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    Can a Creditor Force You Into Bankruptcy?

    A common concern for many people is “can a creditor force me into bankruptcy?” While it is theoretically possible for a this to happen, it’s very rare. When a collection agency force bankruptcy on someone, they have to petition the person into bankruptcy and, in a bankruptcy, creditors do not typically get very much. This means they don’t take this step very often. It’s not worth it to them. If you are concerned and wondering “can a debt collector force me into bankruptcy?” you may want to be more concerned about other things collection agencies can do (such as when can creditors call), since these actions are far more likely. So, what can a creditor do you don’t pay? The most likely scenario is they will send a collection agency after you and then potentially take you to court. This can obviously be a very disruptive scenario, so it is important to try to handle debt issues before they reach this point. If you are asking questions like “Can a creditor force me into bankruptcy?” or “Can a debt collector force me into bankruptcy?” you are already aware that your situation is potentially serious. Speaking with a Licensed Insolvency Trustee can help you understand the debt relief options available to you that can resolve your problems.

    What Creditors Can Do If You Don’t Pay

    Many people who are struggling with debt are unsure of what can a creditor do you don’t pay. In many cases, the first step is calls. These calls are often followed by letters. This situation can be very stressful and these actions also lead to more questions, such as when can creditors call and what happens to overseas debt, for instance. It’s common to be anxious and confused by this process. A creditor may also hire a collection agency to collect the debt. These outside agencies can often be very aggressive and sometimes even harassing. People who have to deal with these agencies often worry about their powers and what they can do, including questions about collection agencies retirement savings (such as RRSP creditors) and more.  Another concern that people even wonder about is if they can sue Canada debt collectors, creditors and collection agencies. The reality is that a collection agency can take a person to court on behalf of a creditors.  While there are many questions that arise when it comes to creditors and collection agencies, there are also laws and regulations that they must follow. These rules are put into place to protect consumers from threatening or harassing behaviour.

    Can a Creditor/Collection Agency Sue You in Canada?

    One of the ways collection agencies and creditors collect debt is by taking people to court for unpaid debt. However, suing someone for not paying their debts takes time, effort, and money. This means it doesn’t happen often and, when it does, it is usually only in situations where a lot of money is owed. In most instances, collection agents stick to calls and letters. 

    Can a Creditor/Collection Agency Sue You in Ontario?

    As mentioned, one of the ways collection agencies and creditors collect debt is through the courts. A creditor (or a collection agency acting on behalf of a creditor) can sue someone for the outstanding debt. However, going to court involves time, legal fees, and a lot of effort, so it usually only happens when a large amount of debt (typically at least $10,000 or more) is owed to a single creditor. What happens more often is frequent calls from creditors and other attempts to get in touch with you to collect. These methods can sometimes feel harassing or intimidating, so it’s important to know the rules around debt collection in Ontario (such as when can creditors call) to make sure your rights are respected. 

    How Can Creditors/Collection Agencies Pursue/Collect Debt in Canada?

    What can a creditor do you don’t pay your debts? One of the first steps is to call and send letters. If the debt is not paid, the creditor may use a collection agency. Some organizations have their own “collections department” while others will hire an independent collection agency. You will usually receive written notice before your debt is sent to a collection agency. Collection agencies often threaten legal action against those who owe money. While an agency can technically take someone to court over unpaid debt, this typically only happens in situations where a large amount is owed. That is because it is costly and time-consuming for the agency to go to court.

    What Can Creditors Do in Ontario?

    Each province in Canada has its own laws and rules regarding what debt collectors can do and how they can act. In Ontario, some of the rules include:
    • Creditors must wait six days between mailing a written notice and having a collection agency contact you to demand payment
    • If you indicate that the debt in question is false or incorrect, the agency must stop contacting you
    • The agency is not allowed to use harassing or intimidating language or provide you with false information. 
    • Creditors and collection agents may only call your employer, your friends, or your family to verify your employment details and/or your contact information. They cannot pressure these individuals nor give them information on your debts.
    What can a creditor do you don’t pay? They are legally allowed to contact you (within reason) and try to collect the debt that is owed. If it is your debt and it is outstanding, they can continue to contact you until the debt is paid, an arrangement has been reached, or you have started a process such as a consumer proposal or a bankruptcy to resolve your debt issue.  

    Can Debt Collectors Follow You to Another Country?

    If you live outside of Canada, but have overseas debt owed to a Canadian organization, you may still receive phone calls from Canada about your debt. Moving out of country with debt does not erase the debt that you owe. However, if you have debt in Canada moving to another country can complicate the legal process. This is because the creditor will have to first sue you in Canada, then move the case to the country you are currently in. This is complicated and costly, so most debt collectors do not take this step, unless you owe a great deal. However, as mentioned, if you have debt in Canada moving to another country does not eliminate your debt. The creditor can still come after you if you return to Canada, though most provinces have a statute of limitations (a time limit) in place for debt collection. 

