Creditors' Remedies against Debtors (10:III): Difference between revisions
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Creditors' Remedies against Debtors (10:III) (view source)
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*first, toward the reasonable expenses of seizing, repairing, etc.; | *first, toward the reasonable expenses of seizing, repairing, etc.; | ||
*second, toward the satisfaction of the obligations owed to the secured party; and | *second, toward the satisfaction of the obligations owed to the secured party; and | ||
*last, if any surplus exists, to the satisfaction of obligations owed to persons holding a subordinate security interest, and then toward the debtor (s 60). | *last, if any surplus exists, to the satisfaction of obligations owed to persons holding a subordinate security interest, and then toward the debtor (s 60(2)). | ||
A person who buys an item from a disposal sale takes the good free and clear of the interests of the secured party, but also debtors, , and any subordinate creditors whether or not the secured party complied with the requirements of section 59(14). In the case of a prior secured creditor’s interest, if the goods are “consumer goods” of a value less than $1,500 (and not fixtures) and the purchaser gave value for the goods, the purchaser takes them free of the prior secured creditor’s interest (see ss 30(3-4)). | A person who buys an item from a disposal sale takes the good free and clear of the interests of the secured party, but also debtors, , and any subordinate creditors whether or not the secured party complied with the requirements of section 59(14). In the case of a prior secured creditor’s interest, if the goods are “consumer goods” of a value less than $1,500 (and not fixtures) and the purchaser gave value for the goods, the purchaser takes them free of the prior secured creditor’s interest (see ss 30(3-4)). | ||
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In addition, s 71.1(1) of the ''COEA'' exempts the principal residence of the debtor; $12,000 is the prescribed amount of equity exemption if the debtor's principal residence is located within the boundaries of the Capital Regional District or the Greater Vancouver Regional District. If the debtor’s principal residence is located outside of these boundaries, $9,000 is the prescribed amount of equity exemption. These values are calculated using the net equity. | In addition, s 71.1(1) of the ''COEA'' exempts the principal residence of the debtor; $12,000 is the prescribed amount of equity exemption if the debtor's principal residence is located within the boundaries of the Capital Regional District or the Greater Vancouver Regional District. If the debtor’s principal residence is located outside of these boundaries, $9,000 is the prescribed amount of equity exemption. These values are calculated using the net equity. | ||
Section 71.3 of the COEA specifies that property in registered plans may be exempt from seizure as well (including Deferred Profit Sharing Plans, Registered Retirement Income Funds and/or Registered Retirement Savings Plans). In order to qualify for an exemption, the plan must be registered similar to the Registered Retirement Savings Plan. However, there are some employee DPSPs that are not registered and exempt from seizure. Notwithstanding this section, property can be seized despite being in a registered plan if it was contributed to the plan after or within 12 months before the date on which the debt became due. Under section 1(1) the "Family Maintenance Enforcement Act", a maintenance debtor refers to “a person required under a maintenance order to pay maintenance costs”. | |||
:'''NOTE:''' Refer to BC Reg 28/98 (Court Order Enforcement Exemption Regulations) for further details regarding exemptions under the ''COEA''. Where there are competing priority interests between judgment creditors and secured parties, each party should seek the assistance of counsel. | :'''NOTE:''' Refer to BC Reg 28/98 (Court Order Enforcement Exemption Regulations) for further details regarding exemptions under the ''COEA''. Where there are competing priority interests between judgment creditors and secured parties, each party should seek the assistance of counsel. | ||
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*c) Corporate debtors cannot avail themselves of the personal property exemption. | *c) Corporate debtors cannot avail themselves of the personal property exemption. | ||
In addition, s 65 of the | In addition, s 65 of the "Insurance Act", RSBC 1996, c 226 allows for the exemption of certain insurance policies. Under s 65(1), if a beneficiary is designated, the insurance money, from the time of the happening of the event on which the insurance money becomes payable, it is not part of the estate of the insured and not subject to creditors of the insured. Under s 65(2), while there is in effect a designation in favour of a spouse, child, grandchild or parent of the insured, the insurance money and rights or interests of the insured in the money and in the contract are exempt from execution or seizure. | ||
