Stop Eviction: Rental Arrears and Consumer Proposals or Bankruptcy
Rental Arrears
Falling behind on your bills often means also falling behind on your rent. While most individuals prioritize their landlord over other creditors to avoid the threat of eviction, few understand that a Consumer Proposal or Bankruptcy can be used to help you get caught up on your rent and avoid eviction.
Maybe your only a few months behind on your rent, or maybe your landlord has already applied for an order to evict you for non payment of rent. Regardless, Canadian law known as the Bankruptcy and Insolvency Act (Canada) (the “Act”) provides a Stay of Proceedings in accordance with s69 of the Act staying (or pausing) a creditor’s right to any remedy against the insolvent person or the insolvent person’s property, and their ability to commence or continue any action, execution or other proceeding, for the recovery of a claim provable in bankruptcy (or a consumer proposal).
In O’Shanter Developments Co. v. Zhulina (2002), 37 C.B.R. (4th) 111, 2002 CarswellOnt 3795 (Ont. Rental Housing Trib.) Member Rogers, of the Ontario Rental Housing Tribunal notes that the remedy that a landlord seeks from an application to evict is based on a debt for rent which is a claim provable in bankruptcy (or a consumer proposal). Member Rogers goes on to state that when an insolvent person files a proposal or bankruptcy the landlord can no longer proceed to recover that debt. Furthermore, the Member notes that s69 of the Act is wider than that and also stays that the creditor does not have any remedy against the insolvent person. The remedy of eviction that has its origin in the debt is therefore also stayed based on the plain meaning of s69.
It is important to note that the tenant remains responsible for any rent accruing after they file a consumer proposal or bankruptcy.
If you are behind on your rent, don’t want to move, and are able to afford your rent in the future, then a consumer proposal or bankruptcy may be just the tool to avoid an eviction, and help you get caught up. If you are struggling with other debts a consumer proposal or bankruptcy will consolidate all of your debts into one single payment, stop interest from accruing, stop collection calls, and in most cases reduce your debt substantially. For more information on consumer proposals, please visit our consumer proposal page.
Utilities – Hydro, Water, Gas
Hydro, water, gas, and other utility arrears can also be resolved through a consumer proposal or bankruptcy. s66.34(3) of the Act states that no public utility may discontinue service to an insolvent person by reason only of the filing of a consumer proposal even if there were arrears owing at the time of the filing of the consumer proposal. However, it is important to note that a public utility need not supply any further services unless arrangements are made for payment for those services.
In our experience, we have had limited success addressing utility bill arrears through consumer proposals or bankruptcy. Telephone and internet services are easy to address as you can simply change providers and include your debt to the old provider in your consumer proposal or bankruptcy. When it comes to hydro, water, and gas you often can’t select which supplier you use. While I would always suggest listing hydro, water, or gas arrears in a proposal or bankruptcy, if the utility company chooses not to file a proof of claim it is likely easier said than done to practically have your pre-filing arrears accurately discharged upon the full performance of your consumer proposal or discharge from bankruptcy.
Free Consultations
If you’re struggling with debt of any kind, regardless of your specific situation we suggest giving us a call at (416) 246-7771 so that a Licensed Insolvency Trustee can review your circumstances, answer your questions, and provide you with free advice. We’re always happy to help.
Steve Welker and Company Inc. has been in business since 2014 and has helped thousands upon thousands of Ontarians become debt free. We have offices throughout Ontario and also offer video and telephone consultations.