However, there are complications that should be considered:
I have met with many seniors, who had serious debt problems. Some of them said they could use their RRSPs or RIFs to deal with their debt.
I always told them not to do this because RRSPs and RIFs are exempt from seizure, except for the previous year’s contribution (for some but not all provinces).I told them that the law makers made RRSPs and RIFs exempt in a bankruptcy because they wanted those funds available just for their retirement; not for repayment of debt.
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Some seniors may be judgement proof which means it is not necessary for the senior to go bankrupt to receive debt relief and creditor harassment protection.”Judgement Proof” term that means that you are protected from your creditors seizing your assets or garnishing your wages.
The term means that your creditors are not able to get a judgement to collect on your debt by seizing your assets through a court judgement.
Please note that these exemptions are applicable to people not in bankruptcy as well as people in bankruptcy.
A senior’s CPP (Canada Pension Plan) or Old Age Security pension funds cannot be seized by your creditors, although if the funds are deposited into your bank account, this account may still be seized or garnisheed by your creditors.
If after checking, you determine you are judgement proof, you should make sure that your CPP and OAS payments are not being deposited to a bank you owe money to.
Your bank can take funds from your bank account to set off against your debt to the bank.
If you are judgement proof, and you take all the precautions we outlined above, you will probably still get collection calls.
The collectors cannot do anything to enforce collection of the debt but many, if not most people hate getting those collection calls.
You will just have to “tough it out”.
Be polite to the collectors and just say that you are judgement proof and have no means to repay the debt.
You should also send your creditors a letter asking for a compassionate write-off.
Again, be polite. Explain the fact you do not have the means to repay them and that you are judgement proof.