Can a creditor put me into bankruptcy against my will?

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In Canada, creditors can’t force you into bankruptcy but may pursue legal actions like garnishing wages if debts go unpaid. You decide to file for bankruptcy or opt for a consumer proposal. Options include negotiation, debt settlement, or consulting a licensed insolvency trustee for guidance.

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Question

Can a creditor force me into bankruptcy? I want to know if my creditors have the power to make me declare bankruptcy against my will.

From: Anonymous Question, Nova Scotia (NS)

Answer

In Canada, creditors can’t force you into bankruptcy, but they might take legal steps if things go south with your debts. If a creditor gets a court verdict and you’re unable to pay, actions like taking a chunk out of your paycheck or placing a lien on your property aren’t out of the question. While their collection tactics can feel overwhelming, remember, the choice to file for bankruptcy or go with a consumer proposal is yours to make. You have plenty of options at your disposal, like negotiating, settling your debts, or consulting a licensed insolvency trustee to guide you out of these choppy financial waters.

From: Insider Scott

OSB Based Answer

No, a creditor cannot force you into bankruptcy against your will. In Canada, bankruptcy is a voluntary process initiated by the debtor through a bankruptcy petition under the Bankruptcy and Insolvency Act (RSC 1985, c B-3). While creditors can take action, such as filing a petition for bankruptcy, this only occurs under specific circumstances, typically requiring a court process and meeting certain creditor thresholds as outlined in Section 42 of the Act. Ultimately, you retain the choice to declare bankruptcy or explore other debt resolution options, such as consumer proposals.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

References

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