Can a Creditor Take Legal Action While You Are Under Debt Review?
While you are under debt review and maintaining your restructured payments, credit providers are generally restrained from instituting new legal action or repossessing assets on accounts included in the review. However, if payments are missed, a creditor may issue a termination notice and resume enforcement. Accounts where judgment was already obtained before debt review may be excluded.
Key Points
- Maintaining payments restrains new legal action on included accounts.
- Missed payments can lead to termination and resumed enforcement.
- Accounts with prior judgment may be excluded.
- Communicate with your debt counsellor if problems arise.
This article provides general consumer information and is not legal advice. Individual circumstances differ. If legal proceedings have already started, obtain advice relevant to your specific circumstances.
The protection debt review provides
One of the key protections of debt review is that, while you maintain your restructured payments, credit providers cannot independently institute new legal enforcement or repossession on accounts included in the review. This gives consumers breathing space to restructure their finances.
This protection is a core reason many over-indebted consumers enter the process.
When protection can be lost
If you miss restructured payments, a credit provider may issue a notice of termination on their account and resume enforcement proceedings. This is why maintaining payments — or communicating immediately if you cannot — is essential.
Accounts where the creditor had already obtained judgment before you entered debt review may also be excluded from the protection.
What to do if you receive legal documents
If you receive a summons or other legal documents while under debt review, contact your debt counsellor immediately. Do not ignore court documents, as failing to respond can result in default judgment.
Your debt counsellor can advise on the appropriate steps and whether the matter affects your restructuring.
Frequently Asked Questions
Worried That Your Debt Has Become Unaffordable?
Debt Guidance can assess your income, essential expenses and debt commitments to determine whether debt review may be appropriate.
Reviewed by Carolina Guevara Harris
Registered Debt Counsellor · NCRDC3152
Last updated: 17 September 2025
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