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Do creditors or collectors need to inform me of legal action?

I have fallen behind on all of my credit card bills and am considering bankruptcy.

Collectors call and so far they have not communicated that they are going to take legal action to collect the debt.

I was wondering how collectors/creditors are required to inform me if they are going to take the matter to court as my current address (that they have) is in The United States.

Do I receive notice of legal action via mail or is verbal notice on the phone enough? How soon after notice is given can a judgement be made if no defence is made on my part? If judgement is made how can they collect if the collector/creditor do not know where my bank account is? Is there a way for them to locate it?

I just needed a few more months until I return home to decide whether bankruptcy is the right option and the last thing I would want is for my bank account to be frozen without enough notice to me.

Thanks!

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One Response to “Do creditors or collectors need to inform me of legal action?”

A licensed trustee said...

In general, in order to garnishee your wages a creditor is required to take you to court and get a court order allowing the wage garnishment.

There are some exceptions, including Revenue Canada (who can seize your bank account or garnishee wages without a court order), certain credit unions (where you have signed a voluntary assignment of wages), or any creditor where you signed a voluntary assignment of wages as part of your original loan agreement (as is typically required by pay-day loan companies).

If you have not been contacted, perhaps because the creditor has an old address, it is still possible for the garnishment to start. The creditor would go to court and prove to the judge that they tried to garnishee your wages (perhaps by sending notice to the most recent address they had on file); if the judge is convinced that they tried to contact you, the garnishment can start.

Either way, if you are so far behind on your bills that you believe a garnishment may start soon, you should contact a bankruptcy trustee to determine if a consumer proposal or bankruptcy is necessary to prevent any further legal action or collection activity.