Canadian Bankruptcy Rule Changes Introduced in the House of Commons: What You Should Know About Bill C-55

The Government of Canada has recently introduced bankruptcy reform legislation, Bill C-55. Although the bill has yet to be passed, Canadians should be aware of the potential changes that could take place as a result of it. Specifically, employees should recognize the new Wage Earner Protection Program which will protect them if their employer ever goes bankrupt. The program will guarantee wage payments of up to $3,000 per employee. In addition, employee’s wages will be given top priority over bank loans. This change will benefit employees in the short term; however, long term effects should be taken into consideration. Banks may be hesitant to give a large loan to a business, knowing that it will be harder for them to recover the loan. In turn, this could affect employees as well. Numerous other changes involving bankruptcy in Newfoundland will take place if the bill is to be passed.

How Bill C-55 Will Affect Bankruptcy in Newfoundland

First, there will be a reduction in the student loan discharge period. Currently, a student loan may only be discharged if the student has been out of school for ten years. With the new law, the period will be reduced to seven years. After 5 years of leaving school, a student will be able to apply to have the debts discharged.

Second, the new act will lengthen the amount of time that people will be bankrupt for. As of now, debtors are eligible to be discharged after nine months. If the bill passes, the discharge period could be extended to 12 months.

Third, the new law will make it more difficult for those who have a considerable amount of debt with Revenue Canada to discharge their debts. If a debtor owes more than $200,000 in tax debt, or that debt is more than 75% of their total debt, they will be ineligible for discharge after nine months. The debtor will need to attend a court hearing and convince the court that they are capable of paying off debts and should be discharged.

Fourth, RRSPs will now be exempt from seizure in various circumstances. Contributions made in the 12 months prior to the bankruptcy will not be exempt.

Finally, the bankrupt individual will lose their tax refund for the entire year that they went bankrupt.

For more information on Bill C-55 bankruptcy reform and bankruptcy in Newfoundland, contact a bankruptcy attorney in your area.

.