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Difference between revisions of "Introduction to Debtors' Options (10:IV)"
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Introduction to Debtors' Options (10:IV) (view source)
Revision as of 06:24, 13 August 2016
, 06:24, 13 August 2016no edit summary
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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 recently revised ''Limitation Act'', SBC 2012 c. 13. a creditor cannot succeed in pursuing a debtor after two years from the last payment or acknowledgement of the debt. Communications with creditors that | Under the recently revised ''Limitation Act'', SBC 2012 c. 13. a creditor 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. | ||
Also important to consider is if the | 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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A debtor may wish to seek legal advice before discussing or disputing a debt with a creditor, but this is not always necessary. If the debtor believes they do not owe the debt they should consider legal advice. If the debtor believes they owe the money but disputes the amount claimed, they may also want to consider legal advice. However, if the debtor simply cannot meet the payment terms, it is recommended that they seek credit counselling. See [[Dealing with Debt (10:IV) | Section IV. Dealing With Debt]]. | A debtor may wish to seek legal advice before discussing or disputing a debt with a creditor, but this is not always necessary. If the debtor believes they do not owe the debt they should consider legal advice. If the debtor believes they owe the money but disputes the amount claimed, they may also want to consider legal advice. However, if the debtor simply cannot meet the payment terms, it is recommended that they seek credit counselling. See [[Dealing with Debt (10:IV) | Section IV. Dealing With Debt]]. | ||
Where a creditor is pressuring a debtor for payment, a | 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. 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. | ||
'''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. | |||
== A. Legal Advice for Debtors Under Secured Transactions == | == A. Legal Advice for Debtors Under Secured Transactions == | ||
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=== 1. Notice === | === 1. Notice === | ||
'''NOTE:''' The forms of notices under the PPSA depend on a number of variables, including the nature of the security and the terms of the security agreement. | '''NOTE:''' The forms of notices under the PPSA depend on a number of variables, including the nature of the security and the terms of the security agreement. Creditors or debtors seeking advice concerning the validity of notices should be referred to a lawyer. | ||
Subject to the circumstances where notice is not required as per s 59 (17) (i.e. for perishable collateral, collateral requiring disproportionately high storage costs relative to its value, etc.), the requirements for notice are outlined in ss 59(6) and (10): the secured party or receiver, as the case may be, must provide at least 20 days’ notice of an intention to dispose of the collateral to parties including the debtor and any other creditor. The clinician should check to make sure that the debtor received notice in time and in the correct form. See [[Creditors%27 Remedies against Debtors (10:II)#8. Notice to Dispose of Collateral | Section II.A.8: Notice to Dispose of Collateral]] for a complete account of the notice requirements that must be met under the PPSA. | Subject to the circumstances where notice is not required as per s 59 (17) (i.e. for perishable collateral, collateral requiring disproportionately high storage costs relative to its value, etc.), the requirements for notice are outlined in ss 59(6) and (10): the secured party or receiver, as the case may be, must provide at least 20 days’ notice of an intention to dispose of the collateral to parties including the debtor and any other creditor. The clinician should check to make sure that the debtor received notice in time and in the correct form. See [[Creditors%27 Remedies against Debtors (10:II)#8. Notice to Dispose of Collateral | Section II.A.8: Notice to Dispose of Collateral]] for a complete account of the notice requirements that must be met under the PPSA. | ||
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=== 3. Rights of a Debtor on Realization === | === 3. Rights of a Debtor on Realization === | ||
The PPSA preserves the debtor’s (but not the secured party’s) rights and remedies under other statutes that are not inconsistent with the ''PPSA'', as well as the specific rights and remedies provided in the security agreement, ss 17 and 56(2)(b). | |||
=== 4. Rights of Redemption and Reinstatement === | === 4. Rights of Redemption and Reinstatement === | ||
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Certain information cannot be included in a credit report, e.g., criminal charges (unless the individual was convicted), convictions more than six years old, and information about race, religion or political affiliation. | Certain information cannot be included in a credit report, e.g., criminal charges (unless the individual was convicted), convictions more than six years old, and information about race, religion or political affiliation. | ||
Credit reporting agencies’ records are not always accurate and up to date. The quality and accuracy of the credit information depends on the credit information provided by the credit granting companies who sign up with the credit reporting agencies. If an individual finds incorrect information on their file, they can report the error to the agency that provided the information to have it corrected. If an individual has proof that their credit report contains an error and they are unable to resolve it with the creditor directly, the individual should contact the credit reporting agencies who are reporting the incorrect information. The agencies will assist them with finding a resolution. '''Any individual who is a victim of identity theft should immediately file a police report'''. The ''BPCPA'' allows individuals to provide a 100 word explanation to the reporting agency, which is to be kept and reported with their file (s.111); this may be a useful provision if a business has reported a disputed claim regarding | Credit reporting agencies’ records are not always accurate and up to date. The quality and accuracy of the credit information depends on the credit information provided by the credit granting companies who sign up with the credit reporting agencies. If an individual finds incorrect information on their file, they can report the error to the agency that provided the information to have it corrected. If an individual has proof that their credit report contains an error and they are unable to resolve it with the creditor directly, the individual should contact the credit reporting agencies who are reporting the incorrect information. | ||
The agencies will assist them with finding a resolution. '''Any individual who is a victim of identity theft should immediately file a police report'''. The ''BPCPA'' allows individuals to provide a 100 word explanation to the reporting agency, which is to be kept and reported with their file (s.111); this may be a useful provision if a business has reported a disputed claim regarding yourself, or if you are a victim of identity theft. Any victim of identity theft is recommended to post a comment on their credit report. This notifies creditors of the fact that the identity theft has taken place, and prevents additional credit being granted without a thorough review by the creditor. It is an offence (punishable by a fine of up to $10,000 or imprisonment for up to 12 months) to knowingly supply false or misleading information to a reporting agency (s 112). | |||
Consumers may obtain their own credit report for free at least once a year by telephoning the credit bureaus directly or completing the form available on their websites Alternatively, a consumer can obtain an instant credit report by using a credit card to pay a one time fee. | Consumers may obtain their own credit report for free at least once a year by telephoning the credit bureaus directly or completing the form available on their websites Alternatively, a consumer can obtain an instant credit report by using a credit card to pay a one time fee. | ||