Most of us understand debt collection on the surface (i.e. Person A owes Person B an amount of money), but what we don’t often see is the finer points of a debt claim and what should be included. Here’s what goes into it in more detail:
Reason for the debt
Every debtor owes the creditor money for a reason. Some examples are:
- The creditor lent money to the debtor. In exchange, the debtor agreed to repay the money with interest, by some frequency, and on certain dates.
- The creditor and the debtor entered into a contract under which the creditor supplied certain goods or services on a specific date and required the debtor to pay for those goods or services.
Reason the debt is owed
The debtor missed an interest payment, or a principal payment, or both.
The debtor refused to pay for the goods or services in full despite the creditor's demand.
Credits owed to the debtor
The debtor may have paid part of the debt, in which case the creditor needs to take that into account.
The creditor supplied certain goods or services that were defective or did not meet the specifications agreed to by the debtor and the creditor.
Debt that remains unpaid
There needs to be a final amount that the creditor says the debtor owes, including any interest, costs, and penalties.
This claim structure can be used to allege most forms of simple debts in Provincial and Supreme Court. Other important details to include in the claim are the total amount of money lent, the interest rate, and the repayment terms. If a contract was drawn, the details of that contract should be included as well.