak a wide range of languages as their native tongue. In Ontario, the majority of the people’s mother tongue is English. That is the language throughout this Brandon’s Blog site, however, if French is your native tongue, you can conveniently substitute the two languages wherever I speak of English, one for the other.

What happens when you file for bankruptcy in Canada when English or French isn’t your native language? In this Brandon’s Blog site, I will certainly discover the unique obstacles faced by non-English speakers in this process and also overview you on exactly how to get rid of language barriers, access necessary sources, as well as seek emotional support throughout this hard time.

Declaring bankruptcy is already a tough as well as stressful trip, and it becomes a lot more intimidating for people that do not speak English. Navigating the Canadian insolvency system needs a comprehensive understanding of the process and paperwork, all as explained by the licensed insolvency trustee, making language effectiveness paramount. Unfortunately, the lack of English can prevent those people from completely understanding their situation.

This Brandon’s Blog about what happens when you file for bankruptcy but cannot speak English reviews a BC court case as well as the resulting policy statement from the Office of the Superintendent of Bankruptcy on this exact subject.

What happens when you file for bankruptcy? Importance of understanding the bankruptcy process in Canada

Trying to understand the Canadian insolvency regime and what happens when you file for bankruptcy is difficult for every layman and particularly for people facing language obstacles due to their limited English. Navigating the ins and outs of insolvency can prove to be an overwhelming job, and language obstacles can worsen the difficulties. Nevertheless, equipped with a thorough understanding of the process, those that talk languages other than English or French can properly tackle their financial dilemma, access necessary resources, and discover the essential emotional support.

What happens when you file for bankruptcy? Declaring bankruptcy is a legal process that grants individuals and even enterprises a fresh start when they can no longer fulfill their financial obligations. In Canada, the insolvency procedure is overseen by the Bankruptcy and Insolvency Act (BIA). This intricate course of action entails various stages and specific regulations for addressing a multitude of concerns. Grasping the ins and outs of the insolvency process is vital for any individual or business seeking to restructure or entirely absolve their debt because they cannot afford to make the debt payments they are obligated to make.

The journey through insolvency can be overwhelming, particularly for an individual who lacks proficiency in English, but there’s no need for it to be so. Armed with the right information and supported emotionally and linguistically, both individuals and companies can make well-informed decisions about their financial future.

what happens when you file for bankruptcy
what happens when you file for bankruptcy

What happens when you file for bankruptcy? Requirements and eligibility criteria for filing for bankruptcy in Canada

To launch an insolvency filing in Canada, it is necessary to satisfy certain requirements. It is critical to have a comprehensive understanding of these criteria, no matter your mother tongue.

Eligibility for a declaration under the BIA needs the person or company to be insolvent. The BIA uses three main criteria to identify the insolvency condition of a specific person or business:

  1. Does the person or company owe $1,000 or more?
  2. Are they incapable to satisfy their liabilities as they end up being due?
  3. If they were to sell off all their assets, would the cash not be able to fully pay off their liabilities?

If you are able to answer “yes” to the very first inquiry as well as “yes” to either or both of the 2nd and 3rd questions, you or your company meet the standards for insolvency under the BIA and are eligible to proceed with an insolvency declaration.

Language barriers can complicate this procedure, making it important to overcome them in order to access the Canadian insolvency system. Utilizing an interpreter is an effective strategy for resolving the language obstacle and efficiently accessing the Canadian insolvency system. By fixing the linguistic divide, individuals are able to completely be involved with the system, make informed choices, and obtain the necessary assistance throughout the insolvency process.

What happens when you file for bankruptcy? Language barriers and their implications

Challenges faced by individuals who cannot speak basic English

When people who are not skilled in English seek help from Canada’s insolvency system legal process, they come across a wide range of challenges, especially when involving their creditors and the licensed insolvency trustee. Language barriers can greatly impede their ability to properly describe their financial difficulties, understand what happens when they file for bankruptcy, understand the insolvency process, and properly complete the needed documents. This interaction space can trigger misconceptions, delays, and also legal issues that are beyond their control. As we look into the conversation below, it comes to be evident that getting expert support, such as working with interpreters or translators, is crucial for non-English speakers to assist in reliable communication throughout the insolvency process.

Types of insolvency process people and companies can access

In the consumer market, the available insolvency processes are:

  1. Consumer proposal to restructure debts and avoid bankruptcy.
  2. Division I proposal to restructure debts and avoid bankruptcy.
  3. Bankruptcy – summary administration or ordinary administration.

For the corporate market, the insolvency processes under the BIA are:

  1. Division I proposal to restructure debts and avoid bankruptcy.
  2. Receivership.
  3. Bankruptcy – ordinary administration.

If you use the search function in the top right corner of this Brandon’s Blog and type in any of the above terminologies, you will find previous Brandon’s Blogs covering all these insolvency topics.

As you will see from the discussion of the court decision and the OSB’s position paper, the licensed insolvency trustee is responsible for hiring a qualified interpreter for a person who cannot speak English in specific situations. The cost of the interpreter in a Division I proposal, receivership or ordinary bankruptcy is not an issue as the cost is an allowable expense. Where the issue comes into play to pay for the cost of interpreter services is in both a summary administration bankruptcy or a consumer proposal.

what happens when you file for bankruptcy
what happens when you file for bankruptcy

What happens when you file for bankruptcy? Access to language support services

The OSB, in response to the British Columbia Supreme Court’s ruling in Ali (Re) 2022 BCSC 169, has lately revealed its position paper that emphasizes the critical value of diversity and also language inclusivity in our society. This document presents comprehensive guidelines for interpreter services, aiming to level the playing field and make sure equal accessibility to these important services, all the while adhering to the BIA and relevant case law.

This July 24, 2023 position paper explores the pivotal functions taken on by Licensed Insolvency Trustees in working with interpreter solutions for debtors during OSB examinations or meetings of creditors. Additionally, it clarifies the step-by-step process whereby Trustees can look for repayment of interpreter expenses from the estate. By promoting practical and also fair access to interpreter services, we can foster an all-encompassing and also inclusive culture that celebrates as well as appreciates the uniqueness of every individual’s voice.

The OSB maintains that if a debtor is unable to communicate fluently in the official language used during an OSB examination or the meeting of creditors, the Trustee must engage the services of an approved interpreter. The OSB’s position paper states that the Trustee has the responsibility of arranging and paying for the services of the interpreter.

As stated above, this really is a non-issue in every insolvency administration other than for a summary administration consumer bankruptcy or a consumer proposal. This is where the Ali (Re) case comes in.

