Do you have any late payments? The lender could enforce a clause called “forfeiture of benefit of the term,” on condition that such a clause is included in your contract. The lender would then send you a “Notice of Forfeiture of Benefit of the Term” and a statement of account.

The notice must comply with the standard model provided in the Regulation respecting the application of the Consumer Protection Act (s. 69.0.2).

Responding to the notice

Upon receipt of the notice, you have 30 days to pay the late payments.

You can also petition the court to have your loan payment terms changed. In deciding whether such a change is possible, the court will take into account:

• the total amount you have to reimburse according to your contract;
• the amounts you have already paid;
• the amount you have left to pay;
• your ability to pay;
• the reason why you are not making your payments.

What happens if you were unable to make the late payments within 30 days of receiving the notice and you did not file a petition with the court? The lender is then entitled to demand payment of the balance of your total obligation, i.e. everything you have left to pay.

Particularity of pawnbroking

A pawnbroker may use the “forfeiture of benefit of the term” clause without sending you a notice or a statement of account if he or she abides by the following condition. The amount you received, considering the contract entered into and all others entered into in the previous 30 days, is $500 or less. In such cases, the manner in which to respond to the lender’s demands presented above does not apply.

Court proceedings

If your contract does not include a “forfeiture of benefit of the term” clause, the lender is still entitled to claim any late payments. The lender could even institute court proceedings against you.