September 1, 2010 Credit Card Rules to Help Consumers.
Three new regulations take effect on Wednesday, September 1, 2010 that will bolster changes made earlier this year.

First, card issuers will be required to offer borrowers a minimum 21-day grace period, during which they won’t have to pay interest on new credit card purchases as long as they pay off their balance by the due date. Previously, grace periods varied and interest could be charged from the date of purchase on new items if the card holder had not paid last month’s bill in full.

The new grace period, which Finance Minister Mr. Flaherty said banks resisted, would cost banks “tens of millions of dollars”. It means purchases made the month after a balance has been carried forward will not be charged interest. Consumers must pay in full by the end of the month to take advantage.

Second, when customers make payments above the minimum amount, they must now be applied to the balance with the highest interest rate first, or proportionally to all transactions. Previously, card issuers could apply payments made above the minimum amount however they saw fit.

Third, credit card statements will have greater transparency and will have to show how long it will take to pay off a balance if only the minimum payments are made. They will also have to provide advance notice of any increases to fixed interest rates.

“People think paying the minimum amount is OK. That’s not OK,” Mr. Flaherty said. “It’s decades … It’s compound interest.”

These regulations follow several changes made in January, which included requirements for information disclosure boxes on statements, the need to obtain customer consent for credit limit increases, an end to over-the-limit fees caused by retailer holds.

The Canadian Law Site has launched its website www.LawApps.ca, featuring 30 Law Apps for the iPhone, iPod Touch and the iPad. The Canadian Law Site is the first company to make available Canadian Law Apps.

These apps will appeal to the legal profession, trustees in bankruptcy and other professionals required to be up to date with the law. Some of the apps are the Divorce Act, including Child Support Amounts by Province, the Bankruptcy and Insolvency Act and the Ontario PPSA (Personal Property Security Act). The law apps are accessible without WiFi or an Internet connection. They are lightning fast and cost a fraction of the cost of traditional law books.

The most expensive app is $9.99; most are $6.99 and five apps are free. The apps are organized so you can find references up to 10 times faster than with a traditional Act. You can copy and paste key sections to Notes or to an email message as well as bookmark key Sections.

These Law Apps will be an excellent tool for the practitioner as he or she will always have critical information at hand without lugging around heavy law books. They will also be invaluable in court for looking up references on the fly.

For more information please refer to the Canadian Law Apps website, including their FAQ page.

Charges laid under the Bankruptcy and Insolvency Act increased in 2007.
The Office of the Superintendent of Bankruptcy (OSB) reported in its newsletter released on January 20, 2009 that its Criminal Investigation Unit (CIU) had increased its activity in 2007.

More than 60 debtors were indicted in 2007 on a total of 799 charges under the Criminal Code and/or the Bankruptcy and Insolvency Act. These debtors joined the group of 42 others who have undergone legal proceedings since the CIU was set up.

To date, 49 debtors have been found guilty and have received a prison term ranging from 6 to 18 months, a conditional sentence from 15 to 24 months, or a repayment order for up to $25,000. In most of these cases, the sentences also included probation orders of up to three years, starting from the end of the sentencing period, and up to 240 hours of community service.

The charges were filed under various sections of the Bankruptcy and Insolvency Act covering offences such as fraudulent disposition of property before filing for bankruptcy, fraudulent transfer of property, obtaining credit by means of false representation, and failure to disclose and assign all the bankrupt’s property to the trustee. Charges were also filed under sections of the Criminal Code covering such crimes as fraud, scams, criminal conspiracy and obtaining credit under false pretences.

At this time, the CIU has about 50 cases under way or pending. Its operations have recently been bolstered by the addition of a new investigator who joined the CIU in October 2007. Also, early in January 2008, in partnership with the RCMP, one of their investigators was assigned to the CIU in order to assist the OSB and to acquire experience in bankruptcy investigation.

The Greater Toronto Area Commercial Crime Section, Toronto North Site, recently charged two individuals with the following offences under the Bankruptcy and Insolvency Act (BIA):

1) Muralitharan THIRUCHELVAN of Toronto, Ontario, has been charged with five counts under Section 198 of the BIA, namely: unlawfully refuse to answer fully and truthfully questions at an examination; making a false entry or omission; obtaining of credit by misrepresentations; disposal of property obtained on credit and failing to perform duties as required by a bankrupt.

