Credit Association of Greater Toronto Presentation TUESDAY, APRIL 6, 2010

The Impact of the Credit Practice Regulations on Debt Collection Process and Procedure AND Effective Use of the Small Claims Court in Collecting Debts Presented by:Michael E. Cassone and G. T. Tillmann

(1)CREDIT BUSINESS PRACTICE REGULATIONS Effective Date of Debt Collection Provisions - January 1, 2010 (2)Apply to institutions, to the affiliates that they control and to the agents and representatives of those institutions and affiliates. (3) INSTITUTIONS that are subject to the Regulations include: ( a ) a bank, as defined in section 2 of the Bank Act ; ( b ) an authorized foreign bank, as defined in section 2 of the Bank Act ; ( c ) a retail association, as defined in section 2 of the Cooperative Credit Associations Act ; ( d ) a company, as defined in subsection 2(1) of the Insurance Companies Act ; ( e ) a foreign company, as defined in subsection 2(1) of the Insurance Companies Act ; ( f ) a company, as defined in section 2 of the Trust and Loan Companies Act. ( institution )

(4)“DEBTOR” means a natural person who has entered into a credit agreement with an institution other than for business purposes and who owes a debt to that institution. ( débiteur ) (5)WHAT YOU MUST DO WHEN YOU COMMUNICATE WITH A DEBTOR TO COLLECT A DEBT (6)WHAT YOU CAN’T DO WHEN YOU COMMUNICATE WITH A DEBTOR TO COLLECT A DEBT (7)IMPACT ON DEMAND LETTERS

Effective Use of the Small Claims Court in Collecting Debts Identify when you can use the legal process to your advantage (sooner rather than later); SCC monetary jurisdiction, impact and importance of SCC; Due diligence!  the importance of good debtor information (asset knowledge, verification and importance of early determination);  impact on recovery of debts - the legal process works! Review of Standard Legal collection process including:  from Claim to Judgment to Enforcement (i.e. milestones);  typical # of days (and Ontario overview);  Undefended Actions  Defended Actions; Innovation and Legal Strategy Conclusion

Day:Responsibility:Action: 1ClientDemand letter information provided to Law Firm. 2Law FirmDemand letter sent out - debtor has 10 days to pay. 3-12ClientCollection Calls. 13Clienta) Assess against criteria (confirm employment status; homeownership; bank account, etc.) b) send to Law Firm. 14Law FirmStatement of Claim prepared with supporting documents; Overnight couriers to Process Server to issue and serve documents Law firmClaim issued by the Court - Process Servers have weekly standing appointments; Upon issuing documents, Process Server proceeds immediately to personally serve same; NOTE: THE 7 DAYS IS THE MAXIMUM AND RELATES TO BRAMPTON COURT ONLY. Legal Collection Process - Ontario

Day:Responsibility:Action: 22-24Process ServerClaim served 'Personally' - wait 21 days for a Statement of Defense. If no defense filed then Law Firm will prepare Judgment; If the Process Server is unable serve personally, then they serve Alternately; Must wait 26 days before preparing judgment; NOTE: ALL OF THE ABOVE CAN TAKE LONGER IF CLIENT SUPPLIES STALE DATED INFORMATION ON THE DEBTOR Law FirmIf no defense is filed, Law Firm will prepare 'Default Judgment' and send to Process Server who will attend Small Claims Court for issuance; (Note: the Process Server may wait for up to 5 days for scheduled appointments with higher volume Courts) Law FirmDefault Judgment' signed by the Court. A copy is mailed to Law Firm AND a copy is faxed by the Process Server to Law Firm. Law Firm will request enforcement instructions from client. NOTE: BRAMPTON COURT CAN TAKE UP TO 7 DAYS MAX - AGENTS CAN HAVE STANDING APPOINTMENTS WEEKLY. 53ClientThe client provides enforcement instructions to Law Firm.

Day:Responsibility:Action: 54Law FirmGarnishment prepared and couriered to Process Server. Same time frames as issuing Claims and/or signing Judgments Law FirmGarnishment issued by the Court; Process Server immediately proceeds to personally serve on Garnishee and upon Defendant; 62-64Law FirmGarnishment served on Garnishee (employer/bank) Law FirmGarnishment received by Garnishee, deductions commence; Garnishee's statement received by Law Firm; Money received by Court Law FirmGarnishee money received by Law Firm and couriered to client. 110ClientGarnishee money received by client. Total Days: 110