What recourse do
your creditors have?

Send a notice

It’s important to know that creditors (that is, the persons or businesses you owe money to) can use a variety of means to collect what is owed to them, provided they comply with certain rules. For example, they can’t take you to court from one day to the next. They must first send a written notice (usually 30 days) asking for payment of the amount due. If you don’t pay, they can then initiate legal proceedings.

Add a notice on your credit report

Any payment that is more than 30 days overdue can result in a notation on your credit report. Fortunately, most companies (e.g., utilities) do not routinely do this when you have one or even more late payments. But if your creditor hires a collection agency, they will not hesitate to do so. The process is simple and free, and it can seriously impact you: you’ll be considered a delinquent payer for six years. Note: Cell phone accounts are now reported to credit bureaus on a monthly basis, just like your credit accounts.

Work with a collection agency

The creditor may hire a collection agency or bailiff to act as an intermediary to collect unpaid accounts or seize some of your assets. They will contact you directly, not the person or company you owe money to.

Of course, in addition to being licensed to practice, the collection agency and bailiff must respect certain rules to recover an amount.

Request a ruling

As mentioned above, if you have not paid your overdue amount after 30 days, your creditors can take you to court. If they get a favourable ruling, they can ask that your money, wages or some property be seized.

• Money seizure

The bailiff can seize your bank accounts, which will then be locked and the funds will be used to pay some or all of the amount due.

• Wage garnishment

If your assets are not sufficient to pay off your debt, or if your assets are legally protected, your creditor can apply to have your wages garnished. The percentage of income that can be garnished varies in each province. In Quebec, it amounts to 30% of your gross income after certain exemptions (i.e., before taxes), which is quite substantial since this can correspond to almost half of your net salary.

• Property seizure

The bailiff can carry out different types of property seizures in order to auction them off and recover some money. This can be anything from your car to the painting your grandmother gave you. However, the bailiff is required to leave furniture that you or your family need on a daily basis, up to a value of $7,000.

Additionally, some property, such as your clothing and tools you need for work cannot be seized.

There are solutions to your debt problems!

In any case, to avoid this situation, don’t wait to settle your debts. Even if the law restricts your creditors’ actions and gives you certain rights, they will do everything they can to make your life difficult and get their money back as quickly as possible. However, there are solutions to put an end to your debts and make sure that your creditors stop calling you.

Contact one of our financial recovery counsellors. They can help you regain your peace of mind by putting a stop to your debt problems.