The offences relate to the purchase and subsequent sale of goods bought on credit and not paid for and the obtaining of credit by false representation to facilitate gambling at a Casino. The total amount of the bankruptcy filing is $280,000.00.

2) Albert Odisho SHAMON of Toronto, Ontario has been charged with six counts under Section 198 of the BIA, namely: fraudulent disposition of property; unlawfully refuse to answer fully and truthfully questions at an examination; making a false entry or omission; obtaining of credit by misrepresentations; fraudulent concealing of property and disposal of property obtained on credit. The total amount of the bankruptcy filing is $135,000.00.

Both THIRUCHELVAN and SHAMON are scheduled for first appearances at the
Old City Hall courthouse on May 11th, 2007. “The investigations resulted from Investigation Orders issued by the Superintendent of Bankruptcy. The Partnership between the RCMP and the Office of the Superintendent of Bankruptcy, continues to be focused on maintaining
confidence in the integrity of the Bankruptcy and Insolvency Process,” stated Inspector Brian Verheul of the RCMP GTA Commercial Crime Section.

For further information: Sgt. Michele Paradis, “O” Division Media
Relations Office, (416) 952-4619 office, (416) 992-4409 mobile

It’s time again for the BankruptcyCanada Blog’s quotes of the year. We ran this for the first time for 2005. The winner in 2005 was a quote from the US concerning a “non-profit” credit counselling company:

“…AmeriDebt has served more as an anchor than a life preserver for many consumers.”
Attorney General Jay Nixon, of Missouri in announcing the lawsuit, filed in St. Louis Circuit Court against non-profit credit counselor AmeriDebt. AmeriDebt filed Chapter 11 bankruptcy in 2004. AmeriDebt, as part of a settlement agreement in 2005, agreed to shut down operations.

We had strong contenders from Canada and the US for the Bankruptcy Quotes of the Year - 2006. Our winner for 2006 is:

“A billion just isn’t what it used to be,” said Forbes associate editor Luisa Kroll, presenting the 20th annual Forbes magazine’s list of the world’s richest people at a New York new conference. National Post – March 10, 2006.

Some of the 2006 contenders were:

For the first time since the depression, households now have negative annual savings and they continue to build up larger and larger debt-loads. Vanier Institute of the Family as reported in: http://www.bankruptcycanada.com/blog/spare-a-dime/ Feb 13, 2006.

Canadians’ ability to service that debt is being further challenged, as it represents 109 percent of personal disposable income. Vanier Institute of the Family as reported in: http://www.bankruptcycanada.com/blog/spare-a-dime/ Feb 13, 2006.

Canadian Imperial Bank of Commerce (TSX:CM) has paid more than $3 billion in penalties in the United States for its investment bankers’ role in Enron’s accounting malfeasance, but “there has not even been a reprimand” in Canada, said investor advocate Diane Urquhart.

Lack of regulation of the industry make consumers vulnerable to receiving poor advice from untrained or poorly qualified counsellors; Consumer Affairs Reports on its Study of the Credit Counselling Industry. December 18, 2006 BankruptcyCanada Blog; http://www.bankruptcycanada.com/blog/cosumer-affairs-reports-on-its-study-of-the-credit-counselling-industry/


“Under the BIA, student loans are among the few debts that are not erased by bankruptcy. The only others are court-ordered fines for personal injury and wrongful death as well as spousal support orders. It is completely unfair to place former students on the same footing as O.J. Simpson and deadbeat dads.” Alan Spergel in a CAIRP News Release dated November 10, 2005.

“Our job is not to teach our customers how to save, but how to spend more.” Walter Wriston, Chairman Citibank. – March, 2006 from the movie “Maxed Out”.

“There’s not as much money in Washington as there used to be!”
-George W. Bush

“I know for a fact that [the banks] aren’t looking for people with experience. They want people who have jobs at the mall. Their whole approach is they want someone who is retail-driven. They want people who can sell, sell, sell.”
-John Ballew - John Ballew has spent over fifteen years as a manager in the retail banking industry. Mr. Ballew lives in New Albany, Indiana.

CRA’s Proposal Policy in Chaos.

Many of the CRA (formally Revenue Canada) offices have recently advised trustees that CRA’s new policy on Proposals is that they will vote “NO” to accepting a proposal unless it calls for payment to CRA of 100 cents on the dollar.