What happens when you file for bankruptcy? The Ali (Re) case

This case before a judge in the BC Supreme Court was a result of an appeal from a decision of a Registrar sitting in bankruptcy court. The issue is who is responsible for paying the cost of an interpreter in a summary administration bankruptcy estate. In a summary administration bankruptcy, the Trustee’s fee is calculated by a government-set tariff and the Trustee’s disbursements, as part of the tariff, are fixed as an allowance of $100. As an aside, in a consumer proposal, the Trustee’s fee is a tariff calculation also and other than for the filing fee and court fee, there is no allowance for disbursements.

In this summary administration consumer bankruptcy estate, the Registrar determined that the Trustee was not responsible for paying for the cost of the service of an interpreter for an examination of the bankrupt as required by the OSB The Registrar, however, did not specify whether the bankrupt or the OSB was required to pay this expense.

In this case, The bankrupt is originally from Lebanon and her first language is Arabic. She came to Canada as a refugee in 2000. She is functional in English but did not feel comfortable with technical or business English, so she requested an interpreter. The Trustee found several individuals who spoke Arabic and were willing to translate for the bankrupt during the examination. However, they were not certified interpreters. The OSB insisted that at its examination, only certified interpreters were acceptable. The cost of retaining a certified interpreter for this duration ranges from $190 to $305.

The Trustee applied to the court to determine who is the responsible party for paying for a certified interpreter. The Registrar concluded that the Trustee was not responsible for the cost of the interpreter, as the Trustee had fulfilled their duty of arranging for the services of an OSB-approved translator. However, the issue of expense responsibility remained unresolved. As a result, both the Trustee and the OSB appealed the Registrar’s decision to a judge in the BC Supreme Court.

The OSB wants the Registrar’s order set aside. It seeks declarations that the Trustee is required to pay the cost of an approved interpreter and will be compensated out of the general remuneration from the bankrupt’s estate provided by the tariff.

The Trustee submits that the Registrar erred in failing to find that the government levy it receives pursuant to s. 147 of the BIA whenever a Trustee distributes funds and was set up to pay for the cost of the government administering the Canadian bankruptcy system is to be used to pay for the expense of having a certified interpreter attend the bankrupt’s examination by the OSB.

Our national association, the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), sought and obtained intervenor status. CAIRP’s position was that the Trustee of the bankruptcy estate usually paid the cost, with correspondingly lower distribution to creditors. It recognizes that, on rare occasions, the Trustee will have to pay this expense where an estate has no assets. However, it submits that a general “trustee pays” rule skews incentives and access to the bankruptcy system by vulnerable groups.

The judge reviewed the BIA legislation and available case law and determined that the Registrar’s order should be set aside. The judge further ruled that the Trustee is entitled to the expenses it incurs, from the bankrupt’s estate, for the services of an interpreter for an examination requested by and to be conducted by the OSB.

what happens when you file for bankruptcy
what happens when you file for bankruptcy

What happens when you file for bankruptcy? The OSB position

Abiding by the court’s decision, the OSB now recognizes that the cost of interpreter services used for an examination conducted by the OSB or for a meeting of creditors is a reimbursable expense in a summary administration consumer bankruptcy (or in a consumer proposal). However, rather than just saying that the OSB will now approve it in those circumstances, it forces Trustees to go for taxation just like in ordinary administrations. In an ordinary administration, the Trustee is entitled to recover its time and disbursements in going for taxation or as the court may otherwise determine.

I can only imagine that if a Trustee goes for taxation in a summary administration or consumer proposal because of interpreter services costs, the OSB very well may take the position that the fee and disbursements of the Trustee in going for taxation are non-recoverable. What leads me to that conclusion is that in the position paper, the OSB states that the Trustee may just decide to:

“Consider the expenses incurred for the services of an interpreter as encompassed under their fees chargeable under section 128 of the Rules, not claim to recover the specific expenses, send their final statement of receipts and disbursements, and proceed to deemed taxation and discharge under sections 62 and 65 of the Rules.”

In other words, what happens when you file for bankruptcy and require an interpreter for those special situations, don’t bother trying to claim the cost of the interpreter, file your summary administration final statement of receipts and disbursements without including that cost, and you won’t have to get your fee and disbursements taxed as it will be in accordance with the tariff. If the Trustee decides to go for taxation to claim the interpreter cost, and perhaps the cost of going for taxation, then it is open for the OSB to issue a negative comment letter and oppose the taxation in court.

What happens when you file for bankruptcy? Conclusion

What happens when you file for bankruptcy is a challenge for all debtors, particularly for those who do not speak English or French. Language barriers can complicate the already difficult financial situation faced by non-English speakers.

However, it is crucial to recognize that language should not hinder individuals from seeking help and relief. Various resources are available to assist non-English speakers in navigating the bankruptcy process and overcoming language barriers. As seen from the above case and the OSB position paper, the Trustee must engage an approved interpreter for all OSB examinations or for a meeting of creditors.

I hope you enjoyed this what happens when you file for bankruptcy Brandon’s Blog. Problems with making ends meet are a growing concern in Canada, affecting individuals of all ages and income levels.

Creating a solid financial plan can be the key to unlocking a brighter and more prosperous future. By taking control of your finances, you can prioritize your expenses, set clear financial goals, and build a strong foundation for your dreams to come true. With the right mindset and approach, financial planning can empower you to regain control, eliminate this issue as a source of stress in your life and find peace of mind.

Individuals must take proactive measures to address financial difficulties and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges, ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now!

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a Trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

what happens when you file for bankruptcy
what happens when you file for bankruptcy
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CERB CANADA: THE ENORMOUS DEBT PROBLEM NOW FACING CANADIANS

The Canada Emergency Response Benefit (CERB Canada) has been closed but is not over

The government is ramping up its efforts to verify CERB Canada eligibility for payments made under the Canada pandemic support program. Many Canadians have been told to return some or all of the funds received in the past. The Canada Revenue Agency (CRA) and Employment and Social Development Canada are working together to ensure that those who received COVID-19 pandemic individual benefits were eligible for them. CRA also announced that they are sending out Notices of Redetermination to Canadians who were ineligible for some or all of the CERB Canada benefits they received.

The CERB Canada benefit was rolled out quickly and there was a lot of confusion about who was eligible for it. It was created to help those in Canada who the COVID-19 pandemic directly impacted. The program provided financial assistance to employees and self-employed workers. The benefit was worth a maximum of $2,000 every 4-week period for up to four months.

