Consumer Proposals, Child Custody and Trial Costs

Consumer Proposals, Child Custody and Trial Costs

The Bankruptcy and Insolvency Act (BIA) in Canada governs that the federal government’s agency the Office of the Superintendent of Bankruptcy (OSB) is responsible for governing and overseeing the national insolvency system. Furthermore, the OSB licenses Licensed Insolvency Trustees, who are persons that manage and administer consumer proposals and bankruptcies.

Both consumer proposals and bankruptcies are initiated by the indebted person contacting a Licensed Insolvency Trustee for help with his or her financial situation. It is often possible for a Licensed Insolvency Trustee to assist with debt management. That can include consolidation of debts, calling and speaking to creditors, or help in general with reworking an indebted person’s budget.

If those voluntary measures do not suffice to resolve the financial problems two formal avenues may require consideration. If the indebted person has some surplus income a consumer proposal is the best avenue forward. It entails getting a Licensed Insolvency Trustee’s help with making a deal with the creditors. The most advantageous with a consumer proposal is that the debtor is allowed to maintain possession of income and assets which is not the case in traditional bankruptcy. Traditional bankruptcy may be the only option if the debtor does not have any income or assets sufficiently to cover the debts.

One debt that may survive a discharge in bankruptcy is a fine or penalty imposed by a court. This was one of the matters addressed by the court in the case Ffrench v. Ffrench. The case involved a couple that divorced in 1994. It was a messy divorce that involved several legal tangles. The wife was finally awarded sole custody of the child, with visitation rights for the husband, as well as joint child support and spousal support in the sum of CAD 700.

In this case, the husband held a rigid position with respect to custody of the child a spousal support. He never conceded paying more than CAD 300 per month and by continuing to litigate which such an unreasonable view increased the legal costs for the wife and, furthermore, by insisting on defending himself, the court was of the opinion that the husband protracted the trial with one and a half day.

Trial costs are not imposed as a punishment on the person who must pay them. Instead, costs are given in the discretion by the courts as partial indemnity to the person entitled to them. Consequently, the court found that the husband had significantly increased the legal costs of the wife by proceeding with legal proceedings that could not have any objective likelihood of success and therefore the husband was forced to pay a larger amount to the wife that would have been appropriate in normal circumstances.

Contact a Licensed Insolvency Trustee today for assistance with financial problems.