I Don't Have Enough Money to Pay My Debts

Debt is one of the most common sources of legal problems. The problem is made worse when you try to ignore the debt and your creditors (the people trying to collect from you).

First steps

If you cannot pay your debts:

1. Contact your creditors. If necessary, see if you can negotiate a different repayment plan with each of them. For example, they may give you more time.
2. If the creditors won’t agree, see if you can get a consolidation loan from your bank or credit union to put all the debts together at a lower interest rate than you are now paying. Seek the assistance of a not-for-profit credit counselling agency that can assist you in planning and applying for such a loan. See Credit Counselling Society of BC in the Resource List.
3. If you cannot negotiate a repayment plan or arrange a consolidation loan, you should speak with a credit counsellor about some of the options under the Bankruptcy and Insolvency Act, including proposals and bankruptcy.

What happens next

If you pursue a formal proposal or bankruptcy itself, you must have a trustee in bankruptcy to assist you. To locate a trustee, the website of the Superintendent of Bankruptcy has a lookup registry of all trustees in Canada. You can also try the Yellow Pages of your phone book under "bankruptcy". Most of your creditors will have to agree to a formal proposal. In a bankruptcy, your assets (except for necessities like clothing, medical aids, work tools, $4,000 worth of furniture and appliances, an inexpensive vehicle, and sometimes your residence) are turned over to your trustee, who will use them to pay off some of your debts.

Once you are "discharged" from bankruptcy (usually after nine months) the bankruptcy debts will be cancelled. There are some debts, such as support payments, court fines and some student loans, that won’t go away after a bankruptcy. It will take some time after the bankruptcy for you to re-establish your credit.

Where to get help

See the Resource List for a list of helpful resources. Your best bets are:

• Credit Counselling Society of BC.
• Bankruptcy BC.
• Access Pro Bono, Lawyer Referral Service, and private bar lawyers.
• The Law Students' Legal Advice Program Manual chapter "Creditors' Remedies and Debtors' Assistance," which has useful information on getting out of debt.
• The Clicklaw common question "I'm thinking about declaring bankruptcy" for a few more resources on bankruptcy.

Before meeting with a lawyer or advocate, complete the form Preparing for Your Interview included in this Guide. Make sure you bring copies of all documents relating to your case.

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Drew Jackson, February 2013.

Legal Help for British Columbians © Cliff Thorstenson and Courthouse Libraries BC is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 Canada Licence.

A sum of money or an obligation owed by one person to another. A "debtor" is a person responsible for paying a debt; a "creditor" is the person to whom the debt is owed.

A person who holds property in trust for the benefit of another person. See "trust."

A person licensed to practice law in a particular jurisdiction by that jurisdiction's law society. See "barrister and solicitor."

(1) A lawyer or a person other than a lawyer who helps clients with legal issues, or (2) to argue a position on behalf of someone.

(1) In law, a court proceeding; a lawsuit; an action; a cause of action; a claim. (2) A historic decision of the court; case law. See "action," "case law, " "court proceeding," and "precedent."