When You Truly Can't Repay A Debt, Know Your Rights

You're one of the millions who were affected by the 2009/2010 economic fallout that suffocated the United States, and was felt by some industries in Canada. Then Canada spiraled into a recession.

Because things were great just prior to the downfall, your business was riding high. You had credit at your fingertips and things looked pretty rosy. Then all of a sudden, the shit hit the fan and you either lost your business or your job. Saddled with debt you were able to manage with the previous income, you now have no way to pay it back.

If you're over 50, well, you know the drill. Finding work that resumed the same kind of income you had has been sketchy. Maybe you found some piecemeal jobs to put food on the table and pay rent, but with very little left over to manage your bills. All your bills have gone to collections.

Some of your collectors were sympathetic to your plight, so even if you could only pay $25 every other month, it was something and it showed you were trying. Others were relentless to the point of abuse -- and some may have broken the law.

Maybe you already had a bankruptcy under your belt from decades prior and you don't have the money now to pay the larger fees required to file a second one.

No matter how hard you work to try and find the income, after downsizing, borrowing more, you can't make it work. Your only option is to ignore the debt. The collection calls continue and so does the abuse.

Years pass. Maybe you've moved or your house was foreclosed. Either way, you've had a break from the constant reminder. The calls have stopped. Then all of a sudden, a there is a knock at the door, or you learn that a bailiff wants to serve you a judgement order on a debt that is over two years old.

There is a statute of limitations

Check your province or state. In Alberta, Ontario, British Columbia, and Saskatchewan, there is a two-year statute of limitations. That means creditors are prohibited from legally suing you for unsecured debt.

Where some people screw this up is when they acknowledge the debt in writing, such as an emailed response to a creditor who decides to hound you electronically. The statute of limitations is in effect right after the last payment or acknowledgement of the debt. So if someone approaches you after two years or however long the limitation is in your area: shut up. Don't respond. Don't acknowledge. If they come to your door, don't accept the paperwork, don't even acknowledge your name. Bid them good day and shut the door.

They are not able to collect the old debt from you, even if you now have the money to pay it. Yes, it is up to the debtor to remove any of rotten credit from your report. But face it. Your credit is bad whether you pay it or not. Paying it doesn't make it miraculously disappear from your credit report.

If it seems that your debt has resurfaced and the collection process has started all over again, after the two years have expired, that probably means your debtor has illegally sold your debt to a third-party debtor.

When your debt gets to the collection stage, most states and provinces have similar legislation as to the personal conduct of a collector. In today's digital world, your debtor may even take to extremes and troll your social media accounts, publicly disclose your debt, and bully you. This is illegal.

Know your rights.

Debt, Collections, Economy, and Unemployment Can Lead to Cyberbullying

When the economy plummeted into the financial abyss in 2008, for some, it took a year or so for the real impact to show its ugly face.

There may have been a slight upturn after 2012, but the damage was so great that many North Americans have yet to recover.

It's more than about losing a job or taking a bath in the stock market. Whole industries nosedived off a cliff. The economic tank coincided with digital technology forcing the world to rethink how it does business and to reshape its ways of communicating.

People didn't just lose their jobs, those positions became obsolete. 

What happens when as a business person, your expenses exceed your income because your industry is either dying or reinventing itself? You lay off your staff, but you're still drowning in a world of debt you incurred during the year the floor collapsed. There is no unemployment insurance, no cushion for small businesses. Even a bankruptcy costs money.

If the employee was lucky enough to collect unemployment insurance, by the time the insurance ran out or when two years were up, most still had trouble finding a position for numerous reasons: ageism, those jobs they were qualified for no longer existed, too many candidates for the same job, logistics, lack of training.

With only part-time and piecemeal contract work available, the underemployed's household bills pile up and food and rent begins to take priority over all other bills. People will use their credit cards to pay for their utility bills until the juggling from here to there catches up with them. 

A third to one half of the U.S. population has debt in collections, according to +USA TODAY. +The Economist reports that student debt is 7% of the U.S. GDP. In Canada, the +The Globe and Mail reports "On a per-capita basis, household net worth rose to a record $232,200."

One industry that has grown in this environment is debt collections. While the business may be a necessary evil to our society, some of the individuals working the files may be practicing illegal behavior in their desperate attempt to close a case file.

They may use abusive tactics by phone and email, but there are some who take it a step further and publicly try to shame a debtor by disclosing their debt across the Internet. The laws are similar in both Canada and the United States when it comes to prohibitive debt collection practices. It is laid out in both countries' debt collection acts.

The piling on by collections when a person is down and out is bad enough. Abusive behavior is inexcusable. Know your rights.