New Bankruptcy & Consumer Proposal Laws

Canada’s bankruptcy and consumer proposal laws are changing today.

Among other things:

• It is becoming more onerous to file a bankruptcy if a consumer has "surplus income” or is a 2nd time bankrupt
• Automatic discharge after 9 months will no longer apply for those with surplus income
• The maximum for simple (aka., “Division 2”) consumer proposals has been increased to $250,000 from $75,000. That is apart from any principal mortgage. 

These changes are meant, in part, to encourage debtors to make proposals to creditors as opposed to going bankrupt.

From a mortgage perspective, one obvious implication is that people with surplus income will need to wait longer to get a mortgage after bankruptcy.

We had an opportunity to speak with Eric Putnam, a Senior Financial Coach with BDO New Beginnings, for details on how the new law will play out.  Eric is an expert on insolvency rules and regularly advises Canadians coast-to-coast on how to deal with debt and improve their finances.

Here is that interview:  New Bankruptcy & Consumer Proposal Law