Organizing your insolvencyNo one is immune to upheaval. A job loss, a divorce, an unexpected random event and it’s the quality of life that can be turned upside down, sometimes to the point of indebtedness.

A precarious situation for which there is no infallible method, but which pushes some to voluntarily organize their insolvency in order to escape their creditors.

It is, therefore, to become poorer in various ways to be found unable to repay the sums due. The miracle solution? Not really. If a person who does not have the means to settle his debts can not be prosecuted, the fraudulent organization of insolvency, itself, is prohibited by the law.

Organizing your insolvency, how does it work?

At least feasible if not enviable, the organization or increase of insolvency is an attempt to evade one’s pecuniary obligations under criminal or tort law, by concealing all or part of one’s property and income.

Social assistance fraud, refusal to pay alimony or any compensation, the reasons are numerous, and the different methods are of the same diversity. In most cases, it’s about giving up furniture or properties to different members of the entourage able to protect this heritage. Other means include:

  • Transferring money to an overseas account or to settle oneself abroad;
  • Subscribing to a new credit (or declare fictitious debts). One way to get around your debts by pretending you owe money elsewhere;
  • Moonlighting;
  • Selling a possession to a loved one for a ridiculous price (and continue to use it);
  • Destroying personal property…

So many practices that rival inventiveness. Note that in case of doubt regarding a possible insolvency organization, judges have the possibility to consider acts committed well before the judicial decision recognizing the debt.

Aggravation of insolvency

Aggravation of insolvency is not considered a crime in Canada. However, it can be considered a crime of fraud punishable by imprisonment and a fine. It is, therefore, a commercial decision and not a separate offense. This long-studied theory lies in the fact of incurring new debts in the company’s name while the latter is already in a state of insolvency and without prospects of recovery.

It is difficult to prove this kind of fraud, but the courts are particularly harsh on these companies. The accomplice(s) incurs the same penalties as the offender.

Ask for advice

In order to avoid cumulating convictions, always use the legal means to escape your creditors. You have various options when it comes to getting out of debt (consolidating your debts in one payment or making a consumer proposal for example) but if nothing works and your income continues to be insufficient to pay off your debts, prefer honesty to your insolvency.

Don’t hesitate to warn the creditor that you will be unable to pay your due. In the event of official insolvency attested by a court, you will be protected from creditors for a minimum of two years after which the prescription will be possible.

In any case, it is very important to seek advice. A doubt, a question, some advice? Located in the Montreal area, N. Séguin Trustee is at your disposal to think with you of solutions adapted to your situation. Contact us to learn more!