The issue that troubles me is that the benefit was mostly paid to people who otherwise would not have been able to afford rent or food. The CERB Canada benefit money was spent immediately and a long time ago. So if CRA and Service Canada have now determined that some people should not have gotten that benefit, what are those people supposed to do if CRA demands the money back?

In this Brandon’s Blog, I discuss what the options may be for people who receive a demand for repayment of the CERB Canada benefit.

Who was eligible for CERB Canada?

To qualify for the CERB payment from the government support program, you must have met certain conditions during the period you applied. The Government of Canada stipulated the following eligibility criteria:

  • You did not look for or receive, CERB Canada or Employment Insurance benefits from Service Canada for the same qualification period.
  • You did not stop your work willingly on your own. You were forced to stop your work by someone else.
  • You are a Canadian resident who is at least 15 years old.
  • You must have earned at least $5,000 (before taxes) in the preceding 12 months, or in 2019, from one or more of the following:
    • job income
    • self-employment income earnings
    • benefits relating to pregnancy or parental leave from the province

The program was designed to help Canadian employees and self-employed Canadians who lost their jobs or saw a significant decrease in income due to the COVID-19 pandemic and the COVID-19 lockdown order resulting in business shutdowns. The program came to an end on December 2, 2020.cerb canada

Sending your CERB Canada payment back

If you have received a letter from Service Canada asking you to repay an overpayment, the CRA says you need to follow the instructions on the letter to return the payment.

You will have the opportunity to provide more evidence to support your claim that you were entitled to the CRA’s full CERB benefit payment. Based on your responses, you may need to repay the full amount you received.

If you received any CERB Canada payments and they now say you didn’t fit into the group of eligible workers, you have the option to pay back what you owe in full right now or over time. They expect you to repay it in full either way.

Now consider this. The federal government paid nearly $12 million in CERB Canada payments to more than 1,600 people with foreign addresses during the first seven months of the pandemic! How did that happen if one of the criteria of this program was you had to be a resident of Canada?

The way the CERB Canada benefit is taxed is by taking it out of your paycheque – wasn’t that enough?

The CERB Canada benefit was not a grant or any other kind of freebie. Anyone who received it had to include it in their taxable income. That is fair because the benefit was meant to replace lost income.

In April 2020, Prime Minister Trudeau announced that the Government of Canada would be taking extensive and decisive action to support Canadians and businesses who were struggling due to the COVID-19 global pandemic through an expansion of this program.

The Prime Minister went on to say that no Canadian should have to choose between protecting their health, putting food on the table, paying for their medication or caring for a family member. He said this is why the government introduced the CERB Canada Benefit, a taxable benefit.

There have even been CRA, Employment and Social Development Canada and court decisions confirming that the CERB Canada payments are taxable and that it was definitely not a free ride. The demand for repayment of benefits from Canadians who CRA and Service Canada now feel were not eligible workers seems totally anti-social. The program was rolled out hastily and under unclear, confusing circumstances, and Canadians have been paying income tax on the benefits they received. Surely our federal government has better places to spend its time clawing back wasteful spending.cerb canada

Mom was shocked when her maternity leave benefits were cut in half due to the CERB Canada benefit

A mother was shocked to see that her most recent parental benefits instalment had been cut in half. She said that maternity and parental benefits are paid to parents so they can take time off from paid work to do another kind of work: care work.

She was receiving half of her parental leave benefits for three weeks, which were already about half of her regular earnings. The reason for the reduction was because it was determined that the CERB Canada benefit she received for every four-week period, increased her income to the point where the reduction was warranted.

Then she received a demand for repayment. She hadn’t expected to have to repay the benefit. Shortly after the COVID-19 outbreak hit in March 2020, she was let go from her work because there wasn’t enough work to go around. She thought she qualified under the eligibility requirements for the CERB Canada benefit.

She couldn’t repay the full amount in one shot so she tried to arrange a repayment plan with CRA. She said that she had to fax about a dozen documents and field several questions from federal government employees to prove she is experiencing “financial hardship” in order to qualify for a payment plan. I don’t understand why payment plans have to be approved rather than just being automatically set up. These are not rich people that they are demanding repayment from, so why make them jump through hoops?

The British Columbia court has ruled that the CERB Canada payment must be deducted from the damage award for wrongful dismissal

Here is another example that the CERB Canada benefit is not a tax-free payment or a non-taxable grant. In Reotech Construction Ltd. v Snider, 2022 BCSC 317 the trial judge awarded the employee damages for a 4.5-month reasonable notice period and declined to deduct his CERB Canada payments.

After reviewing the case, the Supreme Court of British Columbia decided that the original trial judge was incorrect in choosing not to reduce the damage award by the $9,000 in benefits received. The court decided that these payments should be deducted from the award.

There was no indication that the employee would have to repay the CERB Canada benefit to the government. If the CERB payments are not deducted, then the employee would be in a better position than if there had been no breach of the employment contract. The employee would not have received the benefit if he had not been dismissed, making the benefit an indemnity for the wage loss caused by the dismissal.cerb canada

How to repay the CERB Canada benefit

If you received the CERB Canada and now find out that you did not meet the eligibility requirements, as shown above, you must repay the money. There are a few different ways that you can repay the amount demanded.

The easiest way to repay the CERB Canada amount is through your online service CRA My Account. You can log into your account and select “Repay CERB” under the “My Account” tab. If you do not have a CRA online account, you can repay the amount you owe either by sending a cheque through Canada Post to the CRA mailing address you can find online. You can also pay it at your financial institution using the government-issued remittance form.

But what if you are just one of the many hard-working Canadian workers living paycheque to paycheque? What if you do not have the money to repay what they say you owe, either all at once or by taking an amount out of each of your future paycheques that CRA will agree to?

What if you cannot repay because the government stepped up its efforts to verify CERB Canada payments and made demands on you?

As stated above, if you cannot afford to repay the full amount being demanded of you all at once, you can hopefully convince CRA that you deserve a payment plan over time due to “financial hardship”. This assumes that the government is right that you were not originally entitled to the amount that you received for the CERB Canada benefit. But what if you cannot afford to repay it at all, no matter what sort of payment plan you can enter into?

The outcome will depend on if you are insolvent. Being insolvent doesn’t necessarily mean bankruptcy. Insolvency (aka financial failure) is a financial condition that occurs when a person or company doesn’t have enough assets to pay off all debts if they were to be liquidated. It also means that the person or company has stopped paying their bills on time in the normal course.

