111 Waterloo Street, Suite 310
London, ON N6B 2M4

Fourth Time Bankruptcy

November 9, 2017

We were recently in court for discharge hearings for a fourth time bankrupt as well as two third time filers. The court is empowered to refuse to discharge repeat bankrupts, effectively sending them back to the wolves to be dealt with by collectors and possibly lawyers.

However, in most cases the court will allow a discharge with some form of sanction, typically a period of suspension before the discharge becomes effective. The period of suspension may vary significantly depending on the sympathies of the court.

Most people filing multiple bankruptcies are honest people who have repeatedly suffered some form of financial misfortune. The legislation is intended to help such people, the purpose of the Bankruptcy & Insolvency Act is to help an honest debtor find relief from the burden of debt.

But why exactly are we seeing more people filing for more bankruptcies and proposals than in the past?  Could it be that the process is too easy?  Should it be harder to file a bankruptcy or proposal?

The uncomfortable reality is that Canadian incomes have been in steady decline for decades, but taxes have not abated.  Income taxes seem to move slightly based on which political party is in government but when one tax is removed another is added.

Combine low and unstable incomes with skyrocketing living costs and virtually unregulated lending and it is easy to see why people resort to using credit cards and lines of credit to compensate for income deficiencies.

One of the third-time bankrupts, attending at a discharge hearing, explained to the court a sense of urgency to be discharged and rebuild credit which was entirely based on low, pension, income and escalating living costs.  This is not a case of “not getting it” that bankrupt was very well educated.  All the counselling in the world would not change the fact that Canadians are experiencing a growing disparity between income and living costs.