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The Canadian Debtors Association was formed to fix this problem
Many people have faced a difficult time in their life and experienced many problems as a result. We all know that the human spirit can be tested, and it can be tested hard, whether they have lost their jobs, suffered serious injuries, or just needed to trim their spending. Financial hardships can lead to feelings of hopelessness, depression, and anxiety.
A national non-profit organization serving Canadians with debt problems is the Canadian Debtors Association. It was established a few years ago. They advocate exclusively on behalf of debtors who face economic hardship and insurmountable debt. Their belief is that debtors need someone they can call their own, someone who is willing to help them resolve their debt problems and support them unconditionally. A future where Debtors have the support of their own advocates is seen by the Canadian Debtors Association, which has created a Debtor Bill of Rights as a framework for the protocols that Debtors should be entitled to.
In this Brandon Blog, I describe the problem that the Canadian Debtors Association has identified and their preferred method of fixing it. I also provide my comments on their plan.
Canadian Debtors Association motto: Join us as we build a better Debtor experience
The mission of the Canadian Debtors Association is to reduce the number of financially vulnerable Canadians facing a financial crisis and overwhelming debt loads. This is a very good thing. Canadian Debtors Association has identified a real problem in credit reporting. That problem is that the Canadian credit reporting agencies do not really differentiate on someone’s credit report between them completing a successful consumer proposal or Division I Proposal and avoiding bankruptcy, and those who file an assignment in bankruptcy. It is true that those who avoid bankruptcy should be able to clear their record than someone who went into bankruptcy.
Thousands of Canadians file for bankruptcy or submit a consumer proposal to manage their debts every year. Over one million Canadians used the insolvency system from 2012 to July 2021. Regarding the accurate recording and reporting of bankruptcy and consumer proposal information on consumer credit reports, there are no specific references, standards, accountability, or provisions for insolvency reporting through Canadian credit bureaus.
Ms. Henrietta Ross, President, and CEO of the Canadian Debtors Association released through the CNW Group a statement asking all stakeholders in the credit, debt, and insolvency industries to work together on modernizing Canada’s Bankruptcy and Insolvency Act (BIA) in order to assist Canadians facing financial hardship.
Canadian Debtors Association agrees that everyone deserves a fresh start
The insolvency law and policy in Canada are based on the principle of providing a “fresh start” for people who are drowning in insurmountable debt and who suffer a financial breakdown. Legislators, stakeholder groups, academics, and insolvency experts all accept this principle. Debtors seek relief from existing debt in order to regain control of their finances.
The BIA intends to implement a fresh start, but debtors experience problems because, after undergoing a BIA debt relief solution, they encounter problems from the debt industry due to inaccurate insolvency-reporting information on their credit reports. By sabotaging the fresh start Canadians deserve and expect, inaccurate reporting undermines the very fundamental tenets of the Bankruptcy and Insolvency Act. The Canadian Debtors Association proposes that this dilemma can be resolved by amending federal legislation that stipulates the appropriate representation of insolvency-related information on consumer credit reports.
The use of consumer credit has had explosive growth over the past several years, so the utilization of credit reports and personal credit histories has also seen a massive expansion. Canadians’ daily lives are impacted by these monumental changes in the number and use of credit reports.
The responsibility for this information’s integrity and accuracy is not explicit. There is no regulated authority in credit reporting under the BIA. The Office of the Superintendent of Bankruptcy (OSB) oversees the administration of the insolvency system, including maintaining public records and statistics; however, the OSB does not specify how BIA debt relief options of bankruptcy and consumer proposals should be described or interpreted on credit reports. It simply is not their job!
Canadian Debtors Association explain this problem
A person who finds themselves facing economic hardship and in financial difficulty is allowed to use a BIA-subscribed debt relief solution to eliminate their debts through the fresh start process. When filing either for bankruptcy or a proposal is entitled to a stay of proceedings, which prevents creditors from initiating or continuing legal action against the debtor.
Providing inaccurate and misleading information for credit reports, sometimes through simple mistakes and sometimes because there are no differentiation codes for credit reports. So creditors doing a credit search may mistakenly believe that some debts remain delinquent and unaddressed. This undermines the legal stay. The Canadian Debtors Association feels this causes debtors who are otherwise discharged from their past debts, to continue to suffer within the Canadian credit system which is therefore not a total “fresh start”.
