Debtor Assistance and Debt Advice: The Role of the Canadian Credit Counselling Industry

A continuing theme of our work, and that of others, has been the failure of insolvency law to keep pace with the new problems faced by low-income debtors. Researchers have suggested that the cost of personal bankruptcy puts it beyond the reach of many of those in need of it, though it has proven difficult to demonstrate conclusively that large numbers of low income debtors would take advantage of bankruptcy if the price was lower. In this paper, we analyze another industry — the not-for-profit credit counselling industry — that has grown rapidly in recent years and that offers a different sort of remedy for financial distress. We begin in Section II with a brief history of the credit counseling industry in Canada and in the US. We show how the industry has evolved from a small set of government-subsidized and community-based not-for-profit groups into an industry that is heavily subsidized by credit suppliers and, for the most part, lacking any significant community connection. In Section III, we briefly set out the regulatory framework that seems to encompass credit counselling agencies (“CCA”), both for-profit and not-for-profit. We do not, however, reach any conclusions on the application of this framework to Canadian CCA. Instead, we describe the concepts underlying the framework in a coordinated way. In Section IV, based on a set of mystery calls to the largest CCA, we show that most simply have nothing to offer low-income debtors and that most do not do a good job of providing information concerning the alternatives available to them. Rather than introducing substantive legislative or legal rules to help low-income debtors, the Canadian federal government has chosen instead to promote financial education with its 2010 Task Force on Financial Literacy. In Section V, we briefly analyze the Task Force process, suggesting that it largely overlooked the needs of the poor

Bankruptcy for the Poor?

The conventional wisdom is that the poor are not heavy users of the insolvency system, because creditors are unwilling to take risks on the poor and because many of the poor are judgment-proof. However, credit is now widely available across the spectrum of income groups. In addition, poverty is often a temporary state for many Canadians; therefore, being judgment-proof is likewise temporary. Some of those who are poor at any point in time are in fact in need of bankruptcy protection. They have debts that they are unable to pay and little likelihood of being able to repay in the near future. We begin by presenting evidence on indebtedness among families in the lower income deciles. We then turn to the main question: should the Canadian bankruptcy process be more readily available to poor debtors? Following a comparative analysis (considering the United States, Australia, New Zealand, and the United Kingdom) and analysis of interviews with Canadian bankruptcy trustees and other insolvency professionals, we offer six recommendations for reform

Credit Counselling in Canada: An Empirical Investigation

When debt becomes unmanageable, two options for a consumer debtor in Canada are: (1) enlisting the services of a bankruptcy trustee, and (2) becoming a client of a not-for-profit credit counselling agency. Each of these options is regulated differently and has public and private dimensions. At first glance, these two options might seem to illustrate the potential of multiple legal orders to better serve the public. In this paper, however, we argue, based on empirical research on the credit counselling industry, that while this pluralism has potential to facilitate debt relief in Canada, it has failed to do so. The lines between public and private options have been blurred to the point where they are difficult to discern, and the consumer debtor is ultimately disadvantaged

Bankruptcy for the Poor?

For two reasons, the conventional wisdom is that the poor are not heavy users of the insolvency system. First, creditors are reluctant to extend credit to the poor because the risks of non-payment are high. Not having been able to borrow, the poor are not over-indebted and are therefore not in need of bankruptcy protection. Second, some poor debtors - lone parents on social assistance for example - are judgment-proof meaning that judgments for money recoveries obtained by their creditors are of no effect because these debtors do not have sufficient non-exempt property or income to satisfy the judgment. Developments in two areas may challenge the conventional view. Undoubtedly, credit is now widely available across the spectrum of income groups. Even a short-term, low-wage job can bring a credit card to the doorstep of the poor and the slogan no credit, no problem testifies to the availability of retail credit. In addition, we now know that poverty is often a temporary state for many Canadians, with many moving in and out of low-income. Accordingly, the judgment-proof state is not a permanent condition, but a temporary status for many. While this may be welcome news in some respects, it means that debts can be accumulated during periods of relative economic well-being only to go unpaid when a job ends or when hard times return. These developments suggest the possibility that some of those who are poor at any point in time are in fact in need of bankruptcy protection. They have debts that they are unable to pay and little likelihood of being able to repay in the near future. We begin the paper by presenting evidence from the 1999 Survey of Financial Security on indebtedness among families in the lower income deciles. We then turn to the main question: should the Canadian bankruptcy process be more readily available to poor debtors. We draw on two sources to shed light on this question: a) a comparative analysis (considering England and Wales, the United States, Australia and New Zealand) and b) a series of semi-structured interviews with Canadian bankruptcy trustees and other insolvency professionals

Bankruptcy for the Poor?