'''The ''Bankruptcy and Insolvency Act'', 1985, s 67(1)(b.3) now shields all RRSP contributions from seizure in a bankruptcy, except those made in the 12 months prior to bankruptcy.''' | '''The ''Bankruptcy and Insolvency Act'', 1985, s 67(1)(b.3) now shields all RRSP contributions from seizure in a bankruptcy, except those made in the 12 months prior to bankruptcy.''' | ||
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If the order has already been made, the creditor should examine the possibility of having the garnishment released and an order for payment by instalments substituted under s 5, or in the case of garnishment of wages, having the exemption lowered under s 4. The creditor should be advised that hardship may be used as a defence. | If the order has already been made, the creditor should examine the possibility of having the garnishment released and an order for payment by instalments substituted under s 5, or in the case of garnishment of wages, having the exemption lowered under s 4. The creditor should be advised that hardship may be used as a defence. | ||
Typically, it is the debtor who applies for a release of a garnishment order to substitute for an order for payment by instalments. However, if the order has already been made, the creditor should examine the possibility of having the garnishment released and an order for payment by instalments substituted under s 5. The creditor can also seek to have exemptions lowered in the case of garnishment of wages under s 4, resulting in the debt being repaid faster. The creditor should be advised that hardship may be used as a defence. | |||
A garnishee who wishes to dispute indebtedness to the defendant or judgment debtor, should file a dispute notice as soon as possible with the court. If they do not dispute it, a second order, called an order absolute may be issued (see [[Relevant Forms for Creditors%27 Remedies (10:App A) | Appendix A: List of Relevant Documents]]: '''Affidavit in Support of Garnishing Order After Judgment'''). This order operates as a judgment and execution may be taken against him or her. '''Inactivity could render a garnishee liable even if they never owed the money to the defendant/judgment debtor.''' | A garnishee who wishes to dispute indebtedness to the defendant or judgment debtor, should file a dispute notice as soon as possible with the court. If they do not dispute it, a second order, called an order absolute may be issued (see [[Relevant Forms for Creditors%27 Remedies (10:App A) | Appendix A: List of Relevant Documents]]: '''Affidavit in Support of Garnishing Order After Judgment'''). This order operates as a judgment and execution may be taken against him or her. '''Inactivity could render a garnishee liable even if they never owed the money to the defendant/judgment debtor.''' | ||
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==== c) Variation of Exemption ==== | ==== c) Variation of Exemption ==== | ||
A debtor whose wages | A debtor whose wages have been garnished may apply under s 4 of the COEA to have the exemption varied. The registrar or judge shall, within three days after receiving the application, notify persons affected by it and a hearing will be held within seven days. | ||
With respect to maintenance orders, under s 18(2) of the ''Family Maintenance Enforcement Act'', upon application by a creditor, the court can issue a garnishing order against the debtor without giving notice. | With respect to maintenance orders, under s 18(2) of the ''Family Maintenance Enforcement Act'', upon application by a creditor, the court can issue a garnishing order against the debtor without giving notice. | ||
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=== 8. Enforcing a Judgment Outside of BC === | === 8. Enforcing a Judgment Outside of BC === | ||
It is possible to register a B.C. judgment in many foreign jurisdictions, including other Canadian provinces. The requirements for registration may differ from jurisdiction to jurisdiction, so the judgment creditor should consult with counsel in the destination jurisdiction to determine the specific requirements. | It is possible to register a B.C. judgment in many foreign jurisdictions, including other Canadian provinces. The requirements for registration may differ from jurisdiction to jurisdiction, so the judgment creditor should consult with counsel in the destination jurisdiction to determine the specific requirements. A s 30 application to B.C. courts gives the court jurisdiction to issue a certificate in a reciprocating jurisdiction. | ||
It is also possible, and sometimes more efficient, to sue on the judgment in the province or country where the judgment debtor’s assets are located. Normally the foreign court requires a certificate. To obtain a certificate in BC, creditors must file an application to the court that asks for a certificate to be issued (''COEA'' s 30). | It is also possible, and sometimes more efficient, to sue on the judgment in the province or country where the judgment debtor’s assets are located. Normally the foreign court requires a certificate. To obtain a certificate in BC, creditors must file an application to the court that asks for a certificate to be issued (''COEA'' s 30). | ||