If a creditor sues you to recover $25,000 or less, your case will be conducted in the Civil Division of the Provincial Court. You will be notified that a civil claim has been filed either in person or by registered mail, telling you also who is suing you, the reasons for taking legal action (usually that you have not communicated or cooperated with them) and the amount of the claim.
If you do not choose to answer the claim, a judgment will be filed against you and you won’t get the chance to explain or defend yourself. Some alternatives to consider include:
Disputing the claim
Look for the Dispute Note usually included with the claim or request one from the courts. You have 20 days from the receipt of the claim to file your dispute. When you file a dispute, the court will set a date for possible mediation or trial. Negotiate with the creditor and see if you can negotiate a payment arrangement. Go to court and pay the amount you owe, plus any additional costs. Make sure, as with all payments, that you get a receipt for your payment.
If you are being sued for more than $25,000, the case will take place in the Court of Queen’s Bench. You will receive a Statement of Claim, formally stating that an action has been taken against you. You must respond to the Statement of Claim within 15 days, either with a statement in your defence or demand of notice. It is best, in such cases, to hire formal legal representation.
A judgment is the court’s decision on your creditor’s claim. If the court decides against you, the judgment explains the details of the claims and:
- It will go on your credit file and remain there for 7 years, even if you pay, making it difficult for you to get any further credit, house loan, etc.
- It will entitle your creditors to register a writ of enforcement by which they may seize your property or garnish your wages or bank accounts.
Judgments are enforced through a writ of enforcement which must be filed with the Court of Queen’s Bench and registered with the Personal Property Registry. If you own a house or land, the writ of enforcement can be filed at the Land Titles Office, making it difficult to sell or refinance your property.
A judgment can be enforced for 10 years and then renewed until the debt is paid. Interest on unpaid debts accrues from the date of judgment. If you move out of Alberta to another province, creditors can apply to transfer the judgment to your new location to collect on your debt.
When you have paid the judgment in full, you should make sure that the judgment is formally discharged at the Court of Queen’s Bench and at the Personal Property Registry. Make sure you also notify the credit bureau that you have paid your debt and that they note it in your credit record. Judgments will stay on your record for a period of 6 years after you make your payment, making it difficult for you to obtain credit during that time.