This email recently came to in and and the same problem could happen to you:
My son declared bankruptcy in May 2011. One of his unsecured creditors is Rogers Mobile. The paying of his cell bill was linked to his Mastercard.
Since he no longer uses a cell phone and could not afford the $400 fee to get out of the contract, he stripped it down to the lowest possible bill per month and was still paying that at the time of his bankruptcy.
When he filed on May 30, 2011, Rogers was on the list of creditors. Since then, he has gotten monthly bills, every single month… despite several phone calls to inform that he was bankrupt and providing them with his information.
Now today, December 1, 2011, he received a letter from Rogers saying his account was “past due” and they were cutting his phone off if he did not pay. Again he phoned and gave them the information. As well, his trustee has sent the information SEVEN times to the place that Rogers said had to receive the information!
What he is really afraid of is having Rogers put the account into collections as he has read on your site how bad that is for him.
What can he do to make Rogers relieve him of his debt and go away????
I think I know what happened, and unfortunately it looks like this lady’s son made a mistake – and it might be too late to correct it, but there’s still a way to protect your future credit rating (because having bad credit after bankruptcy will certainly make things miserable). But first, let’s just make sure everyone knows how Canadian cell phone providers work:
This is how Canadian cell phone contracts work
You apply to get a mobile phone on a contract plan which actually counts as a hard inquiry to your Equifax and/or TransUnion credit reports, since you are obtaining credit. These cell phone plans incur a high “cancellation fee” if you cancel prior to the end of your contract date. Unless you choose a prepaid plan, or have completed your original three year contract and didn’t renew it by getting a new “free” phone, you can’t just go “month to month” with your cell phone service.
The cell phone providers typically give you a new cell phone for free, or at a substantial discount when you are a new or renewing customer. To recoup their costs on the new mobile phone you get, they make you commit to a three year contract. If you stay a customer of theirs for three years, they’ve made their money back (and probably more) once you’ve been paying for monthly cell phone service for three years. They don’t look too kindly on people who cancel prior to the end of the contract date. It can be done, but there’s a penalty – usually something like $20 a month for every month left on the contract which often caps out at $400. There might even be a minimum charge – even if there’s just one day left on the contract.
This is what I did with my cell phone plan BEFORE declaring bankruptcy
Just before I filed for bankruptcy in September 2007, I was about one year into my three year contract with Bell Mobility. I had a nice mobile phone with a good – but pricey – cell phone plan. Since I wanted to keep my expenses down, I decided to go without a cell phone. I called Bell Mobility and told them to cancel my service. Of course, they notified me of the $400 cancellation fee. I told that was fine. I don’t recall if I told them I was about to file for bankruptcy, but it wouldn’t have mattered. If you want to cancel, you can do that. But of course, you get billed the cancellation fee.
I recall getting a cell phone bill soon after that for over $700. Since I was so strapped for cash at the time, I had not paid my monthly cell phone bill for about three months. Along with the hefty cancellation fee, late fees and tax, that’s what pushed the bill over $700.
This is how I broke my cell phone contract and did not have to pay the early termination cancellation fee
The good news (good for me, not for Bell Mobility) was that I had NOT YET filed for bankruptcy. So, I was able to include the final Bell Mobility bill – including the cancellation fee – in my bankruptcy (Please note, this method isn’t 100% guaranteed to get you off the hook, but it’s better than doing nothing). Bell also blocked my mobile phone’s serial number so that it could not be used again by myself or anyone else. Had I kept the phone service active, I may not have been able to include ANY of that bill in the bankruptcy. Or I might have been able to include past due bills, but not future bills.
If not yet discharged from bankruptcy, there might still be hope
Generally speaking, you are not allowed to have any credit during the time you are an undischarged bankrupt (typically nine months). I recall my Trustee telling me the reason for this is that I could include any new credit in the bankruptcy. So if you have not yet been discharged from your bankruptcy, you might still be in luck. I’m not a Trustee or lawyer, so if you’re in this situation, I recommend you ask your trustee if you cancel your cell phone agreement, and incur a $400 cancellation fee, ask if you can include that fee plus the past due bills in your bankruptcy since it has not yet been discharged.
By not cancelling or breaking your contract, you may still be responsible for the contract, even if you go bankrupt!
