Difference between revisions of "Introduction to Debtors' Options (10:IV)"

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Being in debt is obviously stressful for debtors. Debtors should be made aware that measures can be taken against overeager creditors. Although creditors may choose to not initiate legal action, a '''debtor should not assume that they can ignore their responsibilities.''' The debtor may try to communicate with the creditor(s) in hopes of reaching an agreement about repayment, and to avoid potentially costly legal battles. However, this is only to be done when the debtor wishes to acknowledge the debt.   
Being in debt is obviously stressful for debtors. Debtors should be made aware that measures can be taken against overeager creditors. Although creditors may choose to not initiate legal action, a '''debtor should not assume that they can ignore their responsibilities.''' The debtor may try to communicate with the creditor(s) in hopes of reaching an agreement about repayment, and to avoid potentially costly legal battles. However, this is only to be done when the debtor wishes to acknowledge the debt.   


Under the ''Limitation Act'', SBC 2012 c. 13. a creditor generally cannot succeed in pursuing a debtor after two years from the last payment or acknowledgement of the debt. Communications with creditors that acknowledge the debt will initiate a new two year time horizon in which a creditor is able to pursue the debtor. This should be carefully considered when a debtor is approaching the end of a two year timeline in which they will be relinquished of legal responsibility for the debt at issue. Since this change to the limitation period, several major creditors  have been pursuing debtors through in house collections more aggressively, rather than sending the accounts to third party agencies. The limitation change may also be leading creditors to pursue debtors in court with greater frequency.  
Under the ''Limitation Act'', SBC 2012 c. 13. a creditor generally cannot succeed in pursuing a debtor after two years from the last payment or acknowledgement of the debt. Communications with creditors that acknowledge the debt will initiate a new two year time horizon in which a creditor is able to pursue the debtor. To avoid acknowledging a debt, it is important that the following phrase be included in the letter: “This communication is provided solely for the purpose of [state purpose of letter] and does not constitute an acknowledgement of the alleged debt described (above).” This should be carefully considered when a debtor is approaching the end of a two year timeline in which they will be relinquished of legal responsibility for the debt at issue. Since this change to the limitation period, several major creditors  have been pursuing debtors through in house collections more aggressively, rather than sending the accounts to third party agencies. The limitation change may also be leading creditors to pursue debtors in court with greater frequency.  
 
Also important to consider is if the last payment of the debt or written acknowledgment of the debt occurred before June 1, 2013, when the revised ''Limitation Act'' came into force. If this is the case, then the old legislation applies and the time period in which a creditor may pursue a debtor is six years rather than two. It is important to determine which limitation period applies. To avoid acknowledging a debt, it is important that the following phrase be included in the letter: “This communication is provided solely for the purpose of [state purpose of letter] and does not constitute an acknowledgement of the alleged debt described (above).”


If an acknowledgement of the debt occurs, both the debtor and the creditor must be realistic about the situation. Both parties must assess the costs and delay involved in any litigation. In such negotiations, the latter factors may work in favour of the debtor.   
If an acknowledgement of the debt occurs, both the debtor and the creditor must be realistic about the situation. Both parties must assess the costs and delay involved in any litigation. In such negotiations, the latter factors may work in favour of the debtor.   
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Where a creditor is pressuring a debtor for payment, a debtor may send a “without prejudice” letter to the creditor explaining their position and/or offering a settlement. See [[{{PAGENAME}}#F. Settlements | Section III.F: Settlements]], below for further information. When writing a Without Prejudice letter it is critical to include the following phrase: “This communication is provided solely for the purpose of [state purpose of letter] and does not constitute an acknowledgement of the alleged debt described above.”
Where a creditor is pressuring a debtor for payment, a debtor may send a “without prejudice” letter to the creditor explaining their position and/or offering a settlement. See [[{{PAGENAME}}#F. Settlements | Section III.F: Settlements]], below for further information. When writing a Without Prejudice letter it is critical to include the following phrase: “This communication is provided solely for the purpose of [state purpose of letter] and does not constitute an acknowledgement of the alleged debt described above.”


A debtor cannot seek to avoid defending an action in court where that action takes place in another province on the grounds that the court lacks jurisdiction. An action under s 29 of the ''COEA'' to enforce an extra-provincial default judgment may proceed where the debtor was  served but chose not to offer any defence to the original statement of claim. The creditor simply registers a judgment from another province in B.C., and it becomes a B.C. judgment. Furthermore, as a result of the decisions in ''Morguard Investments v De Savoye'', [1990] 3 SCR 1077 and ''Beals v Saldanha'', [2003] 3 SCR 416, 2003 SCC 72, American and other international default judgments can be easily enforced in B.C. A creditor seeking to register a judgment in B.C. should be aware that only judgments from a reciprocating state can be registered. To determine if a reciprocating agreement exists go to the schedule in the ''COEA''. If there is no reciprocating agreement in place, a creditor can bring an action on the judgment or on the original cause of action.
A debtor cannot seek to avoid defending an action in court where that action takes place in another province on the grounds that the court lacks jurisdiction. An action under s 29 of the ''COEA'' to enforce an extra-provincial default judgment may proceed where the debtor was  served but chose not to offer any defence to the original statement of claim. The creditor simply registers a judgment from another province in B.C., and it becomes a B.C. judgment. Furthermore, as a result of the decisions in ''Morguard Investments v De Savoye'', [1990] 3 SCR 1077 and ''Beals v Saldanha'', [2003] 3 SCR 416, 2003 SCC 72, American and other international default judgments can be easily enforced in B.C.  
 
The process for enforcing a foreign judgment is simplified where the judgment originates from one of  the reciprocating states listed in the COEA: http://www.bclaws.ca/civix/document/id/loo95/loo95/courtorderenflist. Judgments from one of the foregoing reciprocating states can simply be registered in the B.C.S.C.  
 
If the judgement does not originate from a reciprocating state, a creditor must bring an action on the judgment or on the original cause of action instead. This process requires a trial on the judgment or original action, where the court will determine whether to enforce the foreign judgment.


:'''NOTE:''' There have been judgments for the creditor where the creditor pursues the debtor after the two-year timeline.  This may happen where the creditor is inexperienced or neglectful, the debtor does not defend themselves, or the period between payments is not reviewed. If the judgment has been issued by the court, it may be more cost-effective to try and settle the matter with the creditor instead of challenge it in court.
:'''NOTE:''' There have been judgments for the creditor where the creditor pursues the debtor after the two-year timeline.  This may happen where the creditor is inexperienced or neglectful, the debtor does not defend themselves, or the period between payments is not reviewed. If the judgment has been issued by the court, it may be more cost-effective to try and settle the matter with the creditor instead of challenge it in court.
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