It has been over 140 years since the Parliament of Canada first enacted bankruptcy and insolvency legislation. Although the current Bankruptcy and Insolvency Act has grown and evolved to reflect changes in society since then, the underlying need for the legislation remains the same even after all these years.
What is the Bankruptcy and Insolvency Act (BIA)?
The Bankruptcy and Insolvency Act (BIA) was established by the federal government to help unfortunate but honest individuals recover from their financial problems and gain a fresh financial start. It details how different financial options (bankruptcy, proposals) work legally and defines the roles that the Superintendent of Bankruptcy, the representatives of the Superintendent of Bankruptcy (official receivers), the court, Licensed Insolvency Trustees, creditors, and you the consumer, have.
The Act is also in place to protect and preserve the integrity of the process and consumers from further aggressive tactics employed by some collection agencies, as well as from court actions taken against them once they file.
The BIA was written to help Canadians deal with insolvency situations which could also be seen as situations where life simply happened:
A person who is suddenly injured or diagnosed with a chronic or debilitating illness.
A man or woman whose ex-spouse has left them with many large debts and not much else.
A worker who, after many years of service, finds themselves out of work and unable to find a new job.
A person who has put their heart, soul, and all of their financial resources into a new business only to have it not work out, for whatever reasons.
A young person who invests their time and money in an education that leads to uncertain work or no work at all.
This, in part, is the face of financial hardship in Canada and just examples of why the Bankruptcy and Insolvency Act was written: to address and help Canadians deal with the associated financial hardship of not being able to make ends meet nor pay down their debts.
No doubt there is fraud and abuse of the insolvency process, but the Bankruptcy and Insolvency Act was written, and the courts authorized to act, with this in mind. The completion of a consumer proposal or a discharge from bankruptcy may give a person a fresh financial start, but the purpose of the BIA is also to protect the rights of a person’s creditors who gave the credit in good faith.
We would all like to think that the Bankruptcy and Insolvency Act was written for somebody else, but it’s important to remember that – at least sometimes – the only thing that distinguishes us from somebody else is a little bit of luck in avoiding some of the pitfalls life throws our way.
At Frendo and Partners, bankruptcy is not your only option. But if it is the right option for your particular debt situation, YOU can decide that after hearing all of the available options and discussing them with a Licensed Insolvency Trustee.
If you are in need of a second opinion on your debt situation, or if you are looking for a way to avoid bankruptcy, contact Frendo and Partners to schedule a free, no-obligation consultation.