Take action and get your creditors off your back!

Many people believe that their debt problems will sort themselves out over time. This is not true. To get out of overindebtedness, you must take control. If you don’t act fast, the situation will quickly worsen. You could even have your earnings and property seized!

In short

Are you struggling to repay your debts and would like to get out of overindebtedness? The most important thing is to act fast to avoid having your wages seized, stop your creditors from harassing you and minimize the impact on your credit rating.

  • Debts don’t simply disappear overnight. Interest accrues and creditors become increasingly insistent.
  • Harassment from collection agencies can escalate to include repeated calls even at your workplace.
  • Your income, bank accounts and valuable assets could be seized if you don’t pay off your debts.
  • In a nutshell, you should reach out to a Licensed Insolvency Trustee as soon as possible. Declaring bankruptcy or filing a consumer proposal immediately puts an end to calls and property seizure.

What are the consequences of having debts?

Contrary to popular belief, overindebtedness isn’t just a “rough patch”. It can be the result of a series of unforeseen events and misfortunes such as job loss or health issues. It can also be caused by spending more than your budget allows.

Regardless of the reason behind your overindebtedness, you will suffer the following consequences if you fail to take action.

  • Your creditors will continue to contact you and could even resort to increasingly harassing tactics.
  • Interest on your debts will continue to grow. Your monthly payments will keep getting higher, especially on what are known as “bad debts”. Bad debts are those that carry high interest rates (purchases financed by your credit card or line of credit and quick loans, for example).
  • Your credit rating will hit rock bottom and your reputation with lenders will suffer. As a result, you will struggle to secure loans and acceptable interest rates. For example, if you want to purchase a car, lenders will fear that you’ll be unable to make your payments on time. Therefore, they could refuse to lend you money. Alternatively, they could apply interest at very high rates of around 29.9%.

What can creditors seize?

If you don’t pay off your debts, your creditors could seize:

  • Your earnings
  • Money and investments in your bank account
  • Any sums that another person owes you
  • Securities that you own (company shares and bonds, for example)

In certain cases, your creditors have the right to request that a bailiff seize your property (furniture, jewellery and anything else of value, for example). However, items that you require to travel to work, carry out your work and ensure your family’s quality of life (such as clothing and tools) cannot be seized.

Creditors may well have a range of strategies for recovering money that you owe them, but this doesn’t mean they’re free to do as they wish or threaten you. You have rights when dealing with your creditors, so ensure that they respect them!

Are you overindebted?

To find out, answer these 7 questions.

  1. Do you often borrow money to make ends meet?
  2. Are you unable to pay your rent on the first of the month?
  3. Do you use your credit cards to pay for basic needs (groceries, for example) because they’re convenient.
  4. Are your creditors harassing you?
  5. Do you sometimes write checks or make pre-authorized payments without having sufficient funds?
  6. Do you cut down on groceries or other essential expenses to make your payments?
  7. Do you find yourself using one credit card to make the minimum payment on another credit card?

If you answered yes to one or more of these questions, you may be overindebted. Book an appointment with one of our advisors to find out how to break the cycle.

How far can creditors go to recover what they are owed?

As mentioned above, one of the consequences of owing money to creditors is being constantly harassed by them. Collection agencies go to great lengths to contact you. They may call you at home repeatedly (several times a day). Naturally, they can also send you letters and emails.

And that’s not all. If your creditors are unable to reach you at home, they may:

  • Call you at work
  • Call the people who acted as guarantors (who committed to paying your debts if you don’t do so)
  • Contact a friend, partner or family member

How can you immediately stop creditors from calling you?

Once a trustee has filed a consumer proposal or bankruptcy, creditors are immediately prohibited from pursuing collection proceedings under the BIA. Calls, property seizure and legal notices will cease immediately.

However, there are several other ways to end harassment by creditors.

  1. Pay your debts

The simplest way to ensure that the harassment you’re experiencing ends is to pay your debts. But how can you do this if you don’t have the money? In certain situations, you may be able to negotiate a payment agreement with the collection agency. For example, you could make monthly payments of $500 over 10 months to repay a debt of $5,000.

  1. Seek the advice of an expert

If you’re unable to commit to respecting a repayment agreement or if the collection agency refuses the agreement terms, contact a Insolvency Counsellor. After reviewing your situation with you, they can present various options.

Two options will prevent creditors from continuing collection procedures: a consumer proposal and personal bankruptcy. The steps involved in declaring bankruptcy and those required for a consumer proposal are similar, but they’re two distinct solutions. However, both options will put an end to calls from your creditors after a few days.

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