Directive No. 6R3

Assessment of an Individual Debtor

The Office of the Superintendent of Bankruptcy (OSB) has amended paragraph 12 of Directive No. 6R2, Assessment Of An Individual Debtor, to correct a mistake in reference. In paragraph 12, the correct reference should be to paragraph 14 rather than 15.

Coming into Force

The Directive No. 6R3, Assessment Of An Individual Debtor comes into force on April 30, 2010.

Enquiries

If you require further information, please do not hesitate to contact the OSB office nearest you.

James Callon
Superintendent of Bankruptcy


Issued: April 30, 2010

(This Directive supersedes Directive No. 6R2 issued on August 14, 2009, on the same topic)

Short Title

  1. Assessment Directive.

Interpretation

  1. In this Directive,
    • "Act" means the Bankruptcy and Insolvency Act;
    • "administrator" means an administrator of consumer proposals as defined in section 66.11 of the Act;
    • "assessment" means the first stage of the insolvency process, providing for a financial appraisal interview, a description of statutory and non-statutory options available to an individual debtor, and a discussion and review with that debtor of the merits and consequences of his or her choice;
    • "OSB" means the Office of the Superintendent of Bankruptcy;
    • "Rules" means the Bankruptcy and Insolvency General Rules made pursuant to subsection 209(1) of the Act.

Authority and Purpose

  1. This Directive is issued pursuant to paragraphs 5(4)(b) and (c) of the Act and establishes the duties and responsibilities of trustees and administrators in performing the assessment prior to filing an assignment in bankruptcy or making a proposal.

Policy

  1. Trustees and administrators may delegate only those tasks stated in paragraph 7 of this Directive.
  2. Those individuals delegated by trustees or administrators to perform the tasks stated in paragraph 7 must satisfy the requirements listed in Schedule B of this Directive.
  3. During the course of an assessment, when trustees or administrators identify the need for referral for non-budgetary counselling, they shall encourage the debtor to attend such counselling and attendance is at the debtor's discretion.

Standards

  1. For the purpose of the assessment, the individual conducting the assessment, or the relevant portion of it, shall inquire about the debtor's property and financial affairs and shall:
    1. prepare, on the basis of information obtained from the debtor, a complete statement of the debtor's financial affairs setting forth the following details:
      1. the debtor's assets;
      2. the debtor's liabilities;
      3. a detailed current monthly income and expense statement, including all income, gross and net, and all expenses, including special-needs expenses, alimony, support or maintenance payments, transportation costs, and medical and prescription expenses; and
      4. transfers, preferences and settlements of real or personal property of the debtor;
    2. discuss with the debtor his or her views respecting the debtor's immediate problems, evaluate the extent and nature of the problems facing the debtor, and review approaches for dealing with those problems;
    3. identify and discuss, in general, the options available to debtors for resolving financial difficulties, including a discussion of the rights and responsibilities of debtors and creditors under each of the following options:
      1. non-legislative debt-settlement arrangements;
      2. an Orderly Payment of Debts under Part X of the Act, or similar option under provincial legislation, if applicable;
      3. a consumer proposal under Division II of Part III of the Act;
      4. a proposal under Division I of Part III of the Act; and
      5. an assignment in bankruptcy under section 49 of the Act; and
    4. explain the general meaning of the following credit and insolvency matters if pertinent to the circumstances:
      1. garnishment;
      2. co-signers;
      3. credit rating;
      4. assets;
      5. legal action;
      6. payments;
      7. windfalls;
      8. tax returns;
      9. tax credits;
      10. mediation; and
      11. the discharge process and types of discharge orders.
  2. If the tasks noted above were delegated, and the debtor is considering a solution under the Act (except under Part X), the trustee or the administrator shall complete the assessment in person with the debtor.
  3. To assist in choosing the appropriate option pursuant to the Act, the trustee or administrator shall discuss and review with the debtor:
    1. the debtor's views of the situation;
    2. the merits and consequences of the pertinent options;
    3. the rights and responsibilities of the debtor in a bankruptcy or a proposal;
    4. the specific effect of relevant credit and insolvency matters as they relate to the debtor's circumstances (i.e. wage garnishments, co-signing, credit rating, taxes, fees);
    5. the possible outcome of the discharge process as it may relate to the debtor's circumstances, including the trustee's statutory responsibility to report on any fact, matter or circumstances that may, if an opposition is filed, justify the Court's refusal to grant an absolute order of discharge;
    6. the responsibility of a bankrupt to contribute surplus income to the estate, if appropriate; and
    7. the type and nature of counselling adapted to the debtor's needs that will be offered to assist in rehabilitation.
  4. If at any time during the course of the above process the debtor chooses an option to which the Act does not apply, the process, as described herein, ceases and an Assessment Certificate will not be required.

Viable Proposals

  1. The trustee shall determine whether or not the debtor has the potential to file a viable proposal by considering the following factors:
    1. the debtor
      1. has sufficient property available to make a "lump sum payment" proposal, or
      2. has surplus income in accordance with Directive No. 11R2, Surplus Income, and also has the capacity at the time of assessment to sustain continued payments to a proposal for a period of time;
    2. the family or personal situation of the debtor;
    3. the financial situation of the debtor;
    4. the number and type of creditors of the debtor, both secured and unsecured;
    5. the likelihood of acceptance of a proposal by the creditors; and
    6. whether the return to creditors from a potential proposal would be greater than the return from a bankruptcy.
  2. If the trustee determines the debtor has the potential to file a viable proposal, the trustee shall inform the debtor of the trustee's duty pursuant to paragraph 14 of this Directive.
  3. If the trustee determines the debtor has the potential to file a proposal, but it is unlikely that a proposal would be viable because of other circumstances, the trustee shall describe those circumstances in the section 170 report.
  4. If the trustee determines the debtor has the potential to file a viable proposal, and the debtor chooses to file an assignment in bankruptcy rather than a proposal, the trustee shall comment in the section 170 report that a viable proposal could have been filed.

