What Does It Mean To Be Creditor Proof?

Being creditor proof has a big impact on how you choose to manage your debts.

If your assets are protected from creditors, it may mean that you can avoid filing for bankruptcy.

Although bankruptcy remains an option for people whose finances are creditor proof, it simply may not be necessary in order to resolve your debt problems.

Due to the significant impact being creditor or collection proof can have on your financial circumstances, it’s important to look at the term in more detail.

Understanding what being creditor proof really means and whether the term applies to you will help you to decide which debt management options are best for you.

Are your finances creditor proof?

When people have unmanageable debt, their creditors may attempt to recoup the money they’re owed in a variety of ways.

They may apply to have your wages garnished, for example, so that a portion of your income goes directly to your creditors rather than into your account.

Alternatively, creditors may attempt to seize your assets in lieu of debt repayments.

In order to prevent this from happening, many people seek out alternative debt solutions, such as consumer proposals or bankruptcy.

When you file a bankruptcy or consumer proposal, you can prevent your wages being garnished and you can also retain any exempt assets in the case of a bankruptcy.

In fact, these are two of the biggest benefits associated with filing a consumer proposal or bankruptcy.

However, not all types of income can be subject to garnishments and not everyone is in employment.

Furthermore, you may not have any assets of value that could be seized.

If you don’t have an income that could be garnished and you don’t have any assets, you’re considered to be ‘creditor proof’.

Can you be sued if you’re creditor proof?


A creditor can still take legal action against you if you’re creditor proof.

If you’ve been ignoring communication from a creditor and failing to make repayments, for example, they may instigate legal proceedings in an attempt to resolve the situation.

However, being creditor proof means that the option to garnish your wages or seize your assets simply doesn’t exist.

While you’ll still need to deal with any legal proceedings that are made against you, you won’t have to worry about losing assets or part of your income.

Should you file for bankruptcy if you’re creditor proof?

There’s no simple yes or no answer to this question because everyone’s financial situation is different.

However, many people file for bankruptcy in order to prevent their assets from being seized.

If you’re creditor proof and, therefore, don’t need this protection, there may be less reason for you to consider filing for bankruptcy.

Should you bother to repay debts if you’re creditor proof?


Being creditor proof doesn’t mean you can avoid dealing with your debts.

You’re still liable to pay what is owed in accordance with the original terms and conditions.

Even if you’re creditor proof, collections action will continue, and you will be asked to agree to a manageable repayment plan.

In addition to this, money can be taken from your bank account in order to repay your debts, so being credit proof doesn’t give you a way to avoid paying off your debts.

For government-related debts, such as student loans or taxes, the Canada Revenue Agency can take money from your taxes or HST cheques until your debts are paid off.

If you have consumer credit, such as credit cards or loans, there are two ways that creditors can take money out of your account.

If you deposit funds into a bank account and you have a credit card with the same financial institution, they could take money from your account to repay the debt.

Alternatively, if you have money in an account and debt with a different provider, the creditor could instigate legal proceedings and obtain a court order so that money is transferred to them.

Are there any advantages to being creditor proof?

Being creditor proof means that you may choose to resolve your debt problems differently than if you had assets or wages that could be garnished.

Essentially, you could avoid filing for bankruptcy by pursuing these other options if you are creditor proof.

However, it’s important to access personalized advice before you make any decisions regarding your finances.

With more than two-thirds of Canadians in debt, you’ll be surprised at just how many people are in the same position as you.

By talking to a licensed insolvency trustee, you can access the detailed information you need to help you move forward.

To speak with someone in confidence today, contact Bankruptcy Canada now on (877) 879-4770.

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