Still receiving statements form creditors after filing bankruptcy?
A common question I receive from debtors is “Why do I keep receiving statements from creditors when they know I have filed a consumer proposal or a bankruptcy”. Usually it’s a frantic phone call or email that says, “I finished my proposal or bankruptcy and am still receiving statements! They are still coming after me for payment!”
There is no reason to panic. The reason statements are sent has to do with timing, computer generation, lack of human intervention and legal disclosure requirements and not with pursuing collection.
When an individual files a consumer proposal or a bankruptcy the Licensed Insolvency Trustee notifies the creditors of such. In many instances, financial institutions and credit card companies use third party service providers who are tasked with filing the claims with the Licensed Insolvency Trustee and providing information relating to the debt. So it is not the Bank directly who does this work. So there is a time lag between the bank actually receiving notification of the insolvency and the sending of statements.
As well, the statements are computer generated every month. There is no person actually looking at this. And it does take a while for these institutions to do their housekeeping such as closing accounts and to stop sending statements. Yes there are additional interest charges on these statements but again, these are computer generated and you are not responsible for interest charges after the date of filing. The bank will ultimately get around to fixing this. So it is very common that a debtor files and continues to receive statements for a period after the filing. It’s all about the timing.
Financial institutions are required, by law, to send a statement to the debtor when a payment is received. In fact, the legislation says that the bank is not required to send statements if there is no outstanding balance at the end of the period or the credit agreement has been suspended or cancelled and the bank has demanded payment of the outstanding balance. So in the case of when a bankruptcy or a proposal has been filed, the credit agreement has been cancelled and the bank is no longer required to send statements. If they receive a payment through the Licensed Insolvency Trustee by way of a dividend, that then triggers the requirement to send a statement and hence, the phone call to the Licensed Insolvency Trustee.
So if you have filed a consumer proposal or a bankruptcy, it is not uncommon to receive statements from creditors after filing. It is nothing to be concerned about. If you are compliant with your payments and documents, then you have nothing to fear.