Assessment Certificate

  1. At the end of the assessment, the trustee or administrator shall execute the Assessment Certificate (Appendix A) and shall:
    1. request the bankrupt or consumer debtor to sign the acknowledgement portion of the Certificate, confirming that an assessment has been provided, identifying the statutory option chosen to deal with his or her financial situation and confirming that the consequences of his or her choice have been explained thoroughly to him or her;
    2. retain the above-mentioned Assessment Certificate as part of the estate file of the bankrupt or debtor; and
    3. provide the official receiver with a copy of the Assessment Certificate referred to in paragraph 15(b) as follows:
      1. when bankruptcy is the option, at the time of filing the assignment;
      2. when a proposal is the option, at the time of filing the proposal; or
      3. if a notice of intention is filed, at the time of filing the notice of intention.

Exceptions

    1. The requirement in paragraph 8 that a trustee complete the assessment of a debtor's options for resolving his or her financial situation in person does not apply:
      1. in designated areas if:
        1. the duties imposed in paragraph 7 are discharged in person by an individual registered with the Designated Senior Bankruptcy Analyst for this purpose, and
        2. the trustee discharges his or her duties as listed in paragraph 9 by a telephone or video conference interview with the debtor;
      2. if, in the opinion of the Designated Senior Bankruptcy Analyst, extraordinary circumstances exist, he or she may allow an alternative method to be used in conducting assessment interviews in order to ensure access and availability.
    2. In this section, "designated area" means an area identified from time to time by the Designated Assistant Superintendent:
      1. in which there is no trustee available to conduct assessments in person; and
      2. to which no trustee from another area is willing to travel for the purpose of conducting assessments in person.
    3. The Designated Assistant Superintendent shall maintain a list of "designated areas" for his or her district and distribute it to trustees in his or her district, the Superintendent and all other Designated Assistant Superintendents.

Coming into Force

  1. This Directive comes into force on April 27, 2010.

Enquiries

  1. For any questions pertaining to this Directive, please contact your local OSB office.

James Callon
Superintendent of Bankruptcy

Explanatory note

(This note is not part of the Directive)

The remuneration prescribed by sections 128 and 129 of the Rules includes the fees for the first assessment. For ordinary estates or Division I Proposals, the fees for the first assessment are included in the remuneration taxed by the Court.


Appendix A

Assessment Certificate

To: Superintendent of Bankruptcy

From: space to insert name of trustee or administrator of consumer proposal
Name of trustee or administrator of consumer proposal

Re: space to insert name of debtor
Name of debtor

Date: space to insert date of assessment
Date of assessment

I, the undersigned, hereby certify that I have complied with Directive No. 6R3, Assessment of an Individual Debtor, and that I was assisted in the performance of the assessment by
space to insert name of registered individual, if applicable .
(name of registered individual, if applicable )

Dated at space to insert city this space to insert day day of space to insert month, space to insert year.

space to insert signature of trustee or administrator of consumer proposals
Signature of trustee or administrator of consumer proposals

(please check off box if the assessment was performed in a designated area or pursuant to the extraordinary circumstances provision)

Acknowledgement

I, the undersigned debtor, have consulted with the above-named individual(s).

After having discussed my financial situation and the merits and consequences of each option available, I have decided on the following option.

  1. consumer proposal
  2. Division I Proposal
  3. assignment in bankruptcy

In the last six months, I have not received any advice regarding my financial situation other than the assessment referred to in this certificate.

- or -

In the last six months, I have received advice regarding my financial situation other than the assessment referred to in this certificate.

If other advice was received, indicate the amount paid: $ and the name of the provider of financial advice: space to insert amount paid and name of the provider of financial advice.

Dated at space to insert city this space to insert day day of space to insert month, space to insert year .

space to insert signature of the debtor
Signature of the debtor

Appendix B

Individual Assisting in the Assessment

  1. Since January 1, 1995, only trustees and administrators of consumer proposals are authorized to provide the assessment. However, registered individuals may be authorized to provide part of the assessment as described in Directive No. 6R3, Assessment of an Individual Debtor.

Qualification of Registered Individuals

  1. In order to be registered with the Designated Senior Bankruptcy Analyst to provide that portion of the assessment that may be delegated, the following conditions will apply:

    The trustee or the administrator of consumer proposals shall certify to and obtain approval from the Designated Senior Bankruptcy Analyst that the individual delegated to conduct the assessment:

    1. has and continues to have an employee or agent relationship with the trustee; and
    2. has demonstrated and continues to demonstrate that he or she has the character, ability, integrity, knowledge, experience and skills to perform the assessment adequately having regard to:
      1. length of relevant experience; and
      2. formal training or courses of study.

    The trustee or administrator shall advise the Designated Senior Bankruptcy Analyst in writing of any reason or change that would make the registered individual ineligible for certification. This notice will be provided within 10 days of the trustee becoming aware of its occurrence.


Important notice: The HTML version of this Directive is not the official version. In the event of an inconsistency between the HTML and PDF versions of this Directive, the PDF version prevails. Users are required to exercise due diligence with respect to the HTML version.