    Can Creditors Take You to Court?

    Many people worry “Can a creditor force me into bankruptcy?” or “Will this debt collector force me into bankruptcy?” While it is technically possible for a creditor or collection agent to take you to court and petition you into bankruptcy or take other legal collections action, this typically only happens with larger debts (such as instances where a person owed $10,000 or more). That’s because the process of going to court is costly and time consuming. For a collection agency force bankruptcy or take other legal steps (such as garnishing wages or freezing bank accounts) they will need to pay legal fees, spend time registering the debt, and more.  Some collection agents threaten to take cases to court, but this is often a threat that they may not follow up with. 

    Can Creditors or Collections Agencies Take Inheritance Money?

    There are many ways collection agencies and creditors collect debt. However, in the majority of cases, they cannot take money from you without going to court. If a creditor or collection agent wins a case in court and receives a default judgment against you, they can garnish your wages, freeze your bank account, seize non-exempt property, or file a lien against your property.

    Can Creditors/Collection Agencies Call Your Work?

    One of the main ways collection agencies and creditors collect debt is by calling people and attempting to get them to pay. However, there are rules in place regarding who they can call and when they can call. These laws vary between provinces but, in general, creditors and collection agents may only call your work to confirm your employment information.

    Can Creditors Seize Bank Accounts?

    If a creditor or collection agent takes a case to court and wins a default judgment against you, they can freeze your bank account and direct the money in your account to the pay the debt. They can also request that anyone who owes you money (such as an employer or client) garnish these wages and redirect them to pay off the debt. If you have overseas debt, the creditors will need to register the case in the country where the money is owed, then have it transferred to where you live. In general, creditors only take cases to court for large amounts.

    Can Creditors Garnish Your Wages?

    A creditor can take a case to court to obtain a default judgment. If this happens successfully, they can garnish your wages or freeze your bank account. However, creditors and collection agents typically only take these steps in cases where a large amount of money is owed.  Also, if you owe debt in Canada moving to another country does not eliminate this debt, but it makes it more difficult for a creditor to take you to court, since they would have to start the case in Canada, then have it moved to a different country.

    How Long Can Collection Agencies and Creditors Pursue Debt/Collect in Canada?

    There is a statute of limitations in place for debt collection. In Canada, this period is six years from the date the debt goes into default. However, this timeframe resets whenever the debtor makes a payment or otherwise acknowledges the debt. There are laws in place when it comes to debt collection in each province as well. For example, for those who collect debt Ontario places several restrictions. The same is true in other provinces; for those who collect debt Alberta has regulations and restrictions as well. In addition, for organizations that collect debt British Columbia puts laws in place. Each province has its own debt collection time limits in place. For instance, in Alberta and Ontario, the statute of limitations is two years, while in British Columbia it is six years. However, if the creditor obtains a court judgment to collect the debt before the statute expires, they have ten years to collect the debt.  If you are moving out of country with debt, note that this does not make the debt disappear. Creditors and collection agents can still contact you. If this happens, the Canadian statute of limitations (six years) still applies.

    How Long Can Creditors and Collection Agencies Pursue/Collect Debt in Ontario?

    When it comes to calls and actions designed to collect debt Ontario has certain rules in place. One of these rules is regarding the statute of limitations. This is a rule that is in place to limit the amount of time creditors have to collect debts. The Canadian statute of limitations is six years, however, in Ontario this limit is set at two years. That said, it is important to note that this time limit resets whenever the debtor makes a payment or otherwise acknowledges the debt.

    How Long Can Creditors and Collection Agencies Pursue/Collect Debt in BC?

    There are limits in place and rules regarding what debt collectors can and cannot do. These rules and guidelines differ by province. When it comes to tactics used to collect debt British Columbia sets certain limits. For those who collect debt British Columbia sets the statute of limitations at six years, the same as the Canadian limit. Note that this time limit restarts if you formally acknowledge the debt, such as by making a payment.

    How Long Can Creditors and Debt Collection Agencies Pursue Debt in Alberta?

    In terms of tactics used to collect debt Alberta has a series of rules and restrictions in place. One of these is that there is a statute of limitations in place. Effectively, this is a time limit for how long creditors and collection agents can collect debts. In Alberta, this limit is two years. However, any action by a debtor that formally acknowledges the debt (such as making a payment) will restart the clock. 

    Can Creditors/Collection Agencies Garnish Your Bank Account?

    If you owe debt, a creditor or collection agency can take your situation to court to obtain a default judgment against you. If they can do this successfully, they will be able to garnish your wages or freeze your bank account. This means they will be legally allowed to redirect money from your account or your employer to pay off your debts. However, creditors typically only take cases to court when there is a large amount owing (typically about $10,000 or more). The reason for this is because going to court is a lengthy and expensive process. They only take this step when it is financially worth it to them to do so.

