Q: A column of yours has caused me grief. It was about a farmer trying to collect $2,000 for bales he sold. You wrote, “You would have to decide whether the stress and tension between you and the buyer are worth the $2,000. You should be aware that if the buyer is truly in financial difficulty with no money in the bank and all assets pledged as security, you may never collect your money.”
I made a loan to a relative. He promised to repay after harvest. Instead he spent money on a partial payment of a fancy truck, cigarettes and whisky.
Read Also
Food can play a flavourful role in fun summer activities
Recipes – popsicles are made with lactose-free milk and yogurt so are perfect for those who can’t tolerate milk, while everyoneelse will also enjoy them
I tried small claims court, even got a writ of execution and needed a lawyer, and I still haven’t collected the money. Now my relative is threatening bankruptcy. I have been told that as an unsecured creditor, I’m not likely to recover anything.
This person continues to flaunt his lifestyle while ignoring his bills. It appears he can also flout the law, as long as it is civil, not criminal law. Articles like your column merely encourage his behavior. The message it gave to him is that you can do what you want. The law can’t touch you.
A:What my column did was outline the law on debt collection. Under our legal system, if you have sued a debtor and he doesn’t pay, you can
either garnishee (a court order allowing seizure of money in bank account, part of his salary or money due to him from sale of farm produce) or obtain a writ of execution to seize his goods, or land, in some cases. If you attempt to garnishee salary you can’t claim the whole paycheque. Some of the money must be left so the debtor can pay for the necessities of life such as groceries.
Under writs of execution, certain goods are
exempt from seizure, such as furniture and essential tools and machinery enabling one to make a living. Unfortunately, rules relating to garnishees and executions are technical and you will need legal assistance to use such remedies.
I agree that a debtor can make it difficult for a creditor to collect. It is the creditor who must search for the debtor’s bank accounts to garnishee and find out what he owns that could be seized. And yes, artful debtors have done things like move bank accounts, quit jobs or gotten rid of assets to avoid their creditors. In most provinces, a creditor who has obtained judgment can ask for help through a legal process in which the debtor can be questioned under oath about his financial affairs and assets.
Of course, like everything in the legal process, it will take time and money and if the debtor truly has no assets, you’re no further ahead.
You are also correct in stating that an unsecured creditor doesn’t have much chance in the event of bankruptcy or serious financial problems. A secured creditor is one who has taken and registered a mortgage or lien against the property. You mention the fancy truck. In all probability the vendor, or the bank or finance company, has taken a lien against it. This means that if payments aren’t made, the vehicle can be taken back.
Frankly, I’m not sure there is an easy answer to the problem you raise. I believe people should be aware of what the law is – that’s what this column is about.
Unfortunately, there will be people who take advantage of the law. At the same time there are a great many people who run into financial problems through no fault of their own. Illness, family breakup or disasters such as fires can cause people serious financial difficulty.
Nor do I think that the law can be made tougher. Aside from what the law now offers, the only alternative would be a debtor’s prison, a system used in England at one time. To reinstate such a practice would mean that our already overworked criminal system would become a debt collector.
The best defence for a creditor or business is to be careful to whom they extend loans or credit.
