Do I Need A Lawyer If Im In Debt

Debt is stressful at the best of times. But when it reaches a point where you can no longer pay your bills, it can be downright overwhelming. You may receive harassing phone calls and letters from collection agencies. Lawyers may start contacting you; threatening or even initiating court action — potentially resulting in wage garnishments, seizure of assets or liens against your property. Feeling cornered and out of options, your first instinct is to call a lawyer. You hope they can prevent you and your family from losing everything. It's a perfectly normal reaction. But the question is, would it be the best one?

Lawyer-Free Alternatives

If your goal is to simply achieve freedom from debt and prevent further collections actions against you, a lawyer will likely not be necessary in most cases.

Consumer proposals and bankruptcies are federally regulated actions intended to provide honest, unfortunate Canadians freedom from debt. One benefit — beyond helping you get a financial fresh start — is they provide an immediate stay of proceedings on all collections actions, wage garnishments and asset seizures being taken against you. They also prevent any future action being taken as long as you honour the terms outlined by your Licensed Insolvency Trustee.

Though you are entitled to have or seek legal counsel at any time, it is rarely (if ever) necessary. Licensed Insolvency Trustees are licensed and regulated by the federal government and tasked with ensuring the legal rights of debtors and creditors are balanced according to the Bankruptcy and Insolvency Act of Canada. They are knowledgeable, experienced and able to guide you through every step of the process — from consultation to filing, administration and the eventual discharge of your debts. Provided you fulfill all your required duties in the timeframe set out, you can complete the entire process without the courts ever involved.

When to Seek Legal Counsel

There are also situations where a lawyer's involvement may be necessary. Though many of the following scenarios could potentially take place in small claims court where you are able to represent yourself, a lawyer's expertise or guidance might still be of significant benefit — especially if the matter is complex or highly consequential.

Defending an action or disputing the validity of a debt: You may disagree with the amount of a debt a creditor is attempting to collect or believe the creditor has erred and there is no debt at all. You will be required to prove those claims in court and it would therefore be advisable to hire a lawyer who can defend your rights in the legal system.

Submitting a counter claim against your creditor: You may believe your creditor has violated the terms of your debt agreement, broken the law or caused damages to you in some way. If so, you will need to pursue legal action against the creditor and the assistance of a lawyer would be beneficial in representing your case.

Pursuing legal action against a third-party: Perhaps another business or individual has caused you damages (e.g. a car accident) from which the proceeds could assist you with paying off your debts. In this case, you may want to hire a lawyer to ensure your claim is heard and you receive the full value of your entitled legal remedy.

What About Bankruptcy Lawyers?

It is rare for Bankruptcy lawyers to become involved in consumer debt situations, as the focus of their practice tends to involve complex and corporate matters. However, if one or more of your creditors move to have an involuntary bankruptcy order placed against you seeking legal counsel may be necessary. If you choose to accept the order, a Licensed Insolvency Trustee can administer the process. But if you wish to contest it, you will need someone knowledgeable in bankruptcy and insolvency law to represent you in court.

Free Confidential Consultation

No matter your situation, a Licensed Insolvency Trustee will provide a Free Confidential Consultation to review your debts and provide advice about the best options available. Whether you would benefit from a bankruptcy, consumer proposal or the help of a legal professional, they can help you achieve the relief and piece of mind you need. If you're struggling and wondering what to do next, seeing them first can prevent can prevent unnecessary legal fees from making an already unmanageable financial situation even worse.