Directive No. 6R5, Assessment of an Individual Debtor

Date: January 27, 2022

To: OSB Staff and Trustees

Subject: Directive No. 6R5, Assessment Of An Individual Debtor

The Office of the Superintendent of Bankruptcy (OSB) is issuing Directive No. 6R5, Assessment Of An Individual Debtor to correct an error discovered in paragraph 22(1) of the previous version of the Directive and to incorporate additional amendments.

Paragraph 22(1) of Directive No. 6R4 has been amended to clarify exceptions to the requirement that a Licenced Insolvency Trustee (LIT), or the individual delegated by the LIT, complete the assessment of a debtor in-person or by videoconference in accordance with the debtor’s fully informed choice. The paragraph has been renumbered as paragraph 21(1) of Directive No. 6R5.

Paragraph 7 of Directive No. 6R4 has been moved to paragraph 22 of Directive No. 6R5 under the part of the Directive that discusses exceptions.

The Assessment Certificate has been amended to clarify the debtor’s responsibilities for future payments.

Due to the amendments mentioned above, other paragraph numbering has changed as a matter of formatting.

Some terminology in the French language version of the Directive has been updated for clarification purposes.

Please note that Directive No. 28R, Non-Resident Office; Directive No. 13R7, Trustee Licensing; and all rules surrounding LIT licence extensions to additional provinces and territories remain in effect.

Coming into Force

The amendments to Directive No. 6R5, Assessment Of An Individual Debtor come into force on the date that it is signed. The Assessment Certificate comes into force on April 30, 2022.

Enquiries

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

Att.

Elisabeth Lang
Superintendent of Bankruptcy

Issued: January 27, 2022

(Supersedes Directive No. 6R4 issued on December 10, 2021, on the same topic.)

Short Title

1. Assessment Directive.

Interpretation

2. In this Directive,
   • "Act" or "BIA" means the Bankruptcy and Insolvency 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;
   • “Licensed Insolvency Trustee” (LIT) means a trustee or licensed trustee, as defined in section 2 of the BIA and an administrator of consumer proposals as defined in section 66.11 of the BIA;
   • "Rules" means the Bankruptcy and Insolvency General Rules made pursuant to subsection 209(1) of the Act; and
   • “SBA” means Senior Bankruptcy Analyst from the OSB.

Authority and Purpose

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

Guiding Principles

4. When performing the assessment, the LIT shall be guided by the following principles:
   1. Debtor’s Choice: Upholding a standard of informed debtor choice following full disclosure to the debtor that the assessment may be completed in person or by videoconference, at the debtor’s choice;
   2. Privacy: Having adequate facilities and equipment to ensure the assessment process respects and maintains the privacy of the debtor; and
   3. No Third Party Influence: Only LITs, or those individuals delegated by LITs to perform the tasks stated in paragraph 12 of this Directive, are authorized to perform certain functions under the BIA, Rules and Directives.

Policy

5. The LIT shall complete the assessment in-person or by videoconference with the debtor in accordance with the debtor’s fully informed choice.
6. “Fully informed choice” means the debtor’s voluntary decision whether to complete the assessment in person or by videoconference after the LIT discloses the choices and location of the in-person service to the debtor. LITs shall always offer to complete the assessment with the debtor, either in person or by videoconference, unless an exception exists under paragraphs 21 or 22 of this Directive.
7. Where the debtor chooses assessment services by videoconference, the debtor retains the ability to choose to access in-person services with the LIT at any stage during the administration of the estate, if and when a meeting with the LIT is required to be held with the debtor present pursuant to the provisions of the BIA, as the case may be.
8. The LIT shall confirm the identity of the debtor by reviewing at least one valid piece of government-issued identification or another document that the LIT reasonably believes proves the debtor’s identity. A copy of anything relied on by the LIT to confirm the identity of the debtor shall be retained in the LIT’s files.
9. LITs may delegate only those tasks stated in paragraph 12 of this Directive.
10. Those individuals delegated by LITs to perform the tasks stated in paragraph 12 must satisfy the requirements listed in Schedule B of this Directive.
11. During the course of an assessment, when LITs 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

12. 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;
       11. the discharge process and types of discharge orders; and
       12. debts that are statute barred.
13. If the tasks noted above were delegated, and the debtor is considering a solution under the Act (except Part X), the LIT shall complete the assessment in person or by videoconference with the debtor.
14. To assist in choosing the appropriate option pursuant to the Act, the LIT 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 LIT'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.
15. 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

16. The LIT 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.
17. If the LIT determines the debtor has the potential to file a viable proposal, the LIT shall inform the debtor of the LIT's duty pursuant to paragraph 19 of this Directive.
18. If the LIT 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 LIT shall describe those circumstances in the section 170 report.
19. If the LIT 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 LIT shall comment in the section 170 report that a viable proposal could have been filed.

