I Don't Have Enough Money to Pay My Debts

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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[edit]

If you cannot pay your debts:

  1. Contact the 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. There are for-profit as well as not-for-profit Credit Counselling Services that can assist you in planning and applying for such a loan. [See #17-Credit Counselling Society of BC in Part 2 of this Guide.]
  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?[edit]

If you pursue a formal Proposal or Bankruptcy itself, you will need a Trustee in Bankruptcy to assist you. [Try the Yellow pages of your phone book under “Bankruptcy” or see #4-Bankruptcy BC in Part 2 of this Guide for contact information for Trustees in 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, furniture, appliances, work tools, 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 9 months) the bankruptcy debts will be cancelled. You will find it difficult to borrow money for a number of years after a bankruptcy.

Where to get help[edit]

See Part 2- Resources, starting on page 43, for a list of helpful resources. Your best bets are:

  • 17-Credit Counselling Society of BC.
  • 4-Bankruptcy BC.
  • 44-PovNet.
  • 31-LawLINE.
  • 1-Access Justice, 34-Lawyer Referral Service, 51-Salvation Army Pro Bono Lawyer Consultation Program, 45-Private Bar Lawyers.
  • 33-Law Students’ Legal Advice Program. (See Chapter 10, “Creditors’ Remedies and Debtors’ Assistance, for useful information on “Getting Out of Debt”.)

Before meeting with a lawyer or advocate, complete the form, Preparing for Your Interview, in Part 3 of this Guide (page 57). Make sure you bring copies of all documents relating to your case.