If the person is NOT insolvent, they are expected to sell assets or use cash on hand to pay their bills.

If you’re insolvent, you can take advantage of Canadian insolvency legislation, the Bankruptcy and Insolvency Act (Canada) (BIA). The debt to repay the CERB Canada benefit is an ordinary unsecured claim that will be eliminated through a successful financial restructuring under either a consumer proposal or a Division I proposal. As a last resort, you could also file for bankruptcy.

I would rather refer you back to some of my earlier Brandon’s Blogs that go over the requirements for each insolvency option, rather than go through all of them individually here. They are:

  1. Consumer proposal –CONSUMER PROPOSAL TORONTO: THE COMPLETE #1 WAY TO ELIMINATE DEBT IN ONTARIO
  2. Division I Proposal –THE EASIEST WAY TO ACTUALLY LIKE WHAT IS A DIVISION i PROPOSAL ONTARIO
  3. Personal bankruptcy – BEYOND BANKRUPTCY SERVICES: OUR BEST PERSONAL INSOLVENCY FAQ 2 JUMPSTART YOUR FINANCIAL LIFE

CERB Canada: Canadian workers now under fire

In summary, CRA now says it’s “time to pay up” for Canadians who were paid the CERB Canada benefit during the pandemic. Although CRA has a right to claw back the amount if it is correct that the person was not eligible, what CRA’s insistence means for many Canadian workers is they now have to choose between paying back their CERB or paying for food, rent or medicine.

This is so ironic because the benefit payments were designed to help those people in making those payments when their incomes dried up. The amounts were taxed so the government earned income that way. Now they are causing unneeded stress and worry to the people they aimed to help.

I hope this Brandon’s Blog was helpful to you in understanding more about this problem now facing many Canadians. If you or your company has too heavy a debt load, we understand how you feel. You’re stressed out and anxious because you can’t fix your or your company’s financial situation on your own. But don’t worry. As a government-licensed insolvency professional firm, we can help you get your personal or corporate finances back on track.

If you’re struggling with money problems, call the Ira Smith Team today. We’ll work with you to develop a personalized plan to get you back on track and stress-free, all while avoiding the bankruptcy process if at all possible.

Call us today and get back on the path to a healthy stress-free life.cerb canada

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4 PILLARS CLASS ACTION LAWSUIT SETTLEMENT: OUR DEFINITIVE GUIDE TO THE PEARCE V 4 PILLARS LAWSUIT SETTLEMENT

We hope that you and your family are safe, healthy, and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

4 Pillars class action lawsuit: What is a class action proceeding?

Class action lawsuits are familiar to many people. Group legal actions occur when a group of people who have been injured in the same way as defined by law seeks legal action on their behalf. A class action lawsuit involves plaintiffs (persons who have been injured) and defendants (people who are being sued) who are all brought together by the courts, who determine whether a settlement should be reached between them. A class action lawsuit claims to be owed money.

The British Columbia court certified a class-action lawsuit in Pearce v 4 Pillars Consulting Group Inc. (the “4 Pillars class action lawsuit”) on October 29, 2019. In my November 25, 2019, 4 PIllars class action lawsuit Brandon’s Blog titled, HOW DOES DEBT RELIEF WORK: APPARENTLY NOT GREAT 4 EVERYONE, I discussed the issues raised in this class-action lawsuit.

The British Columbia appellate court allowed the 4 Pillars class action lawsuit to proceed as a class action proceeding, dismissing the 4 Pillars’ objections. In my May 24, 2021, 4 PILLARS LAWSUIT GETS GIGANTIC APPROVAL TO PROCEED FROM COURT OF APPEAL FOR BRITISH COLUMBIA Brandon’s Blog I wrote about that decision.

In this 4 Pillars class action lawsuit, the British Columbia Court approved a settlement plan on January 13, 2022. According to the court, the Settlement Administration Plan has been approved and shall be implemented and enforced. In this Brandon’s Blog, I give a brief overview of the 4 Pillars class action lawsuit and describe the Settlement Administration Plan.

4 Pillars class action lawsuit: The 4 Pillars lawsuit class-action

The 4 Pillars class action lawsuit was filed in the British Columbia Supreme Court against 4 Pillars Consulting Group Inc. It is alleged that 4 Pillars’ debt consulting business has violated the provincial Business Practices and Consumer Protection Act (BPCPA) and the federal Bankruptcy and Insolvency Act (Canada) (BIA).

Mr. Paul Pearce attempted to certify his action as a class action. This lawsuit seeks to recoup damages for the debt consulting fees that 4 Pillars charged its clients. The fees were paid in connection with: (i) a consumer proposal under the BIA; or (ii) an informal debt settlement proposal with the person’s creditors, all after April 1, 2016.4 Pillars class action lawsuit: B.C. Court of Appeal Finds Class Action Waiver Clause Unconscionable and Contrary to Public Policy

4 Pillars Consulting Group Inc. appealed the lower court’s 4 Pillars class action lawsuit decision to the Court of Appeal. Its decision was released on May 17, 2021. In agreement with the lower court, the court ruled that a genuine issue must be determined at trial based on all the evidence. So the 4 Pillars’ request to strike the plaintiffs’ BPCPA claims was denied by the judge. The certification stage approved by the lower court was upheld on appeal.

According to 4 Pillars, the class action waiver clauses in its standard form contract signed by its clients and the contracting process they agreed to, barred them from participating in any class proceedings including a class dispute resolution process or class arbitrations. This court ruled that such a class action waiver clause contractual term violated public policy considerations and the substantive rights that the class claimants should have.

There was a substantial conflict between the class action waiver and the administration of justice, as found by the court. That contractual term would successfully bar class actions. It was held to be an unfair contract and that there was unequal bargaining power.

Essentially, class action waiver clauses denied Mr. Pearce, and the class members, access to justice and a legal dispute resolution procedure for claims arising from the connection between them. Accordingly, class certification was upheld and the enforceability of class action waiver clauses was held to be in violation of the class members’ rights and on public policy grounds.

As a result of the Court of Appeal for British Columbia’s decision, access to justice will be given and a trial will be necessary to determine all the legal issues including whether claims can arise from BIA-related offenses. Therefore, 4 Pillars also did not succeed in having this issue struck from the 4 Pillars lawsuit. The claimants wanted to proceed to get their measure of justice.

