Debt Collection

An overview

A common problem facing many businesses and individuals is collection of outstanding accounts receivable. Goods and/or services have been provided, an invoice rendered, but the debt remains unpaid. Telephone calls and letters are met with avoidance or unfulfilled promises – “the cheque is in the mail”.

Eventually, there may be no alternative but to proceed with legal action to collect the debt. If one decides to take such action, there are a number of preliminary matters which must be considered.

Initiating proceedings – Preliminary matters

  1. Limitation Periods… Most collection matters require that legal proceedings be commenced within six years of the debt arising. This may be extended based upon the actions of the debtor.
  2. Is a Judgment Collectable…? What is the likelihood of executing on a judgment if the legal action is successful, specifically, what assets does the debtor have which can be attached to collect the judgment?
  3. Choice of Courts – Small Claims vs. Queen’s Bench… Where the principal sum of the debt does not exceed $10,000.00, one has the option of suing in Small Claims Court or the Court of Queen’s Bench. If the debt exceeds $10,000.00, proceedings must be initiated in the Court of Queen’s Bench, unless you are prepared to waive the amount over $10,000.00.
  4. Can I Protect My Interests Before Going to Court…? If one is concerned that a debtor is liquidating assets to avoid creditors, it may be appropriate to commence immediate prejudgment action. These proceedings may be initiated simultaneously with a Statement of Claim.

Examples include

  1. Garnishment Before Judgment… This attaches to any debt due or accruing due at time of service of the Notice of Garnishment on the Garnishee, excluding wages
  2. Attachment of Personal Property and Land…Where there is evidence that the debtor has or is about to remove property out of Manitoba, or has concealed, removed, or transferred property with intent to delay, defeat or defraud a creditor or is about to do so, in the appropriate circumstances one can obtain a court order attaching to the property or land in question.

I Have a Judgment , What Next?

A Judgment is a Court order which confirms that a debt is owed. However, in order to collect, one must be familiar with the various procedures available to enforce the Judgment, and how best to bring these procedures to bear on the debtor.


Any debt due or accruing due at the time of service of the Notice of Garnishment may be attached. Common examples include wages and bank accounts.

Writ of seizure and sale

The Sheriff’s Office can be instructed to seize and sell the property of the debtor to pay the Judgment, such as motor vehicles. However, care must be taken to ensure the property in question is not secured by another creditor.

Execution against Real Property

Judgment may be registered against title of any properties in the debtor’s name. Eventually, you may take steps to proceed with the sale of the property to pay the Judgement.

Examination in aid of Execution ( Going Straight To The Horse’s Mouth)

Where debtors are avoiding collection attempts or you do not have adequate information about their ability to satisfy a judgment, one may conduct an examination in aid of execution.

The debtor can be compelled to attend at a place of your choosing, usually your lawyer’s office, to answer, under oath, all questions pertinent to their ability to pay the judgment, including income, debts, assets, and property. You may also require that they bring documents such as financial statements, income tax returns, bank account statements and the like for review. One can use the information obtained to commence the appropriate proceedings, such as garnishment or seizure of property.

Do I Need A Lawyer?

The collection of accounts receivable often involves numerous legal considerations and evaluations, which require the knowledge, training, and expertise of a lawyer. Often a letter from a lawyer is all that is required to induce a debtor to make payment. If legal action is necessary, same can be commenced without delay.

The attitude and professional standards employed by a law firm are to the advantage of a creditor, and may result in them maintaining the debtor as a client, if so desired.

How Much Does It Cost?

There may be no costs payable by you as the debtor may be responsible for them through allowable court costs, or otherwise. Depending on the size and amount of the collections, fees can be arranged on an hourly basis or a percentage of the amount collected.