Canadians can also suffer the consequences of inaccurate insolvency information on their credit reports. The misapplication of delinquency ratings, the incorrect labeling of bankruptcy, and the mingling of insolvency terms constitute layers of misinformation that are misleading. Often, even third-party companies that obtain credit reports from a major credit bureau, such as TransUnion, erroneously list “bankruptcy” on reports of debtors who never declared bankruptcy.
The consumer is hurt badly and unnecessary suffering is caused, such as the loss of employment opportunities, refusal of a lease from a landlord, increase in costs Rejection of employment opportunities, refusal of a lease from a landlord, increase in costs services such as attempts by debtors to correct their credit reports are in vain. This unintended negative impact is not the debtor experience envisioned by the BIA. Such negative impact does not lead to a better quality of life for those relieved of their financial burden.
Canadian Debtors Association urges changes to Bankruptcy and Insolvency Act
Consumer credit reports wield enormous power, with significant implications for an individual’s livelihood and well-being, so accuracy is extremely important. It is also imperative to have accurate information since a bankruptcy or consumer proposal is a closely scrutinized part of a consumer’s credit history.
To solve this problem and the negative impact on Canadians otherwise freed from their past financial hardship, the Canadian Debtors Association says that the BIA must be updated to help Canadians have correct representation in credit reports. The BIA is the key piece of Canada’s debtor and creditor balanced legislative framework. It is the only personal insolvency legislation in Canada that provides a fresh start for those in debt. We must ensure its continued effectiveness by making it easier to use and by modernizing it to reflect current credit reporting realities.
Canadian Debtors Association has identified a real problem but the wrong solution IMO
Most provinces in Canada have enacted laws that outline the practices that credit reporting agencies and users of consumer credit information must follow in order to protect consumers’ rights. Federal regulations do not govern credit reporting agencies but provincial laws do. Canada’s insolvency legislation and the Canadian insolvency system are under the control of the federal government. So in my opinion, it would be unwise to try to fix a problem that falls under provincial jurisdiction with federal law.
Second, it is very difficult to pass a Member’s Bill to amend federal legislation through the House of Commons and the Senate. There is always a focus on matters of extreme federal importance or those that will win votes, rightly or wrongly. My view is that people having their insolvency process mislabeled, and therefore taking longer than they should to regain and take on additional credit, does not fit into the category of national significance or vote-getting.
Canadian Debtors Association states they are debtor industry advocate professionals and have honed their skills of debtor advocate work. They should take a more direct approach, in my opinion. Talk to the Canadian credit bureaus directly. In Canada, there are only two credit reporting agencies – Equifax Canada and TransUnion Canada.
Team up with insolvency industry players, such as the national association representing licensed insolvency trustees in Canada, the Canadian Association of Insolvency and Restructuring Professionals. Together, they can advocate directly on behalf of debtors with the credit reporting agencies to make that aspect of consumer credit reports more accurate and meaningful. If their advocacy is not heard, then lobby the provincial governments to enact further legislation, as it is their responsibility to do so.
That would seem a much better solution.
Canadian Debtors Association summary
The Canadian Debtors Association is calling on the federal government to modernize the BIA to better serve Canadians in financial difficulty. However, their only issue is that provincially supervised credit reporting agencies are not differentiating between successfully completed proposals and bankruptcy. Above I have suggested what I believe is a much easier route for them to go in their advocacy to accomplish the same thing.
I hope you found this Canadian Debtors Association Brandon Blog informative. Although nothing is guaranteed, managing your debt in a way that will allow you or your company to be able to afford it, will lead to your financial success. It will also give you the best shot at having a financially stress-free life.
Are you or your company in financial distress and a debt crisis? Are you embroiled in costly litigation or a crushing debt load and need a time out in order to restructure? Do you not have adequate funds to pay your financial obligations as they come due? Are you worried about what will happen to you? Do you need to search out what your debt relief options and realistic debt relief solutions for your family debt are? Is your company in financial hot water?
Call the Ira Smith Team today. We have decades and generations of experience assisting people looking for life-changing debt solutions through a debt settlement plan and AVOID the bankruptcy process.
As licensed insolvency professionals, we are the only people accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a Government of Canada-approved debt settlement plan to do that. It is an alternative to bankruptcy. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.
Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy balanced problem-free life.
You can have a no-cost analysis so we can help you fix your troubles.
Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.
As the COVID-19 pandemic continues, we hope that you, your family, and your friends are safe, healthy, and secure. Ira Smith Trustee & Receiver Inc. is fully operational, and both Ira and Brandon Smith are readily available for phone or video consultations.
