Tilting the Playing Field Away from the Discharge of Debts
The Case of Consumer Proposals in Canada
Bibliographic Data
| ID | 6417477 |
|---|---|
| Authors | Schwartz (0000-0002-9994-3740, Carleton University), Saul Schwartz (Carleton University), Stephanie Ben‐ishai (York University), Stephanie Ben-Ishai (Osgoode Hall Law School, York University, Toronto, Ontario, Canada) |
| Year | 2025 |
| Volume | 51 |
| Issue | 2 |
| Pages | 165-190 |
| Publication date | 2025-05-09 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Canadian Public Policy (JOURNAL) |
| Journal identifiers | ISSN: 0317-0861 • E-ISSN: 1911-9917 |
| Publisher | University of Toronto Press Inc. (UTPress) (PUBLISHER) |
| DOI | 10.3138/cpp.2024-041 |
| OpenAlex | W4410232359 |
| Language | EN |
| References cited | 8 |
We examine the increasing prevalence of consumer proposals as a debt relief option in Canada, highlighting the shift in insolvency regulation toward creditor interests and the implications of this for debtors. Canada has two federally regulated debt relief options. One is bankruptcy, which generally offers the discharge of most debts after nine months but requires that large assets, such as homes and cars, be sold for the benefit of creditors. The other is the consumer proposal, which protects large assets (e.g., homes and vehicles) but requires monthly payments for 60 months before any debt is forgiven. Consumer proposals have become significantly more common over time, rising from 23 percent of consumer insolvencies in 2009 to 79 percent in 2024. Using the Oaxaca–Blinder decomposition and data on the universe of insolvencies in 2011 and 2019, we show that changes in the average characteristics of the debtors—debts, assets, and income—do not account for this increase. Instead, unobservable factors are at the root of the increase. We hypothesize that it is the behaviour of those who benefit financially from the increase—the licensed insolvency trustees who administer the procedures and the large creditors—that is the most likely unobserved influence
Advertising · Art · Business · Debt · Field (mathematics · Banking stability, regulation, efficiency · Canadian Policy and Governance · Credit Risk and Financial Regulations · Mathematics · Finance
| Highly cited | No |
|---|