4 Pillars class action lawsuit: What the Court of Appeal for British Columbia says about the role of 4 Pillars

Both courts found that the 4 Pillars debt restructuring services were:

  • meeting debt-stricken consumers who are either insolvent or on the verge of insolvency and working with them as advisors to individuals;
  • assisting those on the brink of insolvency in drafting a consumer proposal for a LIT;
  • engaging in back and forth discussions with the LIT in an effort to get the LIT to agree to a consumer proposal that is favorable to the debtor;
  • input, on behalf of the debtor, on any response or request from creditors;
  • debtors are charged upfront regardless of whether 4 Pillars actually achieve debt relief for the debtor; and
  • charge higher fees than licensed and regulated professionals.

Debt restructuring businesses (those not licensed by the Superintendent of Bankruptcy) charge this way in general. It is unclear what value they provide if any. Their business model preys on people’s fears of getting advice directly from Licensed Insolvency Trustees.

Services described above are provided by a Trustee at no additional charge over and above the tariff fee set by the government. During our no-cost initial consultation, I provide financial advice regarding unmanageable debt and if you are a candidate for informal debt settlement, I will let you know exactly what to do. In cases where you have too much personal debt and are not eligible for an informal settlement, I have prepared many consumer proposals that have worked. I also serve as a credit counsellor as part of that process.

4 pillars class action lawsuit
4 pillars class action lawsuit

B.C. Supreme Court decision leads to 4 Pillars class action lawsuit settlement

As a result of the class action in British Columbia, I wondered if 4 Pillars would have trouble in Ontario and elsewhere because the appellate court denied the appeal and sent the 4 Pillars lawsuit to trial. It is obvious that 4 Pillars do not want these legal questions answered by a court trial. I also stated that there is a strong possibility that this 4 Pillars class action lawsuit may ultimately strike directly at the heart of the business model of 4 Pillars. Canadian franchisees need to be concerned.

4 Pillars must have been troubled by this too, in addition to losing the litigation and a verdict based on BIA-related offences and running afoul of the legislative intent of the BIA. The 4 Pillars class action lawsuit settlement was negotiated because the company could not afford to lose at trial and they obviously found this to be the most acceptable alternative to litigation. On January 13, 2022, the court approved the Settlement Administration Plan. There is now commercial certainty in BC as a result of this settlement.

It is feasible that a portion of the costs claimants paid to 4 Pillars locations in British Columbia might be refunded as a result of the negotiated settlement. The class action alleges that 4 Pillars franchise businesses breached the BPCPA by providing debt restructuring solutions. The 4 Pillars class action lawsuit sought restitution for monies 4 Pillars supposedly received unjustifiably. Accusations made versus the Defendants are unproven, as well they are rejected by 4 Pillars.

The 4 Pillars class action lawsuit was certified that all persons who paid 4 Pillars fees for a consumer proposal under the BIA or an informal debt repayment proposal with their creditors in BC between April 16, 2016, and August 15, 2021 (the “Class”) are entitled to join. Paul Pearce was appointed as the plaintiff’s representative by the court.

Three settlement agreements were approved by the Honourable Justice Mayer of the British Columbia Supreme Court on January 29, 2021, and November 15, 2021. As a compromise of disputed claims, these settlements are not an admission or finding of liability by the settling Defendants. The approved settlements shows that the goals of class proceedings are being met.

​4 Pillars class action lawsuit settlement: What are the terms of the settlement?

Class members who submit claims are eligible to receive a refund of up to 100% of the eligible fees they paid. Collectively, the Defendants have set up a $7,000,000 Settlement Fund to pay the claims. In addition, a claim that will be assigned to the Class against one of Defendant’s insurers could result in a recovery of up to $800,000.

A person’s refund will be figured out by the total quantity of claims made against this Settlement Fund after paying the approved legal expenses. The quantity of the Settlement Fund readily available to pay claims will be pro-rated if the full amount of claims is less than the Settlement Fund available to pay claims.

The Court has approved legal fees on a contingency fee basis equal to 1/3 of the Settlement Fund (plus taxes) and $103,533.31 in disbursements (including taxes and interest). The Settlement Agreements and Settlement Administration Plan contain all the terms and conditions of this court-approved settlement.

4 Pillars class action lawsuit settlement: How do I make a claim?

​To receive compensation under the settlement, each Class member must complete the online Claim Form by April 28, 2022. The potential claim will be vetted and if it meets the qualifications approved by the court, the claim will be admitted as an approved claim. There is more than one class of individuals able to claim on the Settlement Fund.

4 pillars class action lawsuit
4 pillars class action lawsuit

​4 Pillars class action lawsuit settlement: What if I don’t want to participate?

​In order to opt out of the lawsuit, people not wanting to submit their individual claims must notify class counsel in writing to the Canadian lawyer acting on behalf of the class by not later than April 28, 2022, providing your name and address and indicating that you wish to opt out. Should you opt out of the settlement, you will not receive compensation.

​4 Pillars class action lawsuit settlement: Settlement Claims Deadline

​To receive compensation under this settlement of the representative action, people must submit their individual claims by submitting a Claim Form by April 28, 2022.

4 pillars class action lawsuit
4 pillars class action lawsuit

4 Pillars class action lawsuit settlement: Trouble ahead for 4 Pillars in Ontario and elsewhere because of the class action in British Columbia?

I’m looking forward to seeing if this 4 Pillars class action lawsuit settlement is pursued in the Superior Courts of other provinces for the administration of justice where other 4 Pillars franchisees operate. I hope you found this 4 Pillars class action lawsuit Brandon Blog informative.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy, and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

4 pillars class action lawsuit
4 pillars class action lawsuit
Categories
Brandon Blog Post

CREDIT SCORE IN CANADA: ARE CAR INSURANCE COMPANIES REQUIRED TO PULL A CREDIT REPORT ON NEW BRUNSWICK RESIDENTS?

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

A credit score in Canada: Can car insurance companies use your credit score?

According to the CBC News show “Marketplace” in 2010, home insurance rates can be influenced by a person’s credit score in Canada. A number of people experienced doubled insurance premiums after their insurance company included credit scores in calculating risk.

Consumer credit scores are portrayed positively by those who make use of it. Insurers only check your credit score to determine the best premium for you, according to Desjardins. The Cooperators offer a different perspective. The credit score reflects a person’s financial responsibility and behaviour. The issue is undoubtedly contentious.

In Ontario, as elsewhere in the country, credit scoring has been controversial. In this Brandon Blog, I discuss the recent request by certain auto insurance companies in obtaining consent to check a New Brunswick resident’s credit score in Canada when determining auto insurance rates.

