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).
If you cannot pay your debts:
- 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.
- 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.
- 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. Try the Yellow Pages of your phone book under "bankruptcy" or see Bankruptcy BC in the Resource List 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 nine months) the bankruptcy debts will be cancelled. 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 Guide explains the law and legal procedures in general. It is not intended to give legal advice on your particular legal problem, and should not be relied on for that purpose. Information in this Guide is accurate as at November 2012. Please note that fees and guidelines outlined in the Guide are subject to change.|