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You get into a car accident on the way to work, no one’s hurt, but the vehicles are damaged. Luckily, your ICBC (Insurance Corporation of British Columbia) insurance steps up to cover the costs. Phew! You can breathe a sigh of relief knowing everything’s taken care of.
A few months later, you learn your coverage didn’t apply, and now you’re on the hook to repay ICBC. You’re already struggling financially and can’t afford to pay the hefty bill. What do you do?
What happens if you don’t pay? Will you lose your insurance? Will you be able to renew your license? We hear these questions a lot.
Keep reading for answers to these questions and more.
Will ICBC Debt Disappear Over Time?
In BC, the statute of limitations on many unsecured consumer debts, like credit cards, lines of credit, and personal loans, is two years. This means your creditors have two years from the date of your last payment or the last time you acknowledged your debt to collect their money using legal action.
After this time, your creditors can still contact you to try and get you to pay, but they can’t take legal actions.
Certain government debts, like those from ICBC, have their own rules under the Limitations Act that come with longer timelines. You can speak to a Licensed Insolvency Trustee (LIT) to learn more.
Can You Renew Your Driver’s License With ICBC Debt?
The ICBC can refuse to issue a driver’s license if you owe them money for a host of reasons, including unpaid speeding tickets, traffic violations, insurance payments, and many more.1 They can also terminate your optional insurance coverage. This is a big deal if you rely on your car to get to work. For many people – losing your license could result in losing your job.
Before you can renew your license, you’ll need to clear ICBC debt, which includes any money you owe directly to the ICBC or the provincial government, including provincial violation tickets, penalty point premiums, and Autoplan debt.
Other Consequences of Owing Money to the ICBC
In addition to not being able to renew your license, owing the ICBC money can result in other consequences, including:
- Additional fees. If you don’t have enough money in your account to make monthly ICBC payments, a service charge may be added to your payment.
- Interest charges. After 30 days without a payment, ICBC will start adding interest to your balance.
- Loss of coverage. If your payments continue to go unpaid, ICBC may terminate your optional coverage.
- Damage to your credit score. The ICBC may also report your debt to a credit reporting agency, which can cause a drop in your score.
- Debt collection. The ICBC collects motor vehicle and licensing-related debt on behalf of the provincial government. They can take legal actions against you to collect their money.
- Difficulty getting a license in a new province. Don’t expect moving to a new province to solve your problems. The Interprovincial Record Exchange (IRE) system is used to share driver information between provinces.
What Can You Do to Get Rid of ICBC Debt?
If you can’t afford to pay your ICBC debt, talk to one of their representatives as soon as possible to see how they can help you. You might be able to set up an ICBC payment plan option or defer a payment to better manage your debt in the short term.
If you think there’s been a mistake and you want to dispute your debt, you can visit the ICBC disputes and appeals page for more information.
For more formal debt help, and if you have other debts along with ICBC, you can speak to a Licensed Insolvency Trustee about debt relief solutions such as a Consumer Proposal or Bankruptcy.
Consumer Proposal and ICBC debt
In a Consumer Proposal, you work with a LIT to create an offer to your creditors to pay a percentage of your debt, extend the time you have to pay, or both. If your creditors accept, you have up to five years to repay your debt.
ICBC debt and Bankruptcy
Bankruptcy can help to eliminate many unsecured debts and provide immediate relief from wage garnishment, collection calls, and creditor legal actions. In Bankruptcy, your LIT will sell some of your assets to try to raise money to repay your creditors. There are provincial and federal bankruptcy exemptions that limit what can be sold.
While Bankruptcy may help to eliminate some ICBC debts, it won’t get rid of fines or penalties imposed by the court or debts connected to criminal wrongdoings. For instance, if you owe money to the ICBC due to an impaired driving event, don’t expect it to be discharged.
Consequences of Filing for Formal Debt Relief
A few things to note when considering a Consumer Proposal or Bankruptcy for ICBC debt help.
More challenging to reduce your license
While a Consumer Proposal and Bankruptcy can help to reduce or eliminate your ICBC debt, you will still find it challenging to renew your license until the Proposal or Bankruptcy is accepted.
Restricted payment options
After filing for a Proposal or Bankruptcy, ICBC typically won’t allow you to set up a monthly payment plan.1 Instead, you’ll have to pay up front. This can be a challenge if you don’t have savings.
Low credit rating
Filing for a Consumer Proposal or Bankruptcy will have a negative impact on your credit history. A low credit score can make it more challenging to qualify for insurance in the future and can lead to higher premiums.
ICBC Debt Forgiveness BC
If you need ICBC debt help, and do not see a way out, don’t hesitate to speak to a Licensed Insolvency Trustee. A LIT will assess your finances and explain what debt options are available to you. If you’re considering a formal debt relief solution like a Consumer Proposal or Bankruptcy, LITs are the only professionals in Canada who can administer these proceedings. For a free, no-obligation consultation, call us at 1-888-371-8900 or complete our online contact form. If you have debt, we can help.
