About a year ago, an elderly client called me wondering about options to deal with a creditor that was calling her. Her husband had passed away a few months prior, and she was now barely able to house and feed herself. In discussing her situation, I learned that her only sources of income were Canada Pension, and Old Age Security. Since neither of these sources of income can be garnished, I advised her that she was “creditor proof”. This means that even if a creditor sued her, they would not be able to garnish (or take part of) her income. She had the reassurance of knowing that, even though the creditor could continue to call her, they could not take any of her income. She was relieved because she did not want to file bankruptcy. I did suggest however, that she change her bank account as soon as possible. Why? Since her bank account was with the same creditor that she owed money to, that creditor could take money deposited to her account to satisfy the outstanding debt she owed to them. This is called “right of set-off”.
I spoke to the same client yesterday. She called me back because the creditor we spoke about a year ago had taken money out of her bank account the day before; she was very upset and wondered why they did this, and what she could do about it. Even though a year ago, I suggested she change bank accounts, she unfortunately had not done so. She told me that a few months after speaking to me, the creditor stopped calling her, and so she thought it would be safe to not change her account. So, what can she do now? Sadly, there really isn’t anything she can do; the creditor is not required to return the money taken. However, I again suggested that she close her old account and open a new account at a different bank (that she owed no money to) to prevent this from happening in the future. She told me that she had already done so.
If you are on a reduced income, and have questions about how to manage your debts, please feel free to call us at 310-PLAN or visit us at Hoyes.com.
