The F.A.I.R. Practice System
What is F.A.I.R. Practice?
F.A.I.R. Practice is a new standard of financial assistance for those who are in need of bankruptcy services, putting the debtor at the centre. With F.A.I.R. Practice, our goal is to change the way personal bankruptcy is administered in Canada – particularly for those least able to afford the associated costs. Those trustees who offer F.A.I.R. are proud to offer:
Respect for Debtor
Why F.A.I.R. Practice?
o Rising consumer debt has driven bankruptcy and consumer proposal rates to more than 120,000 per year
o Each year more than 30,000 of Canada’s poorest overpay for their bankruptcies in the form of inflated trustee fees or dividends to creditors when there is no legal requirement to do so
o On average, the overpayment amounts to $350 per person which might not sound like a lot but could mean two weeks worth of groceries for a family or the difference in making next month’s rent.
How Does F.A.I.R. Practice Work?
The Office of the Superintendent of Bankruptcy, which oversees Canada’s 1,100 public trustees, has established guidelines to help ensure trustees get paid, including outlining various methods for prepayment collection. On the surface, this approach seemed fair and reasonable. However, in practice, the approach has had negative consequences.
For the vast majority of these cases, a trustee’s fees are taken from money made available from selling assets, income based payments, or income tax refunds. However, for the 30,000 low income Canadians who file a bankruptcy each year, who have no assets to sell or whose wages are too require an income based payment, a trustee asks for fees up front in the form of a ‘fee guarantee’ and are paid over and above any money collected in a debtor’s estate realization such as an income tax refund.
Who Does F.A.I.R. Practice Benefit and How?
Through Personal Bankruptcy Canada, the goal of F.A.I.R. Practice is to continue to work with advocacy groups, creditors, the courts, the Office of the Superintendent of Bankruptcy and the federal government to change the way bankruptcy is administered in Canada, particularly for those least able to afford the associated costs.