Getting repeated calls from collection agencies can be stressful. You may be receiving calls about credit cards, personal loans, lines of credit, unpaid bills, or other debts.
If you are struggling to keep up with your payments, you may be wondering: Can bankruptcy stop collection calls in Ontario?
In many cases, the answer is yes.
When you file for bankruptcy in Ontario, a legal protection called a stay of proceedings normally takes effect. It prevents most unsecured creditors and collection agencies from continuing collection action against you.
What Happens to Collection Calls After Bankruptcy?
When a personal bankruptcy in Ontario is filed through a Licensed Insolvency Trustee (LIT), most unsecured creditors must stop trying to collect the debts included in the bankruptcy.
This normally means stopping:
- Collection phone calls
- Collection emails and letters
- Wage garnishments
- Lawsuits relating to covered debts
- Enforcement of many existing court orders
Your Licensed Insolvency Trustee will normally deal with your creditors after the bankruptcy is filed.
If a creditor or debt collection agency in Ontario continues calling, you can tell them that you have filed for bankruptcy and provide your trustee’s contact information.
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What Is a Stay of Proceedings?
A stay of proceedings is a legal protection under Canada’s bankruptcy system.
Once a bankruptcy or qualifying proposal is filed, creditors are generally prevented from starting or continuing collection action for unsecured debts covered by the filing.
This protection can provide relief if you have been dealing with constant calls, letters, lawsuits, or wage garnishments.
However, the stay does not apply to every type of debt.
For example, different rules may apply to:
- Mortgages
- Secured car loans
- Child support
- Spousal support
- Certain debts that are not released by bankruptcy
You should speak with a Licensed Insolvency Trustee or obtain legal advice about your particular debts.
How Do I Declare Bankruptcy in Ontario?
If you are asking, “How do I declare bankruptcy in Ontario?”, the first step is usually to speak with a Licensed Insolvency Trustee.
Licensed Insolvency Trustees are federally regulated professionals. They are the professionals authorized to administer bankruptcies and consumer proposals in Canada.
The general process includes:
- Reviewing your income, debts, expenses, and assets.
- Considering alternatives to bankruptcy.
- Completing the required bankruptcy documents.
- Having the trustee file the documents.
- Following the duties required during bankruptcy.
Whether you are considering bankruptcy Toronto, bankruptcy Mississauga, bankruptcy Brampton, or elsewhere in Ontario, bankruptcy is governed mainly by federal insolvency law.
Consumer Proposal vs Bankruptcy
Bankruptcy is not your only option.
A consumer proposal vs bankruptcy comparison can help you understand which solution may fit your circumstances.
Consumer Proposal
A consumer proposal may allow you to:
- Offer to repay part of what you owe
- Make payments over an agreed period
- Keep more of your assets
- Stop most unsecured creditor collection action
A consumer proposal can also create a stay of proceedings once it is filed.
Bankruptcy
Consider bankruptcy if you cannot reasonably repay your debts through other options.
Depending on your circumstances, bankruptcy can affect your assets, income, credit history, and future financial obligations.
Before choosing either option, understand the advantages and disadvantages.
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Ontario Rules for Collection Agencies
Even before filing bankruptcy Ontario Canada, collection agencies must follow Ontario rules.
For example, after initial contact, a collection agency generally cannot contact you more than three times within a seven-day period on behalf of the same creditor unless certain exceptions apply.
Collection agencies also cannot:
- Use threatening or intimidating language
- Use excessive or unreasonable pressure
- Give false or misleading information
- Contact you in a way that amounts to harassment
- Call between 9:00 p.m. and 7:00 a.m. Monday through Saturday
- Call on Sundays outside the permitted hours of 1:00 p.m. to 5:00 p.m.
- Call on public holidays
Ontario also has rules about contacting your family members and employer.
Is Bankruptcy the Right Choice?
There is no single answer for everyone.
The number of Ontario bankruptcies does not change the fact that every person’s financial situation is different.
Before filing bankruptcy, consider:
- How much debt you have
- Your monthly income
- Your assets
- Whether your wages are being garnished
- Whether creditors have started lawsuits
- Whether a consumer proposal is possible
- Whether some of your debts will survive bankruptcy
Getting professional advice early may help you understand your options before the situation becomes more difficult.
Frequently Asked Questions
1. How do you get collection agencies to stop calling?
You can ask the collection agency to follow Ontario’s communication rules. If you file a bankruptcy or consumer proposal, collection calls regarding most included unsecured debts should stop because of the stay of proceedings.
2. Can you say a collection company is harassing you?
Yes. Ontario collection agencies cannot communicate in a way or with a frequency that amounts to harassment. They also cannot use threatening, intimidating, profane, or coercive language.
3. What are the rules for debt collection in Ontario?
Ontario has rules covering when collectors can call, how often they can contact you, what they can say, and when they may contact other people about your debt.
4. Do collection debts ever stop contacting you?
Collection contact may stop for different reasons. Filing bankruptcy or a consumer proposal generally stops collection activity for most unsecured debts included in the filing. Simply ignoring a debt does not necessarily make the debt disappear.
5. Does bankruptcy stop all collection calls?
Bankruptcy normally stops collection efforts for most unsecured debts. However, some secured debts and support obligations are treated differently.
6. Can a collection agency garnish my wages in Ontario?
A creditor may be able to obtain and enforce a court judgment in some circumstances. Filing bankruptcy generally stops wage garnishments relating to debts covered by the bankruptcy.
7. Will bankruptcy clear all my debts?
Not necessarily. Certain debts can survive bankruptcy. You should review each debt with a Licensed Insolvency Trustee or lawyer.
8. Does a consumer proposal stop collection calls?
Generally, yes. After you file a consumer proposal, a stay of proceedings usually stops unsecured creditors included in the proposal from continuing collection actions.
9. Can collection agencies contact my employer?
Only in limited circumstances. Ontario law restricts when a collection agency can contact your employer about your debt.
10. Should I choose bankruptcy or a consumer proposal?
It all depends on your income, assets, debts, ability to make payments, and many other things. Getting some advice could help you weigh consumer proposals against bankruptcy.
Disclaimer: This information is provided in a general nature only. Bankruptcy and debt issues can be highly individualized. You may wish to consult a Licensed Insolvency Trustee or legal professional regarding your specific situation.