Money problems often sneak up on consumers, and few people are prepared to face unexpected financial hardships that leave them unable to repay their debt as planned. Many people don’t know where to turn for answers, or help – something Blair Mantin, a Licensed Insolvency Trustee and Vice-President at Sands & Associates understands well.
Blair joined Breakfast Television Vancouver to shed some light on the subject and explain what can happen if you find yourself unable to pay your bills – and what you can do if you need debt help.
Watch the clip here and read more below.
“What can Happen if I Don’t Pay my Debt?”
If you stop making your required payments on general consumer debts (like a line of credit, overdraft or credit card), your creditors will generally charge you a fee for defaulting on (missing) payments and start reporting those defaults on your credit history. They might also do the following:
- Raise your Interest Rate: Lenders often increase your interest rate after you’ve begun to default on their payments. Unfortunately, this makes the account balance get even bigger, faster.
- Place Account with a Collection Agent: In-house collection departments may start contacting you, and your account may later be sold to a third-party collection agency. Many people feel intimidated and overwhelmed when dealing with collection agents. Collection calls can be frequent, and you may also receive letters indicating that collection methods will escalate.
- Take Money from your Bank Account: If you have a bank account where you owe the money (or with one of the bank’s affiliates), the lender may take funds directly from your bank account for missed payments without notice to you. This is called the “right of offset”.
- Start Legal Action: If a creditor is successful in taking court action against you, the following may happen:
- Wage Garnishee: Your creditor may get permission to take money directly from your wages (or other income). Accumulated interest, penalties and legal fees may also be tacked on to what you have to repay.
- Asset Seizure: Your creditor might be allowed to place a lien on your home, or even outrightly take an asset such as a vehicle.
- Arrest Warrant: Your creditor may ask the court to issue a warrant for your arrest if you don’t appear as required at a court hearing, although this is rare.
Focus on Legal Action: Good News, Bad News
Having legal action taken against you for payment of debts is among the greatest fears of most of our clients. It’s important to note that in general, legal action undertaken by most creditors takes a significant amount of time to proceed. Here’s a couple of key points if you are at risk of being sued for your debts:
- Finding out that your creditor has started a court action can be very stressful and scary – don’t postpone getting debt advice from a Licensed Insolvency Trustee. They may be able to stop the court process from happening.
- If you’re dealing with a government creditor such as Canada Revenue Agency be aware that (unlike other creditors), they can take extreme collection methods without permission from the court.
- You may have very little notice or none at all when it comes to a bank account freeze or wage garnishment put in place by the government.
- Filing a Consumer Proposal or claiming personal bankruptcy are generally the only two methods to put a halt to government collection actions against you. Contact a local Licensed Insolvency Trustee for help with government debts as soon as possible.
Consumer Tip! Canada Revenue Agency does not threaten deportation or jail-time, nor do they accept payments via wire transfer, gift cards or bitcoin. If you have been contacted by an individual making such claims, it may be a scam.
“What Should I Do if I Can’t Pay my Debt?”
If you’re no longer able to pay your debts or you think you soon won’t be able to, consider the following tips which may help you manage your situation:
- Don’t Ignore the Problem – Once you begin to default on payments, the problem isn’t going to clear up on its own. Even if you can’t make your payments, be aware of what is happening with your accounts. Review your statements and mail as usual so you’re not caught off-guard by your creditors. Though it may be tempting to not open mail that you know brings only bad news, it’s imperative that you stay informed about any actions your creditors may be taking against you.
- Understand Your Legal Debt Options – Collection agents may pressure you into debt settlement agreements; or you may be tempted to go further in debt by using high-interest financing because you feel panicked. Know your legal responsibilities and remedies before taking any definite action.
- Speak to a Debt Professional – In Canada only one type of professional is endorsed and authorized by the federal government to help you deal with your debt and protect you from your creditors – a Licensed Insolvency Trustee.
You don’t need to “qualify” for debt help from a Licensed Insolvency Trustee; regardless of your credit history or score, all Licensed Insolvency Trustees offer a free meeting to talk about your situation and explore your options. Remember that you are not alone, we’re here to help you.
We understand that debt problems often build up over time. If you’re only able to make your minimum monthly payments and your budget is stretched, even a small financial upset may push you into a crisis. You don’t have to wait for the problem to escalate to seek help – from our experience, many people wish they hadn’t struggled for so long before getting professional assistance.
Book your free confidential debt consultation with a local Sands & Associates Licensed Insolvency Trustee today to get debt advice and solutions to manage your debt. Debt help without judgment.