What happens if Debtor Declares Bankruptcy?
Walk through the steps of what Openroom needs to update the Rental Debt File
Weiting Bollu
Last Update 10 maanden geleden
Who this document is for:
→ Anyone using Openroom’s Rental Debt Ledger product. More specifically, as a Tenant whose Landlord claims they owe rent.
Subscription Plan
→ Anyone on the Openroom Community plan
→ Anyone on the Openroom Plus plan
What's the Bankruptcy Situation?
There may be situations where a Creditor reported a Rental Debt Ledger file with Openroom but the Debtor declares bankruptcy status afterwards through a Licensed Insolvency and Bankruptcy Trustee.
The Bankruptcy and Insolvency Act (BIA) is the primary federal law in Canada governing bankruptcy and insolvency proceedings. It outlines the rules and procedures for both personal and corporate bankruptcies, as well as proposals and receiverships.
The BIA aims to protect the rights of debtors, creditors, and other stakeholders involved in these processes, while also establishing the roles and responsibilities of trustees, the court, and other relevant parties.
You can read more about the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3).
As a Creditor (someone owes me rental debt), what do I do?
When you, as the Creditor, is owed debt and your Debtor as declared bankruptcy, you can choose not to do anything to notify Openroom. You are not obligated to do so as it's private information of the Creditor.
When there is a Bankruptcy declared and Openroom confirms it, Openroom will indicate it on the Rental Debt Ledger file.
The Debtors will no longer receive any more email communications from the Openroom team unless status of their Bankruptcy changes.
Subsequently, you will no longer receive monthly email notifications of the outstanding debt.
As a Debtor (I owe rental debt to someone), what do I do?
As someone who owes rental debt to another party, the Creditor, you should share information with Openroom to let us know that you have declared bankruptcy.
Openroom updates your credit history file that we share with Credit Bureaus such as Equifax, to let them know that your file needs to be updated. In addition, we stop interest calculations on your file from the date that you've declared bankruptcy.
Information that we need to verify and update your file:
→ Creditor's Package with Stay of Proceedings
This package should have creditors on file that includes the Landlord as the Creditor.
This package will give us information regarding:
→ Trustee's name and contact information
→ The date which the Bankruptcy is filed
→ The discharge date (e.g. 9 months, 21 months)
Once confirmed, Openroom will indicate it on the Rental Debt Ledger file. You will no longer receive any more email communications from the Openroom team unless status of your Bankruptcy changed.
How does interest accumulate?
Interest stops accumulating on the individual who has declared bankruptcy. It does not stop on every single Debtor listed on the rental debt ledger filing automatically.
If all Debtor parties have declared bankruptcy, we stop interest calculations for all parties on the earliest bankruptcy date declared by a Debtor party.
How does it look on the Openroom Rental Debt Ledger File?
When a Debtor or Creditor logs in to their Openroom account using the email address in which it was filed on, they can visually see the information related to the Bankruptcy.
How will it look on the Equifax Consumer Credit Report?
Openroom will continue to send the status of 'Bankruptcy' into Equifax. The record of rental debt may not 'fall off' the Consumer Credit Report. It will have an updated status.
In addition, there will be a section called Bankruptcy in which it will state that the Debtor has had a bankruptcy.
How Equifax treats it (or any other Credit Bureau) will be up to their team.