TORONTO, Sept. 14 /CNW/ - The Federal Government has announced that significant changes to bankruptcy law that were first passed by Parliament in 2005 will be brought into force on September 18. Under these new rules the length of bankruptcy (and therefore the cost of filing bankruptcy) will more than double for many insolvent individuals.
"The timing of these new rules is incredibly bad," notes Douglas Hoyes, a bankruptcy trustee with Hoyes, Michalos & Associates Inc. "The government created these rules during the boom in 2005, but now Canadians are suffering through the worst recession since the Great Depression, and now even bankruptcy relief will be harder to get," says Hoyes. "Personal bankruptcy filings over the last year are up by more than 32%," adds Hoyes.
"We meet with people every day who are losing their jobs. Now, to add insult to injury, the cost of obtaining the relief for these people will be significantly more," says Ted Michalos, a bankruptcy trustee with Hoyes, Michalos & Associates Inc. "The timing shows a blatant disregard for the current financial hardships facing many Canadians," adds Michalos.
What does the new law mean to those facing financial dire straits? Under current rules most personal bankruptcies end in nine months. Effective September 18 all bankrupts will be subject to an income test, and those earning more than $200 per month over the limit set by the government will see their bankruptcy period automatically extended to at least 21 months. This change in timing will significantly increase the cost of bankruptcy for many individuals.
The government has also added a curious new disclosure requirement for persons filing for bankruptcy protection. Effective September 18, all individuals must disclose their level of education in a sworn statement to creditors. "Forcing debtors to admit they didn't finish high school or university just adds insult to injury, for no good reason," says Michalos.
"Calls to our 310-PLAN help line have almost doubled this year. We know that people are extremely worried about the economy, and the impact of these new rules," says Hoyes.
"There are two positive elements to the harsher bankruptcy rules. First, more Canadians will choose to file a consumer proposal as an alternative to bankruptcy," notes Ted Michalos. "In addition, banks will no longer be able to repossess a car or foreclose on a house simply because of a bankruptcy. This will provide some relief to many already stressed individuals," concludes Michalos.
Hoyes, Michalos & Associates Inc., a trustee in bankruptcy firm with offices throughout Ontario, helps people in financial difficulty. Further information on dealing with debt can be found at http://www.hoyes.com.
SOURCE Hoyes, Michalos & Associates Inc.
For further information: For further information: Douglas Hoyes, CA, Trustee in Bankruptcy, firstname.lastname@example.org, (519) 568-4020; Ted Michalos, CA, Trustee in Bankruptcy, email@example.com, 310-PLAN (310-7526, no area code required) or 1-866-747-0660