Ten Ways To Make Yourself “Creditor Proof”

Creditors can be a real headache, especially when you’re struggling with debt. The good news is, there are numerous strategies available that could make it quite challenging for them to get their hands on your money. In this guide, we’ll explore Ten Ways To Make Yourself “Creditor Proof” through legal avenues.

1. Separate Your Banking From Your Creditors

A common error that many debtors make is keeping their bank accounts in the same financial institution where they hold credit cards or other loans. This provides your creditors with a legal right known as the “right of set-off,” enabling them to deduct payments from your account without requiring a court order.

To avoid this, it’s advisable to shift your banking activities to a separate financial institution where you have no outstanding loans or credit card debt.

2. Sell Your Real Estate Assets

Owning real estate property can make you an attractive target for creditors. By selling your property, you not only remove a possible means for creditors to recover their debts but may also be able to use the proceeds to pay off some of your debts, potentially reducing your overall financial burden.

3. Limit Property Ownership In Your Name

It’s another sensible move to limit the number of properties registered under your name. If you’re married, consider purchasing assets under your spouse’s name. If you’re single, perhaps a trustworthy family member could hold assets on your behalf.

These strategies make you less attractive to creditors, as seizing assets not under your name can be legally complex and time-consuming.

4. Opt For A Less Expensive Vehicle

In Canada, a specific exemption protects motor vehicles worth up to $4,000 – $6,000, depending on the province, from being seized by creditors. By investing in a cheaper car, you can ensure that your vehicle remains with you, even in the face of creditors.

5. Consider Living Without A Chequing Or Savings Account

While this may seem drastic, it’s a functional strategy for those with substantial debts. In Canada, the Canada Revenue Agency (CRA) can seize funds from your bank account without needing a judgment if you owe them money.

Also, if you have a judgment against you, a creditor can garnish your bank account, effectively seizing your funds. Living without a bank account can help you avoid these scenarios.

6. Maintain A Low Debt Threshold Per Creditor

It’s generally not cost-effective for creditors to sue debtors for small amounts. By ensuring that you do not owe more than $3,000 to any single creditor, you reduce the likelihood of any one creditor filing a lawsuit against you.

7. Choose Employment That Offers Mobility

Sometimes, creditors may resort to wage garnishments to recover their debts. However, if you work in a field where changing employers is relatively easy, you can avoid wage garnishment by simply switching jobs.

8. Leverage Wage Garnishment Laws

Depending on the province you reside in, certain laws protect low-income workers from wage garnishments. Understanding and using these laws to your advantage can significantly reduce the impact of potential wage garnishments.

9. Consider Moving To New Brunswick

New Brunswick is known as a “debtor’s haven” due to its friendly laws towards those struggling with debt. Moving to New Brunswick could provide you with legal protections that make it more difficult for creditors to recover their debts.

10. Consider Leaving Canada

While this option should be considered as a last resort, it’s worth noting that creditors often struggle to recover debts from Canadians living abroad. If your situation is dire, moving out of the country might be a viable option.

Remember, all these strategies are legal and are intended to help you manage your debt situation effectively. However, they should be used responsibly and not as a means to evade rightful debt repayment. It’s always advisable to seek professional financial advice when dealing with severe debt problems.

By implementing these Ten Ways To Make Yourself “Creditor Proof”, you can protect your assets and peace of mind from creditors. It’s about understanding the laws, using them to your advantage, and making smart financial decisions that prioritize your well-being.

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