Consumer (Proposal) Protections
The Bankruptcy & Insolvency Act is the governing legislation for the filing of Consumer Proposals and ensconced in the Act are certain Consumer Protections.
If the consumer has entered into a contract or agreement, even if the agreement states otherwise, by Section 66.34 (1) the original agreement cannot be altered changed or accelerated. For instance, if you entered into a contract to purchase or lease goods based on future payments – furniture store “don’t pay for two years” contracts come to mind – the contract may include a clause saying that “payment becomes immediately due upon the filing of a proposal”. Such a clause is of no effect.
By Section 66.34 (2)(c) landlord may not terminate a rental agreement for rental arrears. And pre-proposal rent arrears alone cannot be cause for termination of a lease agreement in respect of a residential lease. If at the time of filing your proposal you have rental arrears and are under threat of eviction, the landlord cannot rely on rental arrears as a cause for eviction.
Strangely, water, electricity, gas, and communications providers are included under the definition of “Public Utilities”. And Section 66.34 (3) provides that services cannot be discontinued by reason of filing a proposal. However, for some strange reason it has become convention to exclude telephone and internet providers from this provision.
No provision in any agreement that runs counter to the Bankruptcy & Insolvency Act (Section 66.34 (5)) is of any effect – meaning that a lender cannot add a provision in a contract that obligates a consumer debtor in any manner, including provisions that a consumer debtor cannot file a proposal or bankruptcy.
Assignment of Wages:
Any contract that requires a debtor to assign their wages, that was entered into prior to the filing of a proposal has no effect, Section 66.35 (1).
Employers are not allowed to dismiss, suspend, or terminate employment by reason of the employee filing a consumer proposal.