    How Early Can Collection Agencies/Creditors Call?

    Each province has rules and regulations in place for when creditors may call and how often.
    • For those who collect debt Ontario has its own set of regulations. This is true in many provinces as several have restrictions in place regard when can creditors call. In Ontario, creditors and collection agents are only able to call Monday to Saturday, between 7am and 9pm. On Sunday, they can only call between 1pm and 5pm. 
    • For those who collect debt Alberta also has rules in place. Creditors and collection agents may only call between 7am and 10pm.
    • For those who collect debt British Columbia also has regulations as well. They may only call between 7am and 9pm, Monday to Saturday and between 1pm and 5pm on Sundays.

    Can Collection Agencies Take Money Out of Your Account in Canada?

    It is possible for creditors or collection agencies to garnish the funds in your bank account. However, this can only happen after they take your case to court and successfully obtain a judgment against you. While you do not often sue Canada debt collectors, creditors and collection agencies, they can sue you. However, this typically only happens in situations where you owe a creditor a very large amount of money. It takes time, money, and resources to go to court, so creditors and collection agencies don’t often do this unless you owe at least $10,000.

    Can Creditors/Collection Agencies Garnish Disability Income?

    Creditors and collection agents can garnish wages and freeze bank accounts. However, this doesn’t mean that they can take every sort of payment you may receive. In general, government benefits or payments (such as Old Age Security or government disability support) are not subject to garnishment. However, if you are receiving long-term disability payments through a company plan, these may be considered wages, and thus they could be garnished. However, remember that collection agencies can only garnish wages after receiving a judgment against you in court.

    Can Creditors or a Collection Agency Take Your RRSP?

    Many people worry about their retirement savings when creditors and collection agencies start calling. This makes sense as you do not want to lose the money you put aside for your retirement. However, when it comes to an RRSP creditors can generally not seize these funds. In regards to collection agencies retirement savings are protected if they are in an RRSP (Registered Retirement Savings Plan) and they have not been deposited fraudulently to avoid paying creditors. This means when it comes to your RRSP creditors are not able to seize your retirement savings.

    How Late Can Creditors/Collection Agencies Call?

    A lot of people have questions about when can creditors call. This is understandable as calls from creditors and collection agents can be stressful and even sometimes harassing. Provinces and territories in Canada each have their own regulations and rules for calls from creditors.  For instance, for those who collect debt Ontario states that they cannot call after 9pm Monday to Saturday or after 5pm on Sunday. For those who collect debt British Columbia has the same rules. Similar rules are in place in other provinces. For those who collect debt Alberta states they cannot call after 10pm.

    Why You Should Consider a Consumer Proposal

    If you are worried and wondering “Can a collection agency force bankruptcy?” or concerned about legal action taken by debt collectors, or a situation where you may sue Canada debt collectors, creditors and collection agencies, you are likely overwhelmed by debt. Speaking with a Licensed Insolvency Trustee can help you. A trustee will explain your options and help you make a wise decision for your financial future. One of the options available to you may be a consumer proposal. With this legal process, a trustee will review your financial situation and determine what a fair offer to your creditors would be. In most cases, this offer is for a portion of the debt you owe to your unsecured creditors, rather than the full amount. If those creditors that are owed the majority of the debt choose to accept the proposal, then all are bound by its terms. When you file a consumer proposal, you receive legal protection from your creditors. This means you don’t have to worry about instances with collection agencies retirement savings will be protected, and creditors cannot take legal action against you. Plus, any actions that are already in place (such as wage garnishment) must stop. Rather than worry about how you’re going to handle your debt or fret about moving out of country with debt, speak to a trustee and see if a consumer proposal makes sense for you. 

    How We Can Help

    If you have questions about creditors, collection agencies, and debts, we are here to help. If you are asking “Can a creditor force me into bankruptcy?”, “What happens in situations of moving out of country with debt?”, or “Can you sue Canada debt collectors, creditors and collection agencies?” you are likely dealing with significant financial issues. Don’t suffer alone. There are options out there that can help you resolve your debt problems. Our team of Licensed Insolvency Trustees works with people to help them understand the debt relief options that are available to them and administer insolvency processes if necessary.  Rather than worry about what happens to debt in Canada moving to another country, how to avoid losing RRSP creditors, or asking “Can a debt collector force me into bankruptcy?” talk to our team to find out the facts and learn about debt relief options that could help you. If you have overseas debt, concerns about whether a collection agency force bankruptcy onto you, issues with collection agencies retirement savings and debt, or any other issue regarding paying debt or meeting your financial commitments, contact us to arrange a free consultation. We will review your situation and provide you with details on the options available to you.