Can collection agencies in Canada take me to court?

It depends. Generally, a creditor has the right to take you to court and sue you over the debt that you owe if you stop making payments on it. But depending on how old the debt is, they may not be legally allowed to.

In fact, every province and territory across the country has different Canadian collection laws with various statutes of limitation on how long a creditor has before they can no longer sue a debtor or take them to court. A Licensed Insolvency Trustee can let you know the laws that apply for your region if there have been or will be any changes in the near future to those laws, and how those laws affect your unique situation.

If a collection agency or creditor is going to sue you they must do so before the limitation period expires.

Every province and territory in Canada has different rules and limitation periods. To find out what the statute of limitations is in your area, we strongly recommend that you contact a Licensed Insolvency Trustee and discuss your situation with them. Your first meeting is always free.

How do I stop my creditors from suing me?

If you’ve stopped making payments to your creditors, you need to understand that they have the right to take you to court. Before that happens, though, there are a few things you can do to stop the process.

  • Talk to a Licensed Insolvency Trustee. In a free, no-obligation meeting, a Licensed Insolvency Trustee can help you review all of your options and come up with the best solution for your situation. Licensed Insolvency Trustees are licensed and regulated by the government and are experts in their field.
  • Make a deal with your creditors. Call the people you owe money to and see if they’ll work with you to come up with a payment plan that works for both of you.
  • Make a Debt Management Plan. Like the first option, you make a deal with your creditors, but this time you work with a credit counselling agency that will help you through the process. Be careful which credit counselling agency you choose, check them out. They are not regulated in most jurisdictions.

The worst thing you can do when you stop making payments is to ignore the notices and phone calls, and simply hope that it will all go away. Taking control of the situation is your best option to avoid being taken to court and being sued.

What happens when my creditor takes me to court?

You have stopped making payments and now your creditors or a Canadian collection agency on behalf of the creditor, are taking you to court. Here is what you can expect:

Your creditors will file a lawsuit against you. If you fail to file a defense against the lawsuit, your creditors will automatically win by default. To find out what you have to do to defend yourself, contact a Licensed Insolvency Trustee.

If you decide to file a defense, a trial date will be set.

The trial will have one of two outcomes: Your creditor or the Canadian collection agency on their behalf, will be successful and they will obtain a judgement against you, or you will be successful, and no judgement will be awarded.

If your creditors have won, they will try to recover some monies from you. This will be in one of five forms:

  • They may ask you to make a payment or payments on a voluntary basis.
  • They can garnish your wages. The amount they can garnish and how that garnishment will be handled depends on what type of debt you owe, where you live and how much money you make. To find out exactly how much money could be garnished from your wages, talk to a Licensed Insolvency Trustee.
  • They can garnish your bank account. Again, the laws surrounding this vary depending on your situation. A Licensed Insolvency Trustee can help you calculate how much money could be garnished from your account.
  • They can obtain a Writ of Execution from the courts that allows them to seize non-exempt personal property, which will be sold to pay the judgement.
  • They can file the judgement in Land Titles against your home or other property you own. If the judgement is not paid they can eventually obtain a court order to sell the real property.

Going to court is a daunting experience. Having an expert on your side who understand Canadian collection laws and who can outline your options or who can stop the process entirely could make all the difference. Talk to a Licensed Insolvency Trustee and get the professional advice and help you need.