In the bustling provinces of Canada, financial challenges are not uncommon. One of the prevalent issues people face is the threat of eviction due to rent arrears. The question arises: Can filing a consumer proposal in Ontario or undergoing a debt consolidation plan halt the eviction process? Let’s delve into this subject.
The Power of Bankruptcy & Consumer Proposal
Both bankruptcy and consumer proposals come with an automatic stay of proceeding. This provision is a lifeline for those on the brink of eviction due to rent arrears. The Bankruptcy & Insolvency Act, through subsections 84.2(1) and 84.2(2), offers protection against contract terminations due to bankruptcy. It implies that your unpaid rent, accumulated up to the filing date, can either be discharged in bankruptcy or forgiven in a consumer proposal.
For consumer proposals, similar provisions are found under sections 66.34(1) and 66.34(2).
Understanding the Eviction Process in Ontario
Eviction in Ontario is a process that takes time. Governed by the Residential Tenancies Act (RTA), a landlord must:
- Issue a termination notice, providing a 14-day notice for monthly rent arrears.
- Apply to the Landlord and Tenant Board for an eviction order.
- The Sheriff can issue a vacate notice if the tenant doesn’t act upon the order.
Federal Over Provincial: The Stay of Proceeding
The Bankruptcy & Insolvency Act (BIA) is a federal legislation that takes precedence over provincial laws. Once a personal bankruptcy or consumer proposal is filed, it effectively halts the eviction process. Any orders from the tribunal or board and notices from the Sheriff are rendered ineffective for rents owed up to the filing date.
Staying in a Rental Unit After Bankruptcy: What You Should Know
Choosing to stay post-filing is a crucial decision. While it can strain the landlord-tenant relationship, moving can pose challenges. Renters must pay for the days they stay in the month post-filing and ensure timely rent payments afterward. Otherwise, landlords can restart the eviction process for non-payment of rent.
The “Renoviction” Dilemma
As real estate prices skyrocket, especially in Ontario, a new trend has emerged: “renoviction.” This is when landlords seek eviction for renovations, selling, or personal use. Filing for insolvency won’t save tenants from a “renoviction.” However, many are choosing insolvency to tackle unsecured debt, making them better equipped to handle the financial aftermath of such evictions.
Landlord’s Role Post-Bankruptcy
If a tenant files a consumer proposal or declares bankruptcy, and they’re in rent arrears, the landlord, being a creditor, gets notified. If tenants are up-to-date with their rent, the landlord remains uninformed. Landlords have the right to claim for arrears owed up to the filing date and can even request a creditors’ meeting.
While declaring bankruptcy or filing a consumer proposal in Ontario can temporarily halt the eviction process, it’s not a long-term solution solely for rent arrears. However, for those drowning in multiple debts, these processes can pave the way for a more manageable financial future, allowing them to keep up with rent and other essential payments. Always consult with a trustee for personalized advice.