Personal Bankruptcy in Alberta and Your Rights Against Creditors

Posted by: Krista McDonald on 07/06/2011

Declaring personal bankruptcy in Alberta will stop any debt collection activities your creditors may have underway against you.  If they have successfully sued you for judgment and have a writ of enforcement to garnish your wages, that will stop.  If other creditors and collection agencies are constantly calling you, the calls will stop as well.

However, Albertans have rights relating to creditor collection activity that are in place from the moment you get the first notice of late payment.  The Alberta Fair Trade Act and the Bill Collection and Debt Repayment Regulations determine what creditors and collection agencies can and cannot do to try to collect a debt.

You can help yourself if you know what rights you have when dealing with creditors.  In most cases, the original creditor – the bank or lending institution from whom you borrowed money – is careful to follow Alberta regulations.  However, you should know many creditors turn debts over to professional debt collection agencies, and some of them can be very aggressive.

Debt collection agencies thrive on instilling fear in the hearts of consumers.  Their greatest weapon is ignorance.  Many Canadians do not know their rights when it comes to dealing with creditors.  For example, it is a violation of Alberta regulations to provide false or misleading information. 

From time to time, we see people in our offices who claim a debt collector told them they would not be able to get credit for the rest of their lives if they declared personal bankruptcy.  This is false information.

Some collection agencies claim your spouse will be liable for your debts if you file.  This is also false, as long as the unsecured account is in your name only.

 Creditors and collection agencies must identify themselves and state the purpose of the contact is to collect a debt.  In the case of debts turned over to a collection agency, the law requires the collector to inform the consumer of the original creditor and the amount of the debt.  If it is not your debt, you have the right to dispute it.

 The most important thing you can do to protect your rights against creditors and collection agencies is first and foremost to know what your rights are.  You can find helpful tip sheets on the Alberta consumer website at www.servicealberta.com.  In addition, when dealing with collection calls you need to let them know you know your rights.  Do not be afraid of them.  The worst outcome you could have is a court ordered writ of enforcement allowing a creditor to garnish your wages or attach your property.

 All such legal collection activity can be stopped through either personal bankruptcy or a consumer proposal.  If you need professional advice on dealing with creditor collection activity, schedule an appointment with a licensed bankruptcy trustee in Alberta.