Generally, when you file for bankruptcy or make a proposal to your creditors, unsecured debts will be released. Section 178 of the Bankruptcy Act lists the only debts that survive a bankruptcy or Consumer Proposal. These include alimony, child support, student loans, debts incurred through fraud and damages for assault. Any other type of debt, including income taxes, GST, credit cards, lines of credit etc., is released at the conclusion of the bankruptcy or proposal.
Unfortunately, Saskatchewan Government Insurance (SGI) does not feel itself bound by that legislation and will not issue an individual a drivers’ license, even during or after a bankruptcy, if that individual owed money to SGI at the start of the proceeding.
There are a number of court cases in progress, including at least one in Saskatchewan, where individuals are taking various government bodies to court on either this specific type of issue or issues that are related. All of the cases are leaning in the direction that bodies like SGI cannot do what they are doing.
However, until a court directs otherwise or the Bankruptcy and Insolvency Act is changed to make it crystal clear to SGI that they cannot deny people licenses, the only advice we can give at the moment is that if you owe money to SGI at the start of a bankruptcy or Consumer Proposal, make payment arrangements with SGI both during and after, in respect to your debts to them.
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