By Jasmin Brown

BDO Debt Solutions

The Power of Creditors

May 3, 2023 | 9:29 AM

“The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of Pattison Media and this site.”

Many people struggle with repayment of their debt. People are struggling even more now as interest rates and the cost of living continue to rise. Creditors have powerful tools that they can use when people don’t make their payments. It may start with telephone calls or sending your debts to a collection agency. It may move to a negative impact on your credit report, late payment fees, or you may be one of the many people that receives a wage garnishment from a creditor. One thing is for sure, creditors will take action when they are not being paid.

Wage Garnishment

A wage garnishment is a legal action taken by a creditor that allows them to instruct your employer to take a portion of your paycheque and put it toward the debt owed to them.

Freezing of Bank Account

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A creditor can ask the court to freeze your bank account. If your bank account is frozen, you are no longer able to access the funds in the bank account, and potentially any future funds, and instead those funds are used toward payment of the outstanding debt.

Repossession of Assets

If you have financed an asset such as a vehicle, snowmobile, ATV, boat, etc. either through a lease or a loan and you become delinquent on your payments, the creditor has the right to locate and repossess the asset. Similarly, if you fail to make your mortgage payments, the bank can commence foreclosure proceedings and effectively take possession of your home.

Right of Offset

If you borrow money from a bank that you also use to deposit funds, and you default on the loan, the bank can take money from your account and offset it against the debt owed to them.

Canada Revenue Agency

Not surprisingly, the Canada Revenue Agency has more powerful collection tools than ordinary creditors. They may offset government payments with any tax refunds otherwise payable to you. They may also do any of the following:

· Issue a requirement to pay – instructing your employer or other third party to pay funds directly to them instead of paying them to you

· Obtain a certificate and put a lien on your assets – they can register a lien against your assets, including your home, which secures their debt

· Seize and sell your assets – they can get a writ or memorial that allows them to show up and take possession of any of your personal property and use the proceeds to pay down your tax debt

· Assess and hold a third party responsible to pay your debt – where you transfer property to another party for less than fair market value, they can pursue the third party for payment of your tax debt

Stay of Proceedings

A stay of proceedings stops a creditor from commencing or continuing any legal action against you and is also effective against the Canada Revenue Agency. Filing either a bankruptcy or consumer proposal will provide you with the protection of the stay of proceedings.

Creditors will have to stop contacting you and are no longer able to take legal action against you for collection of debt upon filing. It provides you with immediate financial relief in order that you can deal with your outstanding debt with the assistance of a Licensed Insolvency Trustee (“LIT”). In fact, filing a bankruptcy or consumer proposal with a LIT is the only way to get the protection of the Stay of Proceedings.

If you are not able to make your debt repayments and have accounts that are overdue, it may be time to reach out for help. Similarly, if your creditors have begun taking legal action against you, your wages are being garnished, or creditors have placed liens on your property, a Licensed Insolvency Trustee can work with you to come up with a plan. There is debt relief available.

If you are having trouble making ends meet each month, finding the right debt solution can help. Visit the BDO Debt Solutions website for more information about bankruptcy, or call 1 855 BDO DEBT to book a free, no obligation consultation.

Jasmin Brown is a Senior Vice President overseeing the insolvency practice in Saskatchewan. She is committed to providing creative and practical debt solutions with empathy, understanding and professionalism to help people overcome their financial difficulties.