Most consumers faced with unmanageable debt and looming collection actions don’t know what rights and recourse they can access to help their situation. For many people, knowing what rights you have when it comes to debt relief is the first step towards getting back on track financially, and ultimately becoming debt-free.
BC debt expert, President of Sands & Associates and Licensed Insolvency Trustee Blair Mantin, shares key facts BC consumers should know when it comes to your debt rights, and how to get debt relief in British Columbia.
What Are My Rights When It Comes to Consumer Debt?
Read on to learn more about some of the often-unknown rights, legal resources, and debt solutions available to BC consumers that could help you get out of debt.
As a British Columbian, when it comes to consumer debt:
You Have the Right To: Demand Proof of a Debt, and to Only Pay Back What You Actually Owe
A debt collector must – in writing – provide you the details of the debt they are collecting payment for, including the name of the creditor, the amount of the debt, and the authority of the collection agent to seek payment from you. If you didn’t receive this notice, you have the right to require the debt collector provide this to you.
- If you’ve already paid the debt, or you don’t feel you owe it, you also have the right to dispute the alleged debt.
- Consumer Protection BC has online forms you can use to start this dispute notice.
- If you’re getting calls for someone else, you can use the same online form if you need to let a debt collector know they have wrong person.
Unless you have explicitly co-signed with someone, or triggered debt division through BC’s Family Law Act, it’s important to understand that you are only held accountable for debts you actually incurred a liability for:
- You don’t ‘inherit’ a debt if someone passes away.
- You don’t ‘marry into’ your spouse or common-law partners debts.
Learn more about Co-Signing Debts & Understanding Couples’ Debt Liability
You Have the Right To: Refuse Collection Calls
Under the Business Practices and Consumer Protection Act, BC consumers have the legal right to require your creditors contact you in writing only.
Most people find it much easier to deal with a written collection notice, rather than having to react in real-time to a collection agent who may be using aggressive or even threatening language.
- Consumer Protection BC has a printable form you can access for free, and send it to your creditors to notify them that you request they communicate with you in writing only.
- If the calls continue, keep track of them and contact Consumer Protection BC for help – this regulation does have real weight.
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BOOK YOUR FREE CONSULTATIONAdditional Debt Resource: Statute of Limitations
If you have old debts and you’re in a position that leaves you with no vulnerable income or assets, you may be able to ‘wait them out’ via BC’s Limitation Act. The basic two-year liability limitation period means that if it has been two years or more since you incurred, made payment on, or acknowledged the debt in writing, the creditor who is owed can no longer take legal action against you to force payment.
Although this ‘expiry’ does not mean the debt has been forgiven, it can add a substantial layer of protection between you and your creditors. It’s important to know that some debts are not subject to this limitation period, and certain actions taken within the 2-year period can reset the clock.
You Have the Right To: Add a Statement to your Credit Report to Explain Negative Items
You can add a consumer statement that is roughly 100-150 words (depending on the credit bureau) to your credit reports to explain your situation.
Having a consumer statement on your credit report at Equifax and/or TransUnion can add helpful context for lenders and creditors about challenges you may have faced. For example:
- If you had missed or late payments due to a layoff or illness, you may want to add a statement to explain the circumstances.
- You may want to add a statement explaining unsuccessful attempts to dispute information on your report, if you believe it contains inaccurate information.
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You Have the Right To: Have Nothing Taken From You Without the Court’s Permission
Except where you are dealing with debts that Canada Revenue Agency is collecting on, creditors can’t seize your assets or garnish your wages without first taking you to Court and obtaining a judgment against you.
- Collection agents often threaten drastic actions and may imply that they can take your paycheque overnight, however, court proceedings in BC do take time (at least a month in most cases) – and by law you must be properly notified of the court application.
- Always open your mail so you’re not caught off-guard by a creditor’s actions.
Learn about BC’s ‘Seize or Sue’ Rules
There are a few key creditor exceptions to be aware of here:
- The first risk is with Canada Revenue Agency – while it’s not their first tactic to seize wages or assets, they do not have to take the step of going to court in order to take these remedies against you.
- The second risk is that if you have a bank account with a creditor you owe, or one of its affiliates, the creditor can take money directly from your bank account for missed payments, without notice to you. This is called the ‘right of offset’.
- The third risk is if you are dealing with a creditor for an outstanding debt that has an asset held as security against the debt. For example, a financed vehicle can be repossessed without court permission if you’ve paid less than two thirds of the total amount owing to the secured lender.
Additional Debt Resource: Government Debt Forgiveness
You can’t ‘wait out’ the government if you owe them money, and many Canadians mistakenly think there’s nothing you can do to legally write-off government debts. In fact, there are two ways to accomplish this, as long as you’re working with a Licensed Insolvency Trustee:
- A Consumer Proposal allows you to consolidate, reduce and settle your debts for less than what you owe. Consumer Proposals are the only method of debt negotiation that government-body creditors will accept to reduce your debts, besides bankruptcy.
- Personal bankruptcy, which can potentially forgive up to 100% of your government debt.
You Have the Right To: Get Unbiased Debt Advice – and Restructure Your Debt
No creditor or other party can prevent you from seeking advice from a Licensed Insolvency Trustee about your situation and options – and you don’t have to wait until you have missed any payments to do so.
- It should never cost you money to understand your options. Any Licensed Insolvency Trustee local to your province will talk with you confidentially, at no cost, to help you explore your options to get your debt under control.
- Some of the best value a Licensed Insolvency Trustee provides is giving you coaching and information about what resources exist for you when you’re facing more debt than you can manage.
- You can also seek the protection of the two debt solutions available under Canadian law that allow you to restructure and forgive part (or all) of your debt in the event you can’t repay your debt as originally intended.
- Both filing a Consumer Proposal, or declaring personal bankruptcy, can be used to deal with virtually all your debts, trigger a stay of proceedings to stop creditors from pursuing you further, and legally eliminate your debt for good.
Take 30 minutes to talk with a local, non-judgmental Sands & Associates Licensed Insolvency Trustee. You have options, and we’re here to help you get a debt-free plan that’s right for you.
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Book your free consultation with one of our experts and start living a debt-free life.
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