Many trustees are now refusing to process proposals where the CRA debt is significant enough that a NO vote by CRA will cause the proposal to fail.

The trustee on line discussion group has been burning up with comments. Some trustees are saying that that is really not CRA’s position; it is just a negotiating position with their opening position being that they want 100 cents on the dollar and that CRA will vote to accept proposals from “honest but unfortunate” debtors but that conversely, CRA will vote against acceptance of a proposal where the debtor’s history demonstrates a continued history of disregarding their tax responsibilities.

We state on the BankruptcyCanada.com website the following:

It is our experience that CRA will support a Proposal so long as it has merit.

An October, 2004 Bulletin from the Canadian Association of Insolvency and Restructuring Professional (CAIRP) reported on a meeting with senior officials of CRA and the CRA policy regarding Proposals as follows:

• CRA will either reject or accept proposals based on common sense and a practical assessment of what the debtor can pay.

• The only exception to this policy is in the case of a strategic insolvency or the debtor has been supporting an extravagant lifestyle and has made no attempt to meet his or her tax obligations. In this case, CRA may opt for a more punitive route by bankrupting the debtor, even if the proposal appears to be more favourable, and opposing the bankrupt’s discharge to attempt to obtain a higher recovery.

It appears that the above policy is in jeopardy or at the very least CRA management is not communicating its proposal policy to its offices in a clear and coherent way.

This writer, and I am sure every trustee in Canada, knows of instances where CRA has voted against proposals to “punish” the person and then not followed up by opposing the bankrupt’s discharge. All this accomplishes is leaving “money on the table” that should be in the tax coffers and harming CRA’s credibility.

CRA should clarify its proposal policy immediately or else be faced with the following ramifications:

• Possibly Judicial Scrutiny: The Bankruptcy and Insolvency Act, is a federal law designed to provide relief for debtors, while on the other hand the same federal government under the guise of “policy” is denying the relief available under the Act to some debtors by making arbitrary and moral decisions as a creditor.

• Costing the tax payer money: CRA’s “100 percent” policy is costing the tax payer money. As stated above there are many instances where CRA has voted against proposals to “punish” the person and then not followed up by opposing the bankrupt’s discharge.

• Harming CRA’s Credibility: The inconsistency in the policy; not following up a “NO” vote with an opposition to the bankrupt’s discharge and making moral rather than business decisions on the merits of a proposal all harm CRA’s credibility.

• Undermining the Integrity of the Bankruptcy and Insolvency Act: The proposal process as set out in the Bankruptcy and Insolvency Act assumes creditors will act in a sensible business like way to maximize their collections when voting on proposals. CRA’s arbitrary and inconsistent policy and its attempt to impose its morality on debtors all go to undermine the integrity of the Act.

The Canadian Association of Insolvency and Restructuring Professional (CAIRP), are trying to set up meetings with CRA officials to clarify CRA’s proposal policy. The result of that meeting will be posted on this website.

Trustees in Bankruptcy are to be excluded.

Bill 14, the proposed access to justice act, received third reading on October 5, 2006. With the bill reportedly set to pass this week, the regulation of the paralegal profession in Ontario will soon be a reality.

After bill 14 passes, the Law Society of Upper Canada will be responsible for drafting the bylaws to create the rules and guidelines that will govern the paralegal profession, based on its 2004 report proposing its approach to paralegal regulation.

While the exact content of the final bylaws is yet to be determined, in the report the law society recommended mandatory college education requirements as well as licensing exams for the profession. Errors and omissions insurance, contributions to a compensation fund, and continuing education were also recommended in the report as requirements for paralegals.

According to Steven Rosenhek, chairman of the Ontario Bar Association’s paralegal task force, “the great benefit of the bill is that it sets out a comprehensive scheme for regulation of paralegals in Ontario, which encompasses all of the kinds of things that we at the OBA have advocated for years, including mandatory educational requirements, discipline measures, requirements to carry insurance — all of the things that will protect the public from incompetent or unscrupulous paralegals.”

At the time, an exemption from regulation was suggested for paralegals and law clerks working under the supervision of a lawyer in a law firm, legal clinic or student clinic, as well as for union representatives appearing in labour arbitrations, mediators, bankruptcy trustees, and others.

The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) lobbied to have trustees in bankruptcy excluded from this law.

For more information please refer to:

Text of Bill 14;

Law Times Article of October 16, 2006;

There is a bumpy ride ahead for most provincial economies in 2007 and even Alberta and BC are to ratchet down, a new forecast from economists at Toronto-Dominion Bank warns.