I think this is the mistake that lady’s son made. It appears he had the right idea, to get rid of his cell phone service. However, when he heard there was a $400 cancellation fee, which he could not afford, he did not technically cancel his cell phone service. All he did was include his Rogers cell phone bills in the bankruptcy. It seems that the bills dated prior to the date of bankruptcy were allowed to be included in the bankruptcy. But since the contract was not cancelled, he continues to get monthly bills. Since the new bills are dated AFTER the date the bankruptcy was filed, he may be responsible for them. Definitely ask your Trustee if this debt (and the cancellation fee, if you cancel), could still be included in the bankruptcy if you have not yet been discharged.
Here’s the difference between the way I did it and the way he did it
Do you see the difference between the way I handled the cancellation of my cell phone plan and the way he handled his? We both had cell phone plans on contracts. We both called to cancel them and we were both informed of the $400 cancellation fee. This is where the differences are.
When this lady’s son was informed of the $400 cancellation fee, he knew he couldn’t afford it, and bless him for not wanting to rack up more debt, he didn’t cancel his cell phone plan. He did not incur the $400 cancellation fee, but since he didn’t actually cancel his service with Rogers Wireless, which would have incurred the $400 early termination fee, his account remained open and active.
Making it clear and official that you are terminating your contract and including the debt in your bankruptcy
Here’s a more detailed explanation of what I did. Back in August of 2007, I knew I was going to file for bankruptcy very soon and did not want to be saddled with a monthly cell phone bill. I called Bell Mobility and told them to cancel my service effective immediately. Of course, they informed me that I would owe a $400 cancellation fee. I told them that was fine and to to just send me the bill. As mentioned, I got the bill for my past due invoices as well as my cancellation fee. I simply saved that bill and included it with all of the other bills I gave to my trustee when I filed for bankruptcy on September 11, 2007.
By cancelling my cell phone service and receiving the bill for it prior to the date of filing for bankruptcy, it was quite easy and clear that this debt could be included, rather than trying to do this after the date bankruptcy was declared.
Legally, this was perfectly fine. I included the bill with the cancellation fee in my bankruptcy, because that bill, with the cell phone cancellation fee, was dated prior to my date of bankruptcy. So, I had a clean break from Bell Mobility. So, in all technical and legal respects, it was fine. Morally, maybe not. Sure I felt bad about sticking Bell Mobility with that $700+ bill. But I did everything by books. Bell did not oppose it. To them, this was just another regular routine bankruptcy charge off.
Do you see the difference between what I did and what that lady’s son did? I went ahead with the cancellation and incurred the $400 cancellation fee knowing that I’d be able to include it in my bankruptcy (since I had not yet filed). I made sure that I received the bill before filing so that it would be very clear that debt was incurred prior to the date of declaring bankruptcy. What this lady’s son did was that he did not cancel the service, since he did not want to incur the cancellation fee. I don’t think he realized he could include that in his bankruptcy.
If it’s too late…
In the event that it’s too late to include the overdue invoices and cancellation fee in the bankruptcy, the only other way out of that contract now is to find someone else who can take over the contract. Perhaps a friend or family member? Or place an ad on Kijiji or Craiglist. If you find someone to take over your plan, give him or her your cell phone. Keep in mind that whomever takes over your cell phone plan will have to pass a credit check, so make sure he or she has reasonably good credit.
If I’m understanding this guy’s situation correctly, he “thought” he cancelled by including the outstanding Rogers Wireless bills in his bankruptcy. Unfortunately, he got caught on a technicality – the account was never cancelled. So, you’re still an active customer. The worst thing to do is incur more negative credit after your bankruptcy. Disregarding the bills and not paying them is not the right thing to do. Soon they will go into collections and you’ll have a collections account showing up on your credit report. That’s not a good way to being your “fresh start” after bankruptcy!
Lucky for this guy his bankruptcy has not yet been discharged, so he might still be able to include this.
Do whatever you can to avoid this situation escalating. If this happens to you, go back to your trustee and explain the situation. He or she may not have been aware the account was not cancelled. It’s not like a credit card bill that gets included in the bankruptcy with the balance it had at the time of filing for bankruptcy. This is a monthly contract that you are legally bound to.
