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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 20:38, 19 August 2021
, 20:38, 19 August 2021no 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 ''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. | 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. Under s 24(7) of the "Limitation Act", a partial payment of a debt refreshes the limitation period as it constitutes an acknowledgement of debt. 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. | ||
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 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 ''[https://www.canlii.org/en/ca/scc/doc/1990/1990canlii29/1990canlii29.html?autocompleteStr=Morguard%20Investments%20v%20De%20Savoye%2C%20%5B1990%5D%203%20SCR%201077&autocompletePos=1 Morguard Investments v De Savoye'', [1990<nowiki>]</nowiki> 3 SCR 1077] and ''[https://www.canlii.org/en/ca/scc/doc/2003/2003scc72/2003scc72.html?autocompleteStr=Beals%20v%20Saldanha%2C%20%5B2003%5D%203%20SCR%20416%2C%202003%20SCC%2072&autocompletePos=1 Beals v Saldanha'', [2003<nowiki>]</nowiki> 3 SCR 416, 2003 SCC 72], American and other international default judgments can also be enforced in B.C. | 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 ''[https://www.canlii.org/en/ca/scc/doc/1990/1990canlii29/1990canlii29.html?autocompleteStr=Morguard%20Investments%20v%20De%20Savoye%2C%20%5B1990%5D%203%20SCR%201077&autocompletePos=1 Morguard Investments v De Savoye'', [1990<nowiki>]</nowiki> 3 SCR 1077] and ''[https://www.canlii.org/en/ca/scc/doc/2003/2003scc72/2003scc72.html?autocompleteStr=Beals%20v%20Saldanha%2C%20%5B2003%5D%203%20SCR%20416%2C%202003%20SCC%2072&autocompletePos=1 Beals v Saldanha'', [2003<nowiki>]</nowiki> 3 SCR 416, 2003 SCC 72], American and other international default judgments can also be enforced in B.C. | ||
The process for enforcing a foreign judgment is simplified where the judgment originates from one of | The process for enforcing a foreign judgment is simplified where the judgment originates from one of the reciprocating states listed in the COEA. Examples of reciprocating states include all Canadian Provinces, most Australian states except for Western Australia, the United Kingdom, Germany, and a handful of states from the U.S. including California, Oregon, Colorado, Alaska, Idaho, and Washington. A comprehensive list can be found at: https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/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. | 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. | ||
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=== 2. Limitation of the Right of Seizure === | === 2. Limitation of the Right of Seizure === | ||
With respect to collateral which is a “consumer good,” where the debtor has paid at least two-thirds of the total amount secured, the creditor may not seize the good without first obtaining a court order. | With respect to collateral which is a “consumer good,” where the debtor has paid at least two-thirds of the total amount secured, the creditor may not seize the good without first obtaining a court order (s 58(3) of the PPSA). | ||
=== 3. Rights of a Debtor on Realization === | === 3. Rights of a Debtor on Realization === | ||
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Under s 62, a debtor has redemption rights. Any person entitled to notice of a pending disposition of collateral may “redeem” the collateral by tendering to the secured party fulfilment of the obligations secured by the collateral plus the reasonable expenses incurred by the secured party associated in seizing the collateral or otherwise preparing it for disposition. The aforementioned obligations may simply be the amount in arrears; however, it is more often the case that an acceleration clause applies, and that the obligations will be the total amount of the debt. Where the security agreement contains an acceleration clause, the debtor may apply to court for relief from the consequences of default or for an order staying enforcement of the security agreement’s acceleration provision. | Under s 62, a debtor has redemption rights. Any person entitled to notice of a pending disposition of collateral may “redeem” the collateral by tendering to the secured party fulfilment of the obligations secured by the collateral plus the reasonable expenses incurred by the secured party associated in seizing the collateral or otherwise preparing it for disposition. The aforementioned obligations may simply be the amount in arrears; however, it is more often the case that an acceleration clause applies, and that the obligations will be the total amount of the debt. Where the security agreement contains an acceleration clause, the debtor may apply to court for relief from the consequences of default or for an order staying enforcement of the security agreement’s acceleration provision. | ||
Under s 62(1)(b) of the PPSA, where the collateral is a “consumer good”, the calculation of the obligation secured and the obligation that must be tendered is varied. The debtor may “reinstate” the security agreement by paying only the monies actually in arrears – negating the operation of any acceleration clause. The debtor may waive this right but any such agreement must be in writing after default. Note that the number of times the debtor may reinstate the security agreement is limited depending on the period of time for repayment set out in the security agreement; however, the frequency of reinstatement may be varied by agreement between the parties. | |||
=== 5. Execution === | === 5. Execution === | ||