Assessment Certificate

20. At the end of the assessment, the LIT shall sign 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; and
    3. provide the official receiver with a copy of the Assessment Certificate referred to in paragraph 20(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

21. (1) The requirement in paragraphs 5 and 9 of this Directive that an LIT or the individual delegated by the LIT complete the assessment of a debtor in-person or by videoconference in accordance with the debtor’s fully informed choice, does not apply in a designated area. In such designated area, the duties imposed in paragraphs 12 and 14 of this Directive may be discharged by videoconference, if available, or by telephone if videoconferencing is not available to the debtor.

• (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.

22. The LIT shall not complete the assessment by any method other than those enumerated in paragraph 5 of this Directive without prior approval from the SBA, unless the debtor is in a designated area as provided for under paragraph 21 of this Directive.

Coming into Force

23. This Directive comes into force on the date that it is signed. The Assessment Certificate comes into force on April 30, 2022.

Enquiries

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

Elisabeth Lang
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:
Name of LIT (first name, last name)

Re:
Name of debtor (first name, last name)

Date:
Date of assessment (YYYY-MM-DD)

Manner in which the assessment was completed:

1. In person
2. By videoconference
3. By telephone
4. Other (SBA approved) – please specify:

I, the undersigned, hereby certify that I have complied with Directive No. 6R5, Assessment of an Individual Debtor.

I certify that I have offered the debtor the choice of in-person service for the performance of the assessment and I have informed the debtor of the location at which the assessment would take place if the debtor were to choose to attend the assessment in person.

I certify that I have informed the debtor where I am located, where the counsellor is located, and where any meeting of creditors will be located, should one be required.

I certify that I have informed the debtor that the debtor may also request in-person service from me at any time going forward for any situation where a meeting would be required pursuant to the provisions of the BIA, as the case may be.

I certify that I was assisted in the performance of the assessment by .
(name of registered individual, if applicable)(first name, last name)

Date (YYYY-MM-DD)

Signature of LIT (first name, last name)

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 committed to be paid in addition to the name of the provider of financial advice for any and all providers of such service (mandatory):

• The amount paid: $  and the amount committed to be paid: ;
• The name of the provider of financial advice (first name, last name): ;
• The name of the firm/organization of the individual provider of financial advice: ; and
• The address of the firm/organization noted above (full municipal address following Canada Post address format): .

(Repeat as necessary for multiple entries.)

I acknowledge the LIT has offered me the choice of in-person service for performance of the assessment referred to in this certificate and has informed me of the location at which the assessment would take place if I were to choose to attend the assessment in person.

I acknowledge the LIT has informed me where the LIT is located, where the counsellor is located, and where any meeting of creditors will be located, should one be required.

I understand I may also request in-person service from the LIT at any time going forward for any situation where a meeting with the LIT would be required pursuant to the provisions of the BIA, as the case may be.

I understand that any fees paid for financial advice as indicated above were optional and not required in order to file a proposal or assignment in bankruptcy.

Furthermore, I am not required to make any additional payments for financial advice already received. Any obligation for future payments to the provider of financial advice can be discharged through any of the options under the BIA listed above. Note this does not include payments to the LIT related to my bankruptcy or consumer proposal.

Date (YYYY-MM-DD)

Signature of the debtor (first name, last name)

Appendix B

Individual Assisting in the Assessment

1. Since January 1, 1995, only LITs are authorized to provide the assessment. However, registered individuals may be authorized to provide part of the assessment as described in Directive No. 6R5, Assessment of an Individual Debtor.

Qualification of Registered Individuals

2. In order to be registered with the Designated SBA to provide that portion of the assessment that may be delegated, the following conditions will apply:

   The LIT shall certify to and obtain approval from the Designated SBA that the individual delegated to conduct the assessment:

   1. has and continues to have an employee or agent relationship with the LIT; 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 LIT shall advise the Designated SBA in writing of any reason or change that would make the registered individual ineligible for certification. This notice will be provided within ten (10) days of the LIT becoming aware of its occurrence.