Could Not Paying Your Debts Cause You Legal Problems?

Debts can quickly start to pile up.

One credit card can easily turn into two or even three, and before you know it, instead of worrying about paying your debts off, you’re just trying to cover the minimum monthly payments and keep your head above the water.

Missing a payment once in a while isn’t the end of the world, but if you are starting to skip payments regularly, then you could be at risk of your creditors taking legal action against you, and it’s time to get the help you need. 

What will happen if I start missing payments?

Whether you’ve forgotten your payment date or couldn’t get the money together in time, missing a payment is a big red flag to your creditors, and they’ll usually be in touch pretty quickly to remind you of the money you owe and to find out why it’s late.

Your creditors won’t resort to legal action straight away and will try to contact you to reach an agreement before resorting to more extreme action, such as debt collectors and court judgements. 

Creditor letters and phone calls  

Two of the first ways that creditors will usually try to contact you is in writing or by phone.

These conversations typically start out being very courteous as creditors know that everyone misses a payment once in a while.

They are just interested in knowing the reason for the delay.

However, if you continue to miss your payments, the calls and letters may start to become a lot more serious, escalating in urgency, tone, and consequence.

If you are struggling to make your monthly payments, then it is always best to reach an agreement with your creditors at this stage because they may be able to offer you a more affordable payment plan.

Debt collectors and collection agencies 

If you continue to miss payments and ignore the correspondence from your creditors, your case will likely be assigned to a third-party debt collector or collection agency.

Once a debt collection agency has been assigned to your case, you will usually receive a letter in the post.

All future correspondence should go through the debt collection agency to avoid confusion with your creditors.

Dealing with debt collectors showing up at your home, calling your employer and contacting your family, can be extremely stressful, but ignoring the problem won’t make it go away.

Debt collectors can be very resilient and won’t give up; however, speaking with a Licenced Trustee can help.

As soon as you begin working with a Licenced Trustee, all calls and visits from debt collectors must stop.

Legal action

If you continue to ignore your debt or your creditors are not satisfied with your payment, they could take legal action against you in the form of Judgement.

A Judgement is essentially a court order that demands that you pay the outstanding debt, which, if you ignore, can be enforced by your creditors.

At this stage, your creditors may take what is owed to them from your wages and savings or try to seize your assets.

Aside from being a very unpleasant process, a court Judgement can also end up costing you a lot of money, with most Judgements incurring hidden legal costs that will be added to your debt and which you will pay interest on. 

Stopping your creditors from taking legal action against you

If you’ve missed payments and are already being chased by your creditors, then it is crucial to get help as soon as possible to bring the tables back into your favour. 

Make the payment

If you have the money to do so, then the most obvious way to prevent your creditors from taking legal action against you is to make the payment that you owe.

No matter how far down the line things have gone, legal action can usually be averted by merely paying the outstanding balance, though do be aware that as things progress, you could begin to incur extra charges. 

Negotiate a payment plan 

Despite previous grievances, most creditors will still be willing to discuss a payment plan option if you can’t afford to make your current monthly repayments.

As time passes, creditors can become less cooperative, and you may find yourself in a situation where they are demanding the full outstanding amount regardless of your case. 

Seek help from a debt relief service

Debt is a prevalent problem, and as such, the Canadian government has put measures and procedures in place designed to help people get out of debt.

These measures and procedures are called debt-relief services and can be accessed by speaking with a Licenced Trustee.

A Licenced Trustee is a federally regulated debt professional, who is trained to offer advice, support and services to people looking to get out of debt.

As soon as you begin working with a Licenced Trustee, your creditors, and any debt collection agencies that work for them, will no longer be allowed to chase you or your money.

Together, you and your Trustee will find the debt-relief service that is most suitable for your financial situation, be that debt consolidation, consumer proposal or bankruptcy

Finding a Licenced Trustee

Whether you’re looking for advice on your debt or need a Licenced Trustee to help you file for a consumer proposal or bankruptcy, let us assist you.

Here at Bankruptcy Canada, we are Canada’s top bankruptcy and consumer proposal information website and can connect you with more than 430 Licenced Trustees across the country.

We’ve helped more than 200,000 Canadians to resolve their debts and to get the fresh financial start that they deserve.

To find out more about what we do or be matched with one of our Licensed Trustees, contact us today on (877) 879-4770 or fill out our online form.

With just one phone call or a quick online form, you can begin correspondence with a local Licenced Insolvency Trustee and sleep soundly knowing that you are working towards resolving your debt and that your creditors can no longer take legal action against you. 

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