COVID-19 Rule Changes Now Allow for Virtual Bankruptcies and Consumer Proposals

Canadians are facing a lot of uncertainty right now. With a sudden economic downturn and many businesses shuttered due to social distancing measures, millions have found themselves out of work and unable to pay their debts. It’s critical to flatten the COVID-19 pandemic curve — but we cannot ignore the risk of a less visible public health crisis resulting from rampant financial stress and anxiety.

Thankfully, the Office of the Superintendent of Bankruptcy (OSB) has recognized and was quick to respond to the continued needs of indebted Canadians. By taking the unprecedented step of removing the in-person requirements of the insolvency process, it has empowered Licensed Insolvency Trustees to initiate and administer Bankruptcies and Consumer Proposals online.  

MNP has been conducting virtual Bankruptcies and Consumer Proposals since the OSB guidance was announced in March 2020. For an idea of how these changes may impact your experience working with us, we’ve included a summary of what you can expect below.

Free Confidential Consultations

Every Bankruptcy or Consumer Proposal begins with a Free Confidential Consultation with a Licensed Insolvency Trustee (LIT). This initial, no-obligation meeting gives you the opportunity to get acquainted with the LIT, discuss your goals and address any questions or concerns. It also allows the LIT to review your financial situation — including your income, debts, assets and any other factors that impact your ability to pay your creditors.

Once the LIT fully understands your situation and objectives, they will outline all of the options you qualify for. This could include informal solutions such as negotiating reduced interest rates or payment arrangements, debt consolidation loans, credit counseling or a debt management plan. It could also include formal debt solutions such as a Bankruptcy or Consumer Proposal.

While you ultimately choose which debt reduction strategy you want to pursue, the LIT will offer their objective professional guidance on the variety of options you can choose from. If you decide on an informal solution, they may provide recommendations or referrals to other services they think may help. And if you choose a Bankruptcy or Consumer Proposal, they will assist with initiating those processes and work with you for the entirety of the process. 

To ensure all Canadians retain access to critical insolvency services while observing social distancing measures, Free Confidential Consultations, Assessments and Sign-Ups may now occur electronically via a combination of video chat, telephone and email.

Insolvency Counseling Sessions

If you proceed with either a Bankruptcy or Consumer Proposal, you must meet several conditions to receive your eventual discharge and a financial fresh start. This includes attending two mandatory counselling sessions with the LIT firm.

Insolvency counseling sessions allow you to confront the root causes of your indebtedness and build skills that will help you avoid the same pitfalls in the future. You will discuss savings goals and strategies, learn how to build and manage a budget, review the causes of and techniques to manage financial stress and find out how to rebuild your credit. 

Some people are hesitant and skeptical heading into these sessions, but later report being extremely grateful for the opportunity. They are an absolutely critical component of a successful Bankruptcy and Consumer Proposal to help debtors achieve lasting financial success.

To ensure Canadians’ right to a discharge from insolvency proceeds is not unfairly impacted by COVID-19 social distancing measures, LITs may now conduct Insolvency Counselling via video conference. 

Signatures and Oaths

Bankruptcy and Consumer Proposals are legal proceedings under the Bankruptcy and Insolvency Act (BIA). The documents and affidavits you sign throughout these processes are highly consequential — and violating them could result in punitive damages up to an including the courts refusing to release you from your debts. However, they are also lengthy and contain plenty of legal jargon. LITs have a duty to ensure you understand exactly what you are agreeing to and are in a position to make that agreement.

During COVID-19 social distancing measures, consumers may now submit signed documents via email or other e-signature services with support from LITs via video conferencing. 

Get the Help You Need and Deserve

The ongoing COVID-19 pandemic and related economic fallout has worsened an already difficult financial situation for many households. We recognize the fears, challenges and concerns you’re facing right now and are doing our best to remove any barriers between you and the financial fresh start you deserve. That includes making ourselves available on your preferred teleconferencing platform (e.g. Skype, Teams, Zoom, FaceTime, etc.) through every stage of your insolvency.

Just because we’re social distancing doesn’t mean you’re alone with your financial challenges. If you’re struggling with unmanageable debt, reach out to MNP for a virtual Free Confidential Consultation today. We will make sure you have access to all the available resources and systems to achieve a positive and lasting resolution.