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Losing a lawsuit is not only stressful and time-consuming, but it can cost you a pretty penny. Depending on the case, you could be out hundreds or even thousands of dollars. But what happens if you lose a lawsuit and can’t pay in Canada? 

Read on to find out what options you may have if you can’t pay your settlement. And what potential consequences you could face if you don’t fulfill your legal obligations.

What Happens If You Lose A Lawsuit And Can’t Pay In Canada?

If someone successfully sues you, you’re required to pay the settlement amount in the judgment within a certain amount of time following the completion of the court case. But what if you don’t have enough money to cover your required payment?

Here are some general ways you may be penalized if you can’t pay your lawsuit. Do note, depending on where you live, the consequences may differ.

What Happens If You Lose A Lawsuit And Can’t Pay In Canada: They Can Garnish Your Wages

If you don’t have the funds readily available to pay the plaintiff, payment can come from your income via wage garnishment. That means a certain amount of money will be deducted from each paycheque until your settlement is paid in full. However, depending on where you live, you may be protected from this type of collection method.

What Happens If You Lose A Lawsuit And Can’t Pay In Canada: You Can Be Charged Interest 

As mentioned, you’ll have a specific amount of time to make your payment according to the details of the court case. If you don’t make the payment when it’s due, you could wind up owing more. That’s because post-judgment interest may be added to the original amount owing.

What Happens If You Lose A Lawsuit And Can’t Pay In Canada: They Can Seize Your Property

As a last resort, your property may be seized and sold. The proceeds will then be used to satisfy your payment. 

What Is A Voluntary Deposit To Avoid Seizure?  

To prevent your assets from being seized, you can voluntarily repay the creditor to satisfy what you owe. Taking a proactive step can help you avoid the unfortunate circumstance of losing your property or other valuable assets and avoid bankruptcy.

What Happens If You Lose A Lawsuit And Can’t Pay In Canada: They Can Send A Collections Agency After You

If you don’t pay the plaintiff or creditor right away, they may hire a collections agency to come after you for unpaid dues. This can lead to unnecessary stress and may potentially impact your credit scores.  

Can You Pay A Lawsuit In Installments? 

If you don’t have enough money to make a full payment at once, you may choose to repay what you owe via installments. In this case, you would make smaller payments over a certain period of time until the full amount is repaid. The other party will have to agree on this arrangement before you can proceed. 

If the other party does not agree, there may be other alternatives available. 

Apply For A Loan

Consider applying for a personal loan, then using the money from the loan to satisfy your debt. Then, you can repay the loan through smaller installment payments over a longer period of time. This way, your lawsuit debt is taken care of, and you won’t have to come up with the entire amount upfront.

Keep in mind that you will have to pay interest on the loan, which means you’ll be paying more in the long run. The lower the interest rate, the less you’ll have to pay over the loan term. 

Pro Tip: To secure a lower rate, having good credit is beneficial. Before applying for a personal loan, check your credit score for free using Loans Canada’s CompareHub. Knowing your score before you apply for a loan will give you a good idea of the type of rate you may qualify for. 

How To Pay A Lawsuit In Canada

For the most part, you can pay the other party the settlement via cash, bank transfer, money order, bank draft, or credit card. The payment options may vary depending on the court and the province the case was held in. 

  • In Ontario, you can pay with cash, money order, or bank draft, and deposit your payment with your bank, along with the necessary documents from your lawsuit. 
  • In Quebec, you can pay with cash, debit card, credit card, or certified cheque in person at the courthouse. You can also pay online, or send your payment through the mail by certified cheque or money order. 
  • In Alberta, you can only pay into the court or directly to the plaintiff.  

You’ll need to find out exactly how your settlement can be paid based on where you live. When paying, ensure you keep records and proof of payment. 

Tips On What To Do When Paying Your Settlement 

When settling your payment, keep the following tips in mind to protect yourself:

  • Pay on time. If possible, try to pay your settlement in full when it’s due. That way, you can avoid interest charges or more severe consequences for late payment.
  • Keep records. Retain all receipts and documents that prove your settlement payment is made in case the plaintiff mistakenly comes after you to collect on funds you’ve already paid. 
  • Obtain a release from the other party. A release or acquittance is a document proving that the other party acknowledges that you have made your payment according to the judgment.
  • Inform relevant parties of your payment. Give a copy of your payment receipt or stamped document to other parties involved, including the court office. You may not be required to inform others, but it’s a good idea to inform them anyway.

What Happens If You Disagree With The Judge’s Hearing?

If you feel that you’ve been unfairly sued, you may consider appealing your case. However, this may not be possible in all cases or provinces.

For instance, in Ontario, you may appeal your Small Claims Court case decision in Divisional Court if the claim is for over $3,500. In this case, you must appeal within 30 days of the judge’s original decision. But in Quebec, a small claims judgment cannot be appealed. You will have to pay the amount owed within the time specified in your case. 

Find out what your options are in terms of appealing your case if you disagree with the judge’s decision based on the province or territory that you live in. If you are permitted to appeal your case, remember, there are usually fees involved for filing your appeal. 

Final Thoughts

If you’re wondering what happens if you lose a lawsuit and can’t pay, you’ll be happy to know that there are a couple of options available. You must adhere to the requirements of the court outcome, and that includes paying your settlement when it’s due. If you can’t come up with the funds on time, there are loans and other arrangements that you may be able to work out with the court or creditor.

FAQs On What Happens If You Lose A Lawsuit And Can't Pay In Canada

How much are lawyer fees in Canada?

It can cost as little as $90 per hour for help from a law clerk or law student, to up to $350 per hour for a senior lawyer’s help. Generally speaking, lawyers are usually only required for a few hours of consulting to help prepare a small claims court case. Defendants usually represent themselves in small lawsuits, as the process is usually relatively simple. But in some cases, spending a few hundred dollars to consult with a lawyer can help ensure that you are adequately prepared to represent yourself in court. 

Can I appeal my case to the Supreme Court of Canada? 

If you want to appeal a civil court case decision to the Supreme Court of Canada, you must ask the Supreme Court for permission, or “leave.” You will need to apply to the Supreme Court of Canada for leave to appeal before the appeal is heard. However, do note that very few of the appeals made are granted by the supreme court. So ensure your cause is worth fighting for before making an appeal.

Can I borrow money or get a loan to settle a lawsuit?

Yes, you can take out a loan to cover your lawsuit settlement. For instance, you can apply for a personal loan and use the funds to pay the amount you owe from your court case.  There are lawsuit settlement loans available from lenders across Canada. However, these types of loans are more suitable for those who win their lawsuits, as lenders who offer lawsuit settlement loans lend money based on the outcome of the case. More specifically, settlement loans are repaid when your case settles, and the lender is paid from the proceeds of the settlement when you win. 

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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