Cell Phone contracts are NOT the same as your other bills
Here’s a scenario which may confuse people with cell phone plans: Let’s say you are renting an apartment and have an account with the utility company for electricity on a month to month basis. You get your monthly or bi-monthly hydro bill/electric bill, but then you move somewhere else where utilities are included. So, you just call up your utility company about 30 days in advance and tell them you’re moving. You cancelled your service, you pay your final bill and everything is good. They won’t force you to keep paying the bill at your old apartment. It’s possible you were on a contract (like equal payment plans perhaps), but generally speaking, when you move, you can close your utility account. This is NOT the same as a cell phone bill where you keep the phone and remain locked into your agreement.
Back to the gentleman with the Rogers cell phone. You need to do something very soon, or that account will go into collections. Now, I’m not a trustee nor am I a Rogers employee. But thinking back to when I declared bankruptcy, my trustee told me that I was not allowed to have any credit during the time I was an undischarged bankrupt unless I had their permission. If you filed for bankruptcy in May 2011, you are still an undischarged bankrupt. As an undischarged bankrupt, you are not allowed to have any credit, unless approved by your trustee (and probably the credit issuer). And, since you’re not yet discharged, you might still be able to include debts in your bankruptcy. Cancel that phone and speak with your Trustee as soon as possible. Otherwise you might be stuck paying for that phone long after your bankruptcy has been discharged.
Talk to your Trustee in Bankruptcy – there may be a loophole if your are not yet discharged
This is a long shot, but it’s worth a try. Explain the misunderstanding to the trustee. Tell him or her you thought that you had effectively cancelled your contract by including your most recent bill in your bankruptcy. Or, if you were current with your bills, explain you thought that by going bankrupt, it would have relieved you of your cell phone contract – an honest mistake. But, you now realize that you should have cancelled and incurred the early termination fee for an official cancellation.
Since this was not done, you have access to credit while being an undischarged bankrupt, which is not permitted (technically, if Rogers hasn’t blocked your calling features, you could go and make a bunch of long distance overseas calls or call pay-per-minute 900 numbers and rack up more debt, since you are still being extended credit from Rogers – DO NOT do that – it’s just an example to show you still have credit available to you). I’m honestly not sure how your trustee will handle this, but it’s worth asking. It may get you off the hook.
Good luck in this situation. If anyone else out there is thinking of filing for bankruptcy, and you are on any sort of contract like for a cell phone, car or apartment lease, for example, remember to cancel or break the contract prior to declaring bankruptcy. It makes things more clear regarding the date the debts were accrued. Make sure you have a bill that shows the cancellation fee and is clearly dated prior to the date you go bankrupt to make it as obvious as possible. Even done that way, it’s possible your creditor could oppose it and you could still be liable. Remember that anything on a contract is different from something like revolving credit, such as a credit card. You can include your most recent credit card bill when you file for bankruptcy, and as long as you didn’t go crazy and max it out just before declaring bankruptcy, chances are good that your credit card bill will be included in your bankruptcy. But not something on a contract like a cell phone.
If you cancelled and are still getting bills…
Let’s say you broke your contract, incurred the cancellation fee and received your final bill before you filed for bankruptcy. Even if you forgot to include that bill in your bankruptcy, since it is dated prior to the date you declare bankruptcy, you can still submit it to be included in your bankruptcy. I never had to do this, but back when I was filing for bankruptcy, my trustee told me I could submit forgotten bills, as long as the debt was incurred prior to the date she filed my bankruptcy.
If you’re still getting bills and are currently an undischarged bankrupt, give your credit your bankruptcy estate number and refer them to your trustee. If they were included in your original list when you filed for bankruptcy, it’s is unlikely they will contact you. But if the timing was very close, you may get a few calls or letters the month you file for bankruptcy.
Should you receive bills or contact from past creditors AFTER your bankruptcy has been discharged, and providing the bill in dispute is dated prior to your original date of filing for bankruptcy, remind the creditor that their debt was included in your bankruptcy. You may need to provide them with a copy of your certificate of discharge (will you will receive soon after your bankruptcy has been discharged – typically about nine months after you file for discharge, providing there were no oppositions to your bankruptcy).
In the event your creditor still insists you owe the money, or insists you are still under a cell phone contract, AND you already followed the suggestions mentioned above… you may need to hire a lawyer or paralegal to help you out. In most cases, it’s not likely that it will come to this.
To put it simply… if you didn’t cancel your contract, it’s not cancelled! Dropping down to a cheaper plan and then declaring bankruptcy will not get you off the hook. Make sure you officially cancel or break your agreement, get the bill with the cancellation fee, and THEN file for bankruptcy. It may seem a bit silly, but that technicality can make all the difference!