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Feb 28, 2022|Personal Bankruptcy

What Happens When You Can’t Pay Back Debt?

Are You Unable to Pay Debts in New Westminster?

The Experts at J. Bottom & Associates Ltd. Have Debt Solutions

Many debtors find themselves in so much debt they can’t pay it all back within the terms they borrowed it. Fortunately, there are several solutions available to help you get out of the vicious cycle of debt and back on track financially. While overwhelming debt might seem like an impossible thing to overcome, it isn’t. We understand how frustrating the cycle of debt can be and have helped many residents in New Westminster, North Vancouver, and Port Coquitlam, BC.

The team of experts at J. Bottom & Associates Ltd. Ltd. can help you find relief from all types of debt so you can get a fresh start. From finding personal solutions to corporate solutions for our clients, our team is fully equipped for the task. With more than 55 years of combined experience, our financial trustees provide knowledgeable, simple, and practical solutions to help you overcome your financial challenges. Call us today!

What Could Happen if I Can’t Pay My Debts?

If you’ve found yourself in a position where you can’t repay the debts you owe, there could be a few consequences from your creditors or collection agencies. This is why it’s crucial to reach out to a trusted financial expert before drastic actions are taken. The type of debt you owe, how much you owe, and how long you’ve been failing to make payments will determine what collection actions your creditors can take.

Secured debts are always secured against an asset of some kind, such as a house or vehicle, and give the creditor special rights to collect from property that you’ve pledged as collateral for the loan. Unsecured debts, such as most credit card debts or personal loans, typically require the creditor to file a legal action against you and obtain a judgment before drastic actions can be taken.

Government debts, including spousal support and student loans, are unsecured but give the creditor special collection rights. In most cases, the government can take your tax refunds to pay the debt, or they can garnish your wages without getting a lawsuit. If you stop making your required payments on general consumer debts, such as a credit card, your creditors will generally charge you a fee for missing payments and start reporting those defaults on your credit history. They may take other actions as well, including:

  • Increase Interest Rate: Creditors will often increase your interest rate after you’ve started missing your payments. Unfortunately, this makes your balance increase quickly and serves as an example of how people get stuck in the cycle of debt.
  • Place Account with a Collection Agency: If you continue missing payments and fail to negotiate with your creditors, your account may be sold to a third-party collection agency. Many debtors feel intimidated and overwhelmed when dealing with collection agents, but speaking with a financial trustee at J. Bottom & Associates Ltd. is a great first step to eliminate calls from collection. Collection calls can be frequent, and you may also receive letters in the mail indicating that collection methods will intensify over time.
  • Withdraw from your Bank Account: If your bank account is associated with your debts in any way, the lender may take funds directly from your bank account for missed payments without notice to you. This is called the “right of offset.”
  • Start Legal Action: If a creditor is successful in taking court action against you, they may get permission to take money directly from your wages or any other form of income. Legal fees, penalties, and any accumulated interest on the account may also be added to the total amount you have to pay back. Your creditor may also place a lien on your home or take an asset such as a vehicle. In severe cases, your creditor may ask the court to issue a warrant for your arrest if you don’t appear as required at a court hearing. This is a rare situation and should be discussed with a licensed insolvency trustee.
What Should I Do if I Can’t Pay My Debts?

Do you have too much debt to pay? If you can’t make your payments on time and you won’t be able to resume making them any time soon, there are a few things you can do to manage your situation before it gets too overwhelming. Consider taking the following steps when you can’t pay back your debts:

  • Don’t Ignore the Problem – Once you begin missing your payments, the problem isn’t going to go away or clear up on its own. Being aware of what’s going on with your accounts and keeping communication open with the creditors is crucial when you begin missing payments. Review your monthly statements as you would if you were making payments, so you’re not blindsided by your creditors. It can be frustrating opening the mail when you know it’s not good news, but it’s important to stay informed about any actions your creditors may be taking against you due to missed payments.
  • Understand Your Debt Relief Options – Understanding all your financial relief options in this scenario is crucial to receiving the best outcome. Creditors, lenders, and collection agents may try to pressure you into debt settlement agreements or tacking on a higher interest rate, but it’s important to know your legal responsibilities before taking any definite action. This could result in you paying much more on your balance over time or losing important assets.
  • Speak to a Debt Professional – A Licensed Insolvency Trustee is the only professional in Canada endorsed and authorized by the federal government to help you deal with your debt and protect you from your creditors under the Bankruptcy Insolvency Act. Reaching out to one is a great first step when trying to find a solution for your unpaid debts.

Regardless of your credit score or financial history, you don’t need to “qualify” for help from a Licensed Insolvency Trustee. We offer a free consultation to discuss your situation and explore your debt relief options. We understand that debt problems can build up over time and become overwhelming, so we’re here to help you each step of the way and find a solution that’s right for your specific situation.

Let Our Financial Experts Help You Find a Debt Solution

Whether you’re overwhelmed with student loan debt or can’t pay your car loan, there are debt relief options available in New Westminster, North Vancouver, and Port Coquitlam, BC. Financial issues and outstanding debts can become complicated, but our experienced trustees are here to help answer any questions you have. Our proven strategies have helped many of our clients get out of debt and back on their feet. To get started on breaking the cycle of debt and explore your options to get financial relief, contact us today to get started with your free consultation.

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