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January 15, 2018

You are late with your payments and wonder what recourses are available to your creditors.

The first, and often the most effective, is to put a bad rating to your credit report. However, these bad ratings will appear in your credit file for 6 (long) years! This is the first and most preferred step for all creditors, because it is free of cost and causes great damages to your credit report.

Next, if a creditor obtains a judgement against you, they could seize:

  • Approximately 30% of your salary (before taxes). The law provides that you are allowed certain deductions according to your family situation, but the fact remains that 30% of your gross income represents, in many cases, almost half of your net salary. Rare are those that can afford to live that way for very long.
  • Your furniture, in part: the law provides that a bailiff must leave behind furniture (of his choice) of a total value of $7,000 for the entire household. This is unfortunate, as the furniture is then sold at auction for a pittance, whereas the cost to replace it constitutes an important expense for you. You are therefore in a lose-lose situation. Don’t wait to reach that point.
  • Your bank account. Once seized, any future deposit in your account will also be seized. Your account is therefore, for all intents and purposes, unusable.
  • Your house and your car. In the case where these goods are worth more than the mortgage or car loan, your creditors could seize them and sell them under judicial authority, or publish a legal mortgage and either wait for the sale of the property or the renewal of your mortgage. This type of seizure is usually considered as a default for your financial institution and they may insist that you rectify the situation before they continue financing you.

As you can see, the law offers you certain protections, but they are quite minimal. Unresolved financial issues wreak havoc and rarely disappear without being taken care of. Before being backed into a corner by the justice system or seizures, you should consult a professional (lawyer, accountant, trustee or any other trusted professional) to understand your rights and, especially, the solutions that are available to you.

For all questions or further details, do not hesitate to contact us.

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