New Brunswick has Canada’s highest rates of personal insolvency and some of its lowest credit scores

There are two Canadian credit bureaus that perform credit scoring in Canada, Equifax and TransUnion. Credit reporting agencies track your credit history by tracking consumer borrowing and payment histories. Credit scores in Canada are derived from these activities.

In Canada, two major credit bureaus report credit scores between 300 and 900. It is through this report that lenders determine whether you have good credit. You are more likely to get credit and have low interest rates if your credit score is high. A credit score in Canada at a high level is therefore beneficial.

What is a good credit score in Canada? You can get a pretty good idea of what they are by looking at the following list:

  • 740 plus Excellent
  • The 700 to 740 range is a very good score
  • A score of 680 to 700 is considered good
  • 600 to 679 Fair
  • Below 600 Poor

Missing payments or maxing out your credit card can result in a bad credit score. As a fintech company, Borrowell Canada represents multiple lenders in Canada that issue credit cards and make loans to individuals based on their respective credit score in Canada. They became the first business in Canada to offer free credit scores and credit reports. Borrowell’s New Brunswick users have an average credit score of 634.

New Brunswick has the lowest average credit score in Canada. Adults in New Brunswick deal with financial problems at a higher rate than anywhere else in Canada. New Brunswick is currently the province with the highest bankruptcy rates for consumers.

credit score in canada
credit score in canada

Are bills up to date? New Brunswick auto insurance companies are interested in your credit score

According to insurance companies, studies show bad credit drivers are more likely to have an accident than those with similar driving records, and they want premiums in New Brunswick to reflect that. Several insurance companies in New Brunswick recently gained approval to ask for the introduction of credit scores when setting auto premiums for insurance.

The insurance companies claim studies show that motorists with bad credit are more likely to get into accidents than those with similar driving records, and they want New Brunswick premiums to reflect that.

In Canada, insurance companies believe your credit score in Canada is an accurate predictor of risk and therefore future claims. As a result, policyholders are said to be given rates based on the justest risk segmentation. The application they submitted for approval argued this.

A policyholder will be charged more if they are likely to generate the highest costs than a policyholder who is likely to generate lower costs, according to the New Brunswick Insurance Board. According to the board, it was satisfied there is a relationship between bad credit and bad driving and, as a result, granted the right to set rates using a person’s credit score in Canada.

As part of the risk assessment, a credit score raises a number of concerns:

  • What will the insurance companies do if New Brunswick residents refuse to have their credit score used?
  • For insureds with low credit scores and limited resources, insurance may be harder to obtain and more expensive.
  • Is an individual’s driving record more indicative of risk when it comes to car insurance than their credit score in Canada?
  • Suppose you are a young adult, new to Canada, unemployed, or barely getting by? A low credit score may make it harder for you to get to school, work, or a doctor’s appointment.

A credit score in Canada: Are insurance companies allowed to check credit scores?

Are the rules the same in all the Canadian Provinces? No, they are not. If you live in a certain province, your credit score may also affect your monthly premium. Those who live in Ontario or Newfoundland and Labrador can breathe easier. In these two provinces, auto insurance companies are not allowed to use your credit score in Canada as there is a ban on insurance companies doing so.

As of spring 2019, the Progressive Conservative Party announced plans to allow companies to ask you for your credit score in exchange for a better rate. It hasn’t happened yet. Premier Ford’s plans may have been thwarted by the COVID-19 pandemic!

It is already the case in Nova Scotia, though you cannot be denied coverage if you refuse. In March 2021, the province’s insurance regulator approved RSA Canada’s request to offer discounts to auto policy applicants based on their credit scores.

In Alberta, insurers are required to ask for your consent before looking at your credit score, and they can’t use it if you only want the most basic plan.

Business is regulated by the provincial government in Manitoba and British Columbia. Manitoba Public Insurance and Insurance Corporation of British Columbia do not list credit scores among their criteria.

As for Saskatchewan, it’s the same story with Saskatchewan Government Insurance (SGI). Despite the fact that drivers are required to get basic coverage through SGI, you might face a credit check if you choose private company coverage.

Quebec, New Brunswick, and Prince Edward Island don’t have any laws forbidding the practice, but it was not common in the two Maritime provinces until the recent change in New Brunswick.

In addition to your driving history, insurance companies also consider your location, driving experience, and the type of car you drive when assessing your accident risks.

We also have a consumer watchdog called the Insurance Bureau of Canada (IBC). The code has been published and 85% of Canada’s car and home insurance companies have signed on.

There are a number of friendly ground rules:

  • Asking for your permission prior to checking your credit score in Canada.
  • Do not cancel or deny your insurance if you do not consent.
  • In the absence of much credit history, calculating your premiums using other relevant information.

    credit score in canada
    credit score in canada

A credit score in Canada: Auto insurers’ interest in N.B. credit scores is bad news for many

I hope this credit score in Canada Brandon Blog was informative. The auto insurers’ interest in New Brunswick credit scores is bad news for many. But if you have a low credit score and too much debt, wherever you live in Canada, you are considered insolvent. There are several insolvency processes available to you. It may not be necessary for you to file for bankruptcy.

If you are concerned because you or your business are dealing with substantial debt challenges, you need debt help and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties with debt relief options as an alternative to bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people with credit cards maxed out and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do as we know the alternatives to bankruptcy. We help many people and companies stay clear of filing an assignment in bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

credit score in canada
credit score in canada
Categories
Brandon Blog Post

IS MORTGAGE DEBT NOW THE OBSESSION FOR MANY CANADIANS?

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Is mortgage debt surge responsible for pushing Canadian consumer debt levels higher?

For many people in Canada, a house is the centre of the family’s financial world. As a result, if the family’s financial situation changes, the house, and the mortgage that goes with it, become the focus of the family.

Is mortgage debt pressing consumer financial debt higher in Canada?

Equifax Canada recently reported that it is. One effect of the pandemic is that Canadian credit card usage and debt are dropping, as families borrow more cash right for their homes while spending less on everything else.

In this Brandon Blog, I offer some thoughts on why is mortgage debt rising, pushing total Canadian consumer debt above pre-pandemic levels, while credit card debts are falling during the COVID-19 pandemic.

Is mortgage debt surge pushing Canada consumer debt to $2.1 trillion?

Those in the real estate sector in Canada will certainly agree that the housing market is one of the greatest financial factors that influence the success of the Canadian economy. These days, the sector is exceptionally competitive which has a great influence on the housing market.

Competition among residential real estate buyers is fierce in many markets throughout the nation, especially British Columbia and Ontario. The pandemic has actually stimulated a record boom in Canada’s housing market. Low rates of interest, as well as brand-new demand for a larger home, have actually sustained bidding battles for houses.

