No one expects to face a situation that leaves you unable to meet your financial obligations. Fear over wondering “what will happen if I can’t pay?” can seriously compound the stress of a debt problem.

Blair Mantin, Vice-President and Licensed Insolvency Trustee at Sands & Associates is no stranger to helping consumers confront money problems and make informed decisions about dealing with their financial challenges. Blair joined Global News for a segment aimed at arming BC residents with knowledge about what creditors really can do if they are not paid.

Watch the Global News clip and read more below:

What can Happen if you Don’t Pay your Bills?

In addition to charging you a fee and reporting defaulted payments to credit bureaus, if you default (stop making payments) on most consumer debt (such as a credit card, overdraft, line of credit), the unpaid creditor may take some, or all, of the following actions:

    • Increase your Interest Rate – If you’ve defaulted on payments the lender will probably start charging you a higher interest rate – this can make the outstanding balance grow very quickly.
    • Engage a Collection Agency – A lender may send your account to an in-house collections department, and later sell your account to a collection agency. Collection agents will generally call you frequently (at home or work), send you letters, and warn you about escalating collection attempts to try to get you to pay. Collection agents often make people feel very harassed and intimidated.
      • It’s normally after 3 months of delinquency that a collection agency is engaged.
    • Seize your Bank Account – Your creditor might take money out of your bank accounts to recover all or part of the balance you owe them, or they may close your access to the account.
      • This frequently happens if you have a regular day-to-day bank account with the same bank that you have the debt with.
    • Commence Legal Action – The outcome of a successful court action against you may result in:
      • Wage Garnishment – A portion of your wages will go to your creditor until the debt is repaid. Fees, penalties, interest to date and legal costs may be added to the total amount you have to pay.
      • Loss of Assets – Your creditor may be given permission to take an asset such as a vehicle, or even register a charge against your home equity as a way to secure payment towards your debt.
      • Jail-Time – Although rare, in some instances a creditor can request that the court issue a warrant for your arrest in the event you do not appear at a court hearing.

The good news is that unless you’re dealing with a government creditor (like Canada Revenue Agency), most creditors will need to apply to provincial court in order to take legal action against you – they cannot simply take these drastic measures overnight.

Receiving notice about a court action can be scary, but this does give you time to talk to a professional and get help. Don’t delay in seeking the advice of a reputable professional.

What about Government Debt?

Government creditors can take steps such as seizing your bank accounts or garnishing your wages very quickly – they do not have to apply to court to take these measures. Making a Consumer Proposal or filing a bankruptcy are generally the only two ways to stop a government action against you.


Cashing in on Consumer Weak Spots: An extreme example of people profiting from lack of consumer knowledge is the recent surge of scammers pretending to be Canada Revenue Agency (CRA) agents. Leaving consumers shaken and uneasy, these fraudulent calls often threaten heavy fines, jail time, and even deportation if the potential victim doesn’t send payments by wire transfer, bitcoin, or gift cards.  


Tips for Dealing with Unpaid Debt

If you find yourself unable to make your debt payments, the following steps can help to mitigate the situation:

  • Open your Mail
    • Avoid being caught unaware of upcoming court dates or collection action. Always open all your mail immediately.
  • Stay Calm
    • Don’t make decisions about settlement agreements while you are feeling pressured or panicked. Hurriedly transferring payments to a collection agency or borrowing from family to pay off a creditor can lead to more problems down the road.
  • Avoid more Debt
    • If you can’t make payments, don’t take on more debt (besides the accumulating interest, which can’t be helped).
  • Ask for Help
    • You are not alone. Talk to a Licensed Insolvency Trustee if you need help managing your debt. We’re here to help you.

Sands & Associates is BC’s largest firm of Licensed Insolvency Trustees focused exclusively on helping consumers and small businesses manage their debt. Since 1990 we’ve helped thousands of people get a financial fresh start.

Take the first step towards your debt-free future – book your confidential free debt consultation with a local Sands & Associates representative today.