Your Debts Are Not Forgiven You Just Because Time Has Passed.
In my long-standing practice as a Bankruptcy & Insolvency Act Insolvency Counsellor, the biggest untruth that I consistently come across is a wide held believe among many Canadians that if 7 years have passed and the banks and the collection agents have ceased calling, then your debts are wiped out.
The believe that your debts are wiped off in 7 seven years stems from a misinterpretation of the laws governing the Credit Bureaus in Canada. When you owe a credit card debt, a personal loan or car loan, every month the banks send information about how you pay those debts to the Credit Bureaus. The information the banks send includes, the amount of credit facility they gave you, how much of the credit facility you have used and how frequently you pay. The credit bureaus calculate your credit rating based on that information.
One of the laws governing the Credit Bureaus is to strive to be as accurate and as current as possible in reflecting your true status to potential lenders by reporting an accurate credit rating. The law also says that, if within a period of 7 years, a debtor has not updated a borrower’s file at the credit bureau, then the credit has an obligation to delete that particular debt from their files to keep the file clean.
The act of cleaning a debtor’s file by the Credit Bureaus does not in itself mean that the debt is forgiven or wiped out. You still owe that money for as long as you haven’t paid, settled or declared bankruptcy. .So, it may be possible to have a clean credit report while you still owe a chunk of money to your long-standing creditors. The Bank, a collection agent or a lawyer representing the bank can call any time to demand the principal, accumulated interest and collection fees.
It is easy to understand what I am saying when you consider it from a personal point of view. Let us say that before you left the old country, you went to a friend to borrow money for your plane ticket to Canada. You have lived here for 20 years. For 20 years, your friend never had your contact information and you never bothered to contact him to pay. If you went back home for a visit and your friend meets you in a beer bar, does he have a right to collect his money then? Do you still owe him or you don’t because 20 years have passed?
If you are having debt problems, call me at 416-398-1877 ext 201.
I will help you face them squarely and resolve them.
Ken Ntiamoa, MBA
BIA Insolvency Counsellor