What’s behind the record-breaking growth in the hot housing market in Canada? Is mortgage debt behind the increase in mortgage debt? Yes, according to Statistics Canada. It stated last Friday that Canadian families incurred a new high level of mortgage debt in the 2nd quarter in a row. Canadian households added record mortgage debt amid low interest, high prices.

Driving hot markets in many regions aided move real estate prices and the average sale price higher, pushing the need for home loans to $34.9 billion in the 4th quarter of 2020. This need beat the previous high of $28.7 billion in the 3rd quarter, Statistics Canada reported.

is mortgage debt
is mortgage debt

Is mortgage debt growth making Canada’s economy vulnerable? The central bank says yes

What is the Bank of Canada‘s worries? The Bank of Canada said that growing mortgage debt makes Canada’s economy vulnerable.

High household debt, as well as inequalities in the real estate market, have escalated in the past 12 months, leaving the economy more prone to economic shocks. The central bank said that although consumer debt had actually dropped in early 2020, a boost in housing debt has more than balanced out that decrease, with total household debt climbing sharply since mid-2020.

That is one reason why, effective June 1, 2021, the Office of the Superintendent of Financial Institutions (OSFI, Canada’s leading financial regulatory authority, elevated the home mortgage stress test level for mortgage applications through banks, insurance companies and credit unions. It does not yet apply to private mortgages.

The stress test was raised so that borrowers must now be able to meet the financial test to carry a mortgage at an annual interest rate of either 5.25 percent or 2 points over the actual mortgage market rate they can get, whichever is greater. This will certainly make it harder for some to get approved for a home mortgage. The government hopes this will lead to reducing the pool of accepted borrowers as well as eventually, lowering residence rates.

The June 1 adjustment implies potential mortgagors will certainly need to prove that their finances can stand paying at that greater interest rate, no matter what rate a lender is willing to lend at. OSFI hopes that this adjustment will reduce either the number of buyers or the amount a purchaser can afford to pay given the mortgage financing available to them. The hope is that it will stem the higher pressure on house prices in the country.

Is mortgage debt the only reason Canadian household debt is so high?

As you can see from the above, mortgage debt is up but credit card debt is down. in fact, it is at a 6 year low. So is mortgage debt the only reason total household debt is up? When I speak of mortgage debt, I am talking about conventional mortgage debt. The answer is no.

Equifax Canada also reports that other big-ticket credit products like credit lines have likewise represented a general increase in Canadian financial debt. She said there was a 60 percent rise in house equity credit lines! Like mortgage debt, this is a secured debt registered against the borrower’s home.

People are borrowing these additional home equity lines of credit. The worry is if rates of interest rise, individuals may not be able to pay the debt servicing costs and the debt payments for that financial obligation. Those kinds of loans are usually at a variable interest rate.

is mortgage debt
is mortgage debt

My take on why is mortgage debt and other household debt driving in these directions?

It wasn’t an interest rate boost that forced Canadians to get consumer spending in check – it took a pandemic for many of us to transform our spending practices. Stay-at-home orders, lockdowns, nowhere to go and fewer places to spend our money have all contributed to what we are now seeing. Couple that with many Canadians being able to work from home and Canada’s COVID-19 Economic Response Plan.

Consumer spending shifted away from credit card spending. My personal view is that people’s spending patterns shifted away from consumer goods that normally would be charged to credit cards. Perhaps some of the increase in home equity lines of credit was to consolidate debt by borrowing against their homes to pay down high rate credit card debt.

Also, people were hunkered down working, going to school and generally living 24/7 in their homes. We all got to see the points we love about our home and perhaps noticed for the first time, or at least were bothered for the first time, with little imperfections in our homes. That could lead to increased borrowing in order to do additions or renovations.

It also could lead to selling the existing home and buying a different one and moving. Maybe that drove more demand than there was supply, which caused home prices to continue rising. Increased pricing required increased mortgage application numbers, mortgage borrowing, the individual size of mortgages to increase and drove total mortgage growth. Perhaps FOMO also contributed to the increased demand.

This is merely conjecture on my part, but one thing is for sure. The pandemic could not stop house prices from rising, mortgage debt from increasing and credit card debt from reducing. Overall, household debt increased. The worry now is if interest rates rise, it will take a larger proportion of household income to meet debt servicing requirements. Hopefully, everyone’s household budget will be able to handle it.

Is mortgage debt now the focus for many Canadians?

Apparently so. I hope that you found this Is mortgage debt now the obsession for many Canadians Brandon Blog interesting. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

is mortgage debt
is mortgage debt
Categories
Brandon Blog Post

4 PILLARS LAWSUIT GETS GIGANTIC APPROVAL TO PROCEED FROM COURT OF APPEAL FOR BRITISH COLUMBIA

NOTE: On January 13, 2022, three settlement agreements were approved by the Honourable Justice Mayer of the British Columbia Supreme Court on January 29, 2021, and November 15, 2021. As a compromise of disputed claims, these settlements are not an admission or finding of liability by the settling Defendants. You can read all about the Settlement Administration Plan and how to file a claim by CLICKING HERE to read our latest 4 Pillars blog.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

4 pillars lawsuit
4 pillars lawsuit

The 4 Pillars lawsuit class-action

In my November 25, 2019, Brandon Blog titled “HOW DOES DEBT RELIEF WORK: APPARENTLY NOT GREAT 4 EVERYONE“ I wrote about the litigation involving 4 Pillars Debt and Credit Restructuring Company, 4 Pillars Consulting Group Inc. and other entities (4 Pillars or the 4 Pillars lawsuit), Pearce v 4 Pillars Consulting Group Inc., 2019 BCSC 1851.

Mr. Pearce is suing for damages for the fees billed by 4 Pillars to all persons that paid fees to it in British Columbia in connection with: (i) a consumer proposal under the Bankruptcy and Insolvency Act (Canada) (BIA); or (ii) an informal debt settlement negotiation proposal with the individual’s creditors, all after April 1, 2016.

Mr. Pearce claims that it is appropriate for the refunding fees paid, damages for alleged losses stemming from breaches of the provincial Business Practices and Consumer Protection Act (BPCPA) and BIA, and damages based upon the claim that the fees billed were unscrupulous under section 8 of the BPCPA.

In this Brandon Blog, I describe what the 4 Pillars lawsuit is all about and why the Court of Appeal for British Columbia has allowed it to proceed as a class action proceeding, dismissing the 4 Pillars objections.

