Bankruptcy is Important

September 19, 2018

It may sound strange like a strange thing to say but bankruptcy is important, very important.  Our whole economic system has changed very dramatically over the last one hundred years.  My grand parents bartered with their farmer neighbours for goods and services.  In fact, right up until the late 1940’s, much of our economy was based on a system of bartering.

Bartering has many advantages over other economic systems that extend beyond the economy.  Bartering builds neighbourhoods, it builds a deeper sense of community and social intervention.  The downside of bartering for government is that people who barter generally don’t pay taxes.  The Income Tax Act has a provision that the value of the goods or services bartered should be assessed and taxes levied on that value.  The government doesn’t want to miss out.

Historically we never had income taxes until the outbreak of the first world war and many of the other taxes we now pay were invented since.  As at this writing Canadians pay about half of all the money they earn, including in some cases the assessed value of barter, in some form of taxation.  The effect of taxation, especially on lower income earners (about 60% of Canadian income earners) is to increase poverty.  Nonetheless, those taxes must be paid or are subject to severe collections measures which can, in many cases, only be averted by filing for bankruptcy.

Quite aside from taxation, our economy has been overrun by bankers, who since the 1970’s have been deregulated and write their own rules (as discussed in previous blogs) to facilitate profiteering from their customers.  The effect of banking at its simplest is that our after-tax incomes are eroded on multiple layers of fees and interest charges.  When we look more deeply we find that the banks have generally hijacked global currencies and replaced them with a fee based monetary system.

Now, the intent of this blog is not to wax conspiratorial but rather to point out how little control we have of our own financial resources and how little of those resources ultimately become available for us to utilize for our most basic necessities.  The affect of the erosion of available money due to taxation and bank charges is the resort to use credit, which has become more readily and abundantly available than at any other time in history.

In fact, as noted in a previous blog article the use of debit transactions (which replaced cash many years ago) at the point of sale is now being supplanted by credit card transactions.  The result is a growing consumer indebtedness, especially among the more disadvantaged and vulnerable populations.  These people, experiencing such economic crises need a viable solution and bankruptcy provides that.  Bankruptcy is important for many people as an avenue for dealing with the most challenging financial challenges they can experience.

The intent of our insolvency legislation is to provide the honest debtor with relief from the burden of debt.  When we look back over the last twenty years we will see that millions of Canadians have filed insolvency proceedings, mostly bankruptcies.  Underscoring my point that bankruptcy is important.