"It's going to be a difficult ride in the next few quarters."

The most likely scenario is that Ontario will grow by 1.8 per cent this year and 2.0 per cent next year, the TD forecast states. While those numbers are very low for a province that has traditionally carried the Canadian economy, they mask a steeper slowdown expected during the last half of this year and the first half of next year, Mr. Burleton said.

The Ontario economy has recorded only minimal growth over the past 3-4 quarters, as its key manufacturing sector has been sideswiped by a strong Canadian dollar and high energy prices. Since the start of the year, another 40,000 jobs have been lost in manufacturing, bringing the total drop since 2004 to more than 100,000 jobs. What’s more, with the U.S. economy now showing signs of softening, manufacturing output and employment will remain under pressure over the next few quarters. In 2007, TD Economics projects auto production to dip for the second consecutive year, as North American sales continue to pull back and Ford and General Motors forge ahead with their restructurings.

Quebec has similar problems. Tourism is suffering and the forest industry has been losing jobs. The future looks dim for both those industries, the TD forecast argues, projecting a dismal 2.0 percent growth this year and 1.9 percent next year.

Neither province has much hope of a recovery to normal economic growth rates until 2008, TD says.
“For the manufacturing-based economies of Central Canada and some parts of the Atlantic [region] that have recently struggled under the weight of a high Canadian dollar and elevated energy prices, the dampening influence of weaker demand growth stateside has effectively quashed any hopes of a meaningful recovery until 2008.”

CIBC World Markets Inc. has a similar forecast for the Ontario economy, although it also expects the central bank to move decisively to revitalize Central Canada, economist Warren Lovely says. He projects that the Bank of Canada will cut interest rates four times in the next year, “not only to restrain the loonie, but also revive a badly sagging Central Canadian economy.”

He also sees manufacturing weakness spilling over into the broader economy — a repeat of the economic pain of the early 1990s.

Even the western provinces will feel a pinch from the global economic slowdown, economists say — although the divide between Alberta and the rest of the country will continue for a couple of years. “As the headwinds begin to blow from the south, the respectable overall growth trends in Canada are masking an increasingly skewed regional picture,” TD says.

“We not only concur that growth in the Alberta economy has passed its peak in the current cycle, but that the risks of a hard landing have been rising.”

The most probable scenario, however, is that the Alberta economy will be able to avoid the boom-bust cycle of the past, and coast gradually to growth rates of about 3 per cent a year, down from the 6.8 per cent expected this year. Prices for oil, gas and other commodities are sliding, the TD forecast says, and some capital spending plans will likely be delayed or cancelled.

“A softening in conditions in resource markets, including crude oil and forestry, will knock both Alberta and B.C. off their high growth horses over the next few years.”

CIBC, however, was far more upbeat about the prospects for the West, predicting that massive capital spending will continue, with commodities prices remaining high. Alberta's growth should continue to reach almost 7 per cent next year, Mr. Lovely forecasts.

For more information please refer to:

Canadian Press in a Wednesday, September 27, 2006 article reported that The Canadian Payday Loan Association renewed its plea Tuesday for the federal government to introduce legislation this fall that would give provinces the authority to regulate the country’s burgeoning payday loan industry.

The CPLA, which represents 850 of the 1,350 stores offering payday loans across Canada, urged Justice Minister Vic Toews to make the bill a top priority now that six of 10 provinces have asked Ottawa for the ability to regulate payday lending.

“There is widespread consensus among stakeholders, the industry association, the provinces and the federal government, that regulation of the industry is necessary and warranted,” said CPLA president Michael Thompson in a release.

“All that is needed to get the ball rolling is federal legislation.”

Toews has said he plans to introduce legislation eventually that would let the provinces set and police interest rates. Currently, the federal Criminal Code limits annual interest rates to 60 per cent, but the limit has rarely been imposed on short-term loans.

Manitoba, British Columbia, Alberta, New Brunswick, Nova Scotia and recently Saskatchewan have all signalled plans to regulate this industry once the federal legislative changes are in place.

For its part, the Manitoba government has already introduced a bill to limit interest rates, but can’t act before the federal bill is passed.

The industry, which lends about $2 billion each year, services about two million Canadian annually.

For more information please refer to our May 1, 2006 Blog.