Douglas P. Welbanks: Bankruptcy laws must be modified in this brave new videoconferencing world

A former director of debtor assistance and debt collection for the B.C. government is calling on banks to lower profits in hard economic times—just like everyone else

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      We entered the virtual reality of video conferencing in April 2020 and have been stuck there since.  

      It’s a quiet place that lacks all movement and is surrounded by four walls. Televisions are busy reporting all the possible news, every word, every new death from the COVID-19 pandemic. Computers busily engage people as a vicarious substitute for live interaction.

      For the millions of workers, business owners, and corporate managers all unduly discharged from their workplaces, fear replaces the tranquillity of home.

      How will they pay the rent or the mortgage? What will they do when the money runs out?

      Everyone has been ordered by the state to stay indoors in the universal war against a deadly virus. There is no way out.

      This is not exactly what Aldous Huxley had in mind when describing the brave new world of the future. A new world, indeed, is what we got—held hostage by a kidnapper. This has never happened before.

      Could anyone imagine a world without sports? Least of all the NHL and corporate franchises. No one saw this coming. This was one very big void that video conferencing could not replace.

      My 15-year-old daughter’s volleyball team hung in there until mid-April when it finally became clear that the season was finished before it started. She still has all the planned and unplayed tournaments written beside the kitchen fridge.

      There is nothing like a caged teenager in the house.

      It has often been said that only in a crisis do we see a person’s true character. The difference in 2020 is that there is no person to blame or save people from.

      And there isn’t just one crisis. Despair and anguish cover the land affecting each household, city, province, and country. Many have no money or food. Many are sick. Many are dying.

      Everywhere you look we find epic financial losses, gargantuan unemployment rates, massive shutdowns, lineups of abandoned airplanes on airport runways, and 24/7 news broadcasts about the status of the virus, reporting who is winning and who is losing.

      Behind the scenes, a new wave of innovation gathers momentum. Governments and businesses find new ways to keep going and overcome the dangers of the present. Social distancing and other hygienic precautions have succeeded in reducing the spread of the disease.

      Videoconferencing has evolved to become a key element in social distancing—for schools, business, and governments.

      For Hollywood entertainers, shoppers, and consumers of restaurant takeout food, a new online life has emerged. Although we know this titanic disruption to free unrestricted movement is temporary, we hear the message of the future: not only will things not go back to the way they were, not everyone will want them to go back.

      COVID-19’s hidden message to the world is "we must change."

      On the economic front, governments must look into the rear-view mirror and remember to protect personal property and farms from bank and creditor seizures, just as Alberta led the way during the Great Depression.

      Banks and financial institutions must share the burden, which also means lower profits during these hard times, like everyone else. 

      Mortgage rates, credit card interest rates, and all of rest of the $600-billion in consumer debt need a substantive reduction for a six- or 12-month period.

      Loan deferments mean that the banks continue to meet their profit margins, notwithstanding the collapse of the economy. This is not good enough.

      They need to charge less and profit less during this period of national and international shutdown.

      The federal government’s plan to lend businesses money bewilders many of us. Neither a lender nor a borrower be! Either help or don’t help. Don’t create new debt loads or false impressions that "help" means a repayable loan.

      The LIP grants of the 1970s helped employ the poor and provide direct community support. Much better than loans.

      There is a great opportunity for everyone to get it together—the wealthy and the poor—and to change for the better, so as to support nurses and health-care providers better, to care for the elderly better, to lend less and to borrow less.

      Bankruptcy rules and laws need to be modified to provide for low-cost, short-term moratoriums on creditor interest and payments, rather than vest a person’s or business's property into the hands of trustees to liquidate for the benefit of the creditors.

      No single business or economic enterprise should unduly profit while others suffer and struggle for survival during the COVID-19 shutdown.

      Douglas P. Welbanks is a former director of debtor assistance and debt collection for the B.C. government and the author of several books, including Unbreakable: The Ujjal Dosanjh Story and Julius Seizure: The Secret World of Bankruptcy, Debt Collection and Student Loans. The Georgia Straight publishes opinions like this from the community to encourage constructive debate on important issues.