The conventional wisdom is that the poor are not heavy users of the insolvency system, because creditors are unwilling to take risks on the poor and because many of the poor are judgment-proof. However, credit is now widely available across the spectrum of income groups. In addition, poverty is often a temporary state for many Canadians; therefore, being judgment-proof is likewise temporary. Some of those who are poor at any point in time are in fact in need of bankruptcy protection. They have debts that they are unable to pay and little likelihood of being able to repay in the near future. We begin by presenting evidence on indebtedness among families in the lower income deciles. We then turn to the main question: should the Canadian bankruptcy process be more readily available to poor debtors? Following a comparative analysis (considering the United States, Australia, New Zealand, and the United Kingdom) and analysis of interviews with Canadian bankruptcy trustees and other insolvency professionals, we offer six recommendations for reform

The Role of Governments in the Overindebtedness of the Economically Disadvantaged

In this article, Professors Stephanie Ben-Ishai and Saul Schwartz examine several ways in which the government becomes a creditor of economically disadvantaged Canadians and its role in limiting the options available for resolving the resulting overindebtedness. Specifically, the authors explore how government transfer programs, and the debts that result from benefit overpayment, affect those already marginalized by poverty. Ben-Ishai and Schwartz then argue that the two main remedies available to Canadians facing insolvency - credit counselling and bankruptcy - are simply too costly for low-income individuals, a term the authors use to describe those who are poor even before they incur the serious debts leading up to an insolvency. Low-income Canadians coping with government debt are shown to be in a unique and difficult position with respect to repayment. Using the overpayments that can occur within transfer programs such as Ontario Works (OW) and the Ontario Disability Support Program (OSDP) to illustrate the particular issues affecting low-income individuals, the authors demonstrate the lack of recourse this group has when dealing with insolvency. Ben-Ishai and Schwartz analyze this issue using the statutory framework, interviews with government program officials and data on social assistance overpayments to cast doubt on the assumption that those with low income have no need for bankruptcy and credit counselling. In so doing, the authors ultimately question whether existing insolvency remedies are serving the needs of all Canadians

Perceived changes to quality of life indicators following a physical activity intervention for recovering cancer patients: A qualitative study

The aim of this study was to examine the perceived changes to the quality of life (QoL) for a group of recovering cancer patients, following 6 months of physical activity. Background Evidence suggests that physical activity can improve the QoL of recovering cancer patients, reducing many of the side-effects of cancer and its related treatments, including depression, anxiety, chronic fatigue and improve physical and psychological health. Method A qualitative study with 14 mixed site cancer patients aged 43-70 (12 women, 2 men). The intervention was in 2 parts the first part was an 8-week physical activity programme, the second part related to a period of non-supervised, physical activity for 4 months (6 months in total). The Programme took place at a university in the South West of England. Semi-structured interviews with patients took place 3 times over 6 months. A grounded theory approach was used to analyse the data. Results We found that prior to the 6-month physical activity intervention many of the patients were anxious about being able to complete the initial 8 week programme. Anxieties related to low self-esteem and the chronic fatigue resulting from their cancer treatment. Consequently several patients expressed concerns about their ability to help themselves self-manage their recovery through physical activity. On completion of the intervention the majority of patients reported improvements in their perceived QoL relating to their ability to self-manage, their self-efficacy, energy levels, along with decreases in chronic fatigue. Conclusion Our study has provided valuable insights into how the perceived QoL of a group of recovering cancer patients can be improved through a combined 6-month period of supervised and independent physical activity. These findings serve as further evidence of the effectiveness of a person centred healthcare approach for recovering cancer patients

Person-centred, physical activity for patients with low back pain: piloting service delivery

Low back pain (LBP) is one of the most common and costly conditions in industrialized countries. Exercise therapy has been used to treat LBP, although typically using only one mode of exercise. This paper describes the method and initial findings of a person-centered, group physical activity programme which featured as part of a multidisciplinary approach to treating LBP. Six participants (aged 50.7 ± 17 years) completed a six-week physical activity programme lasting two hours per week. A multicomponent approach to physical activity was adopted which included aerobic fitness, core activation, muscular strength and endurance, Nordic Walking, flexibility and exercise gaming. In addition, participants were required to use diary sheets to record physical activity completed at home. Results revealed significant (p < 0.05) improvements in back strength (23%), aerobic fitness (23%), negative wellbeing (32%) and disability (16%). Person’s Correlation Coefficient analysis revealed significant (p < 0.05) relationships between improvement in perceived pain and aerobic fitness (r = 0.93). It was concluded that a person-centered, multicomponent approach to physical activity may be optimal for supporting patients who self-manage LBP