4 Pillars lawsuit: What is a class action proceeding?

As part of that litigation, Mr. Pearce applied to the BC Court to have his litigation turned into a class action proceeding. The Court ruled that there were enough grounds for his legal action to move forward as a class-action claim. As can be expected, 4 Pillars objected to that motion. They also unsuccessfully argued that certain sections of the claim should be stricken.

4 Pillars appealed that decision to the Court of Appeal for British Columbia. On May 17, 2021, the Court of Appeal for British Columbia released its decision. In this Brandon Blog, I discuss the appeal, what the appeal court had to say and what it decided in the 4 Pillars lawsuit appeal.

4 pillars lawsuit
4 pillars lawsuit

Debtor Warning – Debt Consultants Sometimes Not What They Appear

What 4 Pillars say their organization’s role is

4 Pillars states that they are professionals who provide a variety of services specific to individuals in debt. They say they outline the choices readily available and also walk people through the procedure. They say that your financial debt settlement will likely be one of the following, which they will manage on your behalf:

  • informal debt settlement
  • consumer proposals
  • bankruptcy

They also say they will work with the person on their aftercare. They also say that their role ranges from providing individual debt settlements on behalf of debtors with collection agencies and their creditors to negotiating with Licensed Insolvency Trustees (individually a Trustee, Bankruptcy Trustee or LIT) on behalf of a debtor in determining the terms of a consumer proposal.

What the Court of Appeal for British Columbia says about the role of 4 Pillars

The Court of Appeal described them this way:

  • 4 Pillars sell their debt restructuring services as debt advisors to individuals on the brink of insolvency who are seeking debt restructuring. They are unlicensed and charge fees above those professionals who are licensed and regulated.
  • Their debt consulting business is not licensed or registered, and they charge customers fees up‑front for services regardless of whether the appellants actually achieve any debt relief.
  • Their debt consulting services are:
    • to meet and work with consumers who are struggling with debt;
    • to help them draft a consumer proposal to present to a LIT:
    • and to engage in back and forth discussions with the LIT in efforts to have the LIT agree to a consumer proposal that is favourable to the debtor.
  • All of these services are provided with the goal that the LIT will then present the consumer proposal to the debtor’s creditors.
  • 4 Pillars may then provide input, on the debtor’s behalf, on any response or request from the creditors.

4 Pillars lawsuit: What do the 4 Pillars debt consultant’s services actually involve?

Just to remind you, this is what the lower BC Court and the Court of Appeal for British Columbia found the 4 Pillars services to be:

  • to meet and work with consumers who are struggling with debt;
  • to help them draft a consumer proposal to present to a LIT:
  • and to engage in back and forth discussions with the LIT in efforts to have the LIT agree to a consumer proposal that is favourable to the debtor.
  • Provide input, on the debtor’s behalf, on any response or request from the creditors.
  • They charge customers fees up‑front for services regardless of whether the appellants actually achieve any debt relief.
  • Charge fees above those professionals who are licensed and regulated.

This is very common amongst all the debt restructuring businesses. It is questionable what value they provide if any at all. Their business model preys on people’s fears of getting advice straight from Licensed Insolvency Trustees.

The services described above a LIT provides at no additional cost above and beyond what the government-approved tariff fee is. The reality is that you do not need the 4 Pillars Consulting Group Inc.

As a LIT, I provide financial advice regarding your unmanageable debt and if you are a candidate for informal debt settlement, I will tell you exactly what to do in our no-cost initial consultation. If you have too much personal debt and are not a candidate for an informal settlement, I have many times prepared consumer proposals that work. As part of that process, I also act as a licensed credit counsellor.

4 pillars lawsuit
4 pillars lawsuit

Is Debt Settlement Really Worth It?

Debt settlement is really worth it. Going to one of these unscrupulous debt settlement companies, instead of a licensed insolvency trustee for debt settlement is NOT.

If you’ve been struggling with debt, it’s time to consider debt settlement through a consumer proposal with the services of a LIT. It likely won’t sound appealing at first, and you may feel that you are taking a gamble, but the process of debt settlement can be incredibly beneficial to you. Keep in mind that even 4 Pillars introduce you to a LIT in order for you to relieve yourself of your debts, hopefully through a consumer proposal process.

A consumer proposal is the only government-approved debt relief program. A LIT can get you a true debt settlement, without having to pay extra unnecessary fees to any of the debt relief companies.

Now let’s see what the Court of Appeal for British Columbia had to say about this 4 Pillars Consulting debt restructuring services business’s appeal from the lower court decision.

Class action waiver not effective to resist class action certification

The Court of Appeal of British Columbia believes the class action waiver clause is unenforceable as being contrary to public policy. The class action waiver significantly interferes with the administration of justice. It would have the effect of precluding class action lawsuits.

It has the impact of precluding Mr. Pearce, and class participants, from having access to justice and to a dispute resolution procedure in accordance with the law for claims developing from the connection between these parties. Therefore, the class action certification was upheld.

4 pillars lawsuitOther grounds of appeal in the 4 Pillars lawsuit

Having reviewed the evidence filed in respect of 4 Pillars’ applications for summary dismissal and after considering their arguments, the lower court judge was not satisfied that Mr. Pearce’s arguments in the 4 Pillars lawsuit, that 4 Pillars was acting for, or representing, a debtor in arrangements or negotiations with their creditors is bound to fail.

The evidence suggested that 4 Pillars had a role in the negotiations between a debtor and their creditors regarding a consumer proposal – even if they were not directly engaged with creditors.

The lower court’s view was there is a genuine issue to be decided at trial on a full evidentiary record. Accordingly, the judge dismissed the 4 Pillars attempt to strike the portions of the pleadings in respect of the Plaintiffs’ claims under the BPCPA.

The Court of Appeal for British Columbia agreed that it will be necessary to have a trial to figure out if claims can occur from offences of the BIA. Therefore, 4 Pillars was likewise unsuccessful in getting this issue stricken from the 4 Pillars lawsuit.

Trouble ahead for 4 Pillars in Ontario and elsewhere because of the class action in British Columbia?

It will be very interesting to see how this class action 4 Pillars lawsuit winds its way through the BC court. Absent an appeal to the Supreme Court of Canada, it is now game on. Mr. Pearce and all members of the class have the green light to continue the litigation. If successful, it goes to the heart of the 4 Pillars business model. Every franchisee across Canada needs to worry.

I hope you found this 4 Pillars lawsuit Brandon Blog informative.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Call a Trustee Now!