Bankruptcy and your 407 ETR debt

Until January 2014, any debts owing to 407 ETR could result in a license plate denial – even if you filed for bankruptcy.

Generally, the federal law states that debts that existed prior to an assignment in bankruptcy are erased after your discharge from bankruptcy. This “fresh start” principle allows an insolvent person to get back on their feet and move forward without the crushing burden of their debt. However, that wasn’t the case with 407 ETR debts in Ontario.

The 407 is owned by a private company, and the Highway 407 Act in 1998 gave the company the right to collect tolls. If you don’t pay your 407 ETR bill, then they have the right to revoke the renewal of your driver’s license plate. 407 ETR took the position that they did not have to re-instate your plate after you filed for bankruptcy, and were technically discharged from their debt, as they were not pursuing collection.

One Hamilton lawyer, David Thompson, had been arguing in the courts for over a year that the provincial legislation was unfair to insolvent drivers and contravened the federal Bankruptcy and Insolvency Act. In December of 2013, the Ontario Court of Appeal agreed. The courts ruled that the 407 arrangement with the province was “incompatible with the fresh start or financial rehabilitation purpose” of Canada’s bankruptcy laws.

“Indeed, it frustrates (bankruptcy) legislation’s heart and the very foundation on which insolvency legislation stands,” wrote Justice Sarah Pepall.

There are still a few outstanding issues that need to be resolved so currently (April 2014) nothing has changed – the 407 is not yet recognizing the decision and are in fact appealing the decision to the Supreme Court. So, if you owe money to the 407 and file for bankruptcy you will not be able to renew your plates – yet.

If debt is taking hold of your life and you need a Fresh Start, contact Taylor Leibow Inc. for advice and solutions.


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