Can a Collection Agency Take Me to Court? Will I Go to Jail for Not Paying My Debts?

Most collection agents get paid a commission or a performance bonus based on the amount of debts they collect. They will often try numerous different collection tactics to get you to pay your debts, so they can earn their commission or bonus. But, can a collection agency take you to court?

The answer is yes - it is possible for a collection agency to start a court action against you. Typically, the collection agent representing your creditor will first call you and send you numerous threatening letters.

However, they will only take you to court if they believe you have the ability to pay, and they have been unsuccessful in collecting from you without going to court.

In case the collection agency do take you to court, the purpose of the court hearing will be to determine whether or not you owe the creditor. In most cases the fact that you do owe the money is not in dispute. You know you owe the money, and the creditor has proof that you owe it, so in most cases the court hearing is a very quick event.

The judge signs a piece of paper, called a judgment, stating that you owe the money.

The next possible step for the creditor is to apply to the court to enforce the judgment, which generally means they apply to seize your bank account or other assets, or garnishee your wages; but, in most cases there is no point in a creditor freezing your bank account, since once your bank account is frozen you will never deposit any money into that account again. In addition, most people don’t have any assets that can be confiscated. Therefore, the creditor is most likely to attempt to garnishee your wages.

If they know where you work, garnisheeing is possible. If they don’t know where you work, they cannot send a garnishment notice to your employer until they determine where you work.

Many people worry that if they don’t pay their debts they will go to jail, but that is not the case. Jail terms are the result of a criminal trial. Creditors are taking action in a civil trial, which as described above leads to a judgment or a garnishment order, but not jail.

To go to jail you must be convicted of a criminal offence, and you must be charged with a crime by the police. If you rob a bank, you will go to jail. If you commit fraud and are convicted, you can go to jail. Not paying your credit card is not a criminal offence.

Even though debts do not lead to jail, it is very stressful having collection agents threatening you, and having your wages garnisheed creates an obvious financial burden.

If you are worried about creditors and collection agencies taking you to court, contact a licensed trustee to determine whether a consumer proposal or bankruptcy is necessary to stop garnishments and get you back on track.