Bad things happen to good people, and nobody intends to run into financial problems that can lead to defaulting on obligations to credit card companies. Individuals lose jobs, income, have medical problems in the family, or separate from spouses. These are just a few of the reasons why an individual might see his or her credit and finances turn into a mess that can seem impossible to clean up.

Unfortunately, the big banks and most creditors will not be considerate of your personal situation. Your account simply represents a numbered debt to them, and so if you don’t pay them you can quickly find yourself in Small Claims Court.

Most Small Claims Court actions in Canada follow the same process:

1.     Your creditor sues you by filing a claim in the Small Claims Court (depending on the amount that you owe).

2.     Your creditor serves the claim upon you.

3.     You have an opportunity to file a defence.

a) At this point many people do not file a defence because they are ashamed and know that they owe the money and don’t want to face the embarrassment of going to court. In the absence of another plan to deal with the debt, that is the reason that you are being sued – so not filing a defense is a big mistake.

4.     If no defence is filed, your creditor can obtain a default judgement from the Small Claims Court.

5.     Once your creditor obtains a default judgement, he or she can utilize enforcement remedies that are available through the Small Claims Court, such as garnishing your wages or freezing your bank account.

So how can you stop a Small Claims Court action in Canada? If you know that you owe the money and you know that there is no way to pay the debt off, then you have two choices:

1.     File a defence with the Small Claims Court requesting a monthly payment plan.

2.     If you already have a judgement against you, you can file a motion with the Small Claims Court explaining why you didn’t file a defence and request permission to file one and then request a monthly payment plan.

Here are the challenges with the above 2 scenarios: 1) Your creditor will still have to accept your monthly payment plan; 2) Interest will continue to compound on the debt; 3) The moment you default, you creditor can obtain a judgement against you; 4) The Small Claims Court will continue to be in your life until such time as the debt is paid in full.

Fortunately for you there are programs available in Canada that are legislated options for getting out of debt, and these options may not involve bankruptcy. Leveraging one of these financial programs can stop a Small Claims Court action, even if your wages are being garnished or your bank account is frozen! These programs can reduce your overall debt and freeze interest. If you owe money that you can’t repay, don’t deny or ignore the fact that you owe the money, especially if you have been sued in Small Claims Court. The best way to stop a Small Claims Court action that has arisen from an unpaid debt and resolve your financial problem is to seek professional financial guidance.

For more information about how to stop a Small Claims Court action that is associated with an unpaid debt, contact DebtCare at 416-907-2582 or visit www.debtcare.ca.