Feds making it free to check personal bankruptcy records
Trustees concerned absence of cost will lead to snooping, malicious searches
Ottawa’s proposal to cut an $8 online search fee for a file of personal bankruptcies could make it more difficult for some individuals with past financial problems to find a job or an apartment, a trustee warns.
The Office of the Superintendent of Bankruptcy Canada is “modernizing” its online insolvency record search that allows users to access public records on insolvency estates, bankruptcies and receiverships by dropping the search fee.
“Everyone was shocked and flabbergasted,” said B.C. trustee Blair Mantin, who said insolvency trustees learned recently about the coming change at a conference.
“We don’t know why it’s being done. In all my years working as a trustee, never once has anyone said this has been a problem.”
Trustees are concerned that employers, landlords, marketers or just nosy neighbours can easily access limited information about an applicant’s or tenant’s bankruptcy file and make assumptions about that person’s financial problems without proper context.
He said a search would only tell when the individual filed for bankruptcy, total value of their assets and liabilities and whether or not they finished paying off the debt.
“There could be a hundred different reasons why someone filed for bankruptcy,” said Mantin, who works for Sands and Associates. “They may have been in a car accident or gone through a divorce.”
The $8 fee likely limits random searches and provides some protection to personal financial information, said Mantin, a member of the Canadian Association of Insolvency and Restructuring Professionals, which hasn’t taken an official stand against the proposed change.
A spokesman for the bankruptcy office in Ottawa didn’t return a request for comment on why the change was being made. Mantin said the government will be forfeiting at least $4 million a year in fees, money he said that could be used to educate the public on options to resolve debt problems.
Only debtors filing for official bankruptcy or a related consumer proposal (through which a courtappointed licensed trustee negotiates a partial payback of debts) will be included in the bankruptcy database.
Those choosing a “debt management plan” offered through a private debt counsellor and which usually requires the debtor to repay his loans in full, sometimes without interest, would not show up in the database, said Mantin.
The Credit Counselling Society of B.C., which offers debt management and is a non-profit organization funded by Canada’s banks, is in favour of free searches.
“I’m not surprised the trustees are opposed to dropping the fee,” said CEO Scott Hannah.
With greater access to bankruptcy files, he said, “there’s greater transparency.”
He said some trustees promise their clients that no one will learn about their bankruptcy because the $8 search fee is a barrier to multiple searches.
But Hannah said, “There are long-term consequences to filing for bankruptcy and people should think twice before filing for bankruptcy.”
He said those who file for bankruptcy may find it affects a job search but a person who pays off all debts wouldn’t necessarily face the same situation.
“Banks want their consumers to be responsible for their debts,” he said.
He also said he doesn’t think the elimination of the $8 fee “because it’s so low” would increase the number of searches and that “nosy Nellies” checking up on their neighbours are rare because few working people have time to conduct random searches.
Mantin said the existence of a bankruptcy or a debt management plan would appear on a debtor’s credit history for the same amount of time but a search of those records is done with an individual’s permission, unlike a search of a bankruptcy office’s files.
The bankruptcy office said it will safeguard the records from trolling marketers.