B. Orderly Payment of Debts

AuthorRoderick J. Wood
ProfessionFaculty of Law. University of Alberta
Pages525-527

Page 525

The orderly payment of debts provisions are set out in Part X of the BIA. These were introduced in 1966 after similar provisions contained in provincial legislation in Alberta were held to be unconstitutional.76

Part X of the BIA (the "OPD") does not apply throughout Canada, since jurisdictions must proclaim it into force in order to bring it into operation.77The OPD is currently available only in Alberta, Saskatchewan, Nova Scotia, and Prince Edward Island.

Page 526

A consolidation order under the OPD provisions differs from a consumer proposal in several important respects. A consolidation order is not voted upon by the creditors or approved by a court. It is a mechanism under which the various debts are consolidated into a single amount that is paid to the clerk of a court and then distributed to the creditors by way of dividend. A consolidation order does not permit a compromise of the claims. The debtor must pay the debts in full, except that the interest on the debts that accrues after the consolidation order is fixed at 5 percent.78

1) Eligibility

The OPD originally was restricted to claims that did not exceed $1,000, but the monetary restriction has been eliminated by regulation.79The debtor must reside in a province in which the OPD provisions are in force.80The debtor must be an insolvent person but cannot be a corporation.81A debt that is incurred by a debtor in connection with a trade or calling or a debt associated with a mortgage or agreement for sale of land cannot be included in a consolidation order.82

2) Application for a Consolidation Order

A debtor may apply to a clerk of the court by filing an affidavit that sets out details of the debtor’s financial situation.83The clerk of the court reviews the information and settles the amount and frequency of payments into court.84In doing so, the clerk of the court is not empowered to adjudicate upon the reasonableness of the debtor’s estimate of what can be paid to the creditors, but must accept the amount proposed by the debtor.85The creditors are notified and given an opportunity to object to the amount entered as owing to the creditor or to the amounts and times for payment by the debtor under the consolidation order.86

Page 527

The consolidation order must provide for payment in full of all debts covered by...

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