Insolvency Searches

Recently the Office of the Superintendent of Bankruptcy (“OSB”) announced that it is modernizing its Insolvency Record Search function including the elimination of the $8.00 fee charged to the general public.

The announcement of the fee elimination caused a bit of concern by some in the insolvency community thinking that insolvency records could now be searched by anyone, for free.  It was suggested that this would eliminate the confidentiality of an individual declaring bankruptcy or filing a consumer proposal and that nosy neighbours would have free access to the database of insolvency filings.

The elimination of the fee has been endorsed by some, primarily those who may benefit from it being eliminated, credit counselling firms and debt advisors, who are direct competitors of the Licensed Insolvency Trustee.  They have stated that the only debt relief option available where a consumer’s privacy is protected is credit counselling.  Not so fast.  Every debt management program is recorded on your credit record, just like a bankruptcy and a consumer proposal. So, I don’t know how the privacy is being protected.

But hold on.  Is this really an issue? Is it much ado about nothing?  Is this Chicken Little crying out the sky is falling?  In my view, it is not.

The $8 fee per search was never an impediment for anyone to search the database.  If someone really wanted to know about an individual’s insolvency, they would pay the fee.  The elimination of the fee, coupled with the enhanced search requirements being proposed by the OSB, will still keep the insolvency process free from the nosy neighbours.

The OSB has indicated that the proposed Insolvency Record Search system will include modern safeguards to protect the personal information of debtors.  Some of the new protections which are not available in the current system which will protect disclosure of personal information:

  • Personal information disclosed about an insolvent person will be limited to that entered by the searcher. Personal information entered will only be confirmed, not provided in a search result. Searchers will need to know the first, last name, and date of birth of a debtor in order to obtain confirmation of an individual insolvency.
  • The new system will no longer provide access to insolvent debtor records that do not match the search criteria (e.g. lists of names).
  • For each correct search, a reduced amount of personal information will be returned in the public search results. For example, home addresses and full postal codes will no longer be included in search results as they are in the current system.
  • The public record search retention period for information will be reduced to 10 years post-discharge.
  • The new system will include technologies designed to reduce the potential for unintended uses of insolvency information (e.g. machine-based searches).

From what I know about the OSB, I would be surprised if this mandate was undertaken without some regard to the privacy of the individual debtor. The OSB has stated that it has consulted with the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) throughout the development of the new system, and has addressed comments received to date. The design will maximize protection of personal information while also meeting the specific needs of LITs, in fulfilling their insolvency estate administration and legislative requirements.

It should be noted that the OSB has no plan to propose to remove the $8 fee from the current system prior to its being retired from service.

The full OSB article about this can be viewed here.

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