Hi Kathryn. It is not fraud to close your own bank account. If you have a payday loan or any other debt that you cannot pay, and you are considering filing a consumer proposal or bankruptcy, or advice is as follows:

1. Meet with a licensed trustee to review your options. If a consumer proposal or bankruptcy is the option you decide, then:
2. Open a new bank account at a new bank, where you have no debts, and notify your sources of income (employer, the government, etc.) of your new bank account so that your direct deposit paycheque goes to the correct account.
3. Once your income is transferred to the new account, you should close the old bank account so that no creditor has access to it.
4. When you file your bankruptcy or consumer proposal we will notify all of the creditors, and they will then communicate with us.

It generally takes creditors a few days or longer to process your bankruptcy or consumer proposal and shut off the automatic payments they have programmed. That’s why closing the bank account is essential protection for you. If you leave money in that bank account they may continue to take payments even after the bankruptcy has started.

“There is a common misconception that payday loans cannot be included in a personal bankruptcy or consumer proposal. This is absolutely false.
The first step is to close the compromised bank account.”

I’m in Ontario. If a person has a current payday loan that needs to be repaid, I thought that closing the bank account was fraud. You’ve signed documents giving them permission to debit your bank account so if you intentionally close the bank account you’re not making the money available to them.

Hi Stacey. As a general rule, if you formerly banked with CIBC we do NOT recommend banking with PC Financial, since you are correct, they are owned by CIBC. I am not aware of any case where CIBC took money out of a PC Financial account; operationally they are two separate banks. However, since there are many banks to choose from, we believe that out of an abundance of caution if you have debt with CIBC you should open your new account somewhere other than CIBC.