Tips for Dealing with Debt Collectors in Canada
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By Taz Rajan & Kimberly Beaulieu | 998 words | Reading Time: 4 min, 58 seconds | Updated Date: 2021/10/26
Suddenly, your phone rings, and you feel your heart racing because you know it is a collection agency. You feel sick because you have no idea how you are going to pay back what you owe. What now? What do you do when debt collectors call?
Life can throw all kinds of unexpected crises at you. Job loss, unexpected vehicle problems, relationship breakdown, illness or an urgent home repair can put you behind in payments. When that happens, constant collection calls can be overwhelming.
An important way to reduce stress is to learn about the unknown. Here are some things you should know about collection agencies in Canada.
How Did a Collection Agency Get my Information?
Debt collection agencies have two ways they obtain accounts for unpaid debt. The first is through assignments, and the second is by buying files.
A debt collection assignment is when a lender (a credit card company or a bank for example) hires the collection agency to collect money on unpaid debts. Collection agencies receive a commission (often around 30%) of the debt they collect.
The second way is when a collection agency buys accounts from the lenders, who have stopped trying to collection on certain accounts. The collection agency owns the debt and will start contacting the debtor. This normally happens with old debts, and explains why you may receive calls and letters years after your last contact with a lender.
Know Your Situation
The first step is to understand your situation. Review your credit card statements, loan agreements, and bank account to know exactly what you owe and what you have. This will help you understand who might or might not be calling.
Next, be sure that the collection agency is legitimate. They should provide you with details of your debt, not the other way around. If you’re not sure, check with your provincial consumer affairs office, or the Better Business Bureau. If you think it could be a scam, contact the Canadian Anti-Fraud Centre.
Know Your Rights
Now that you know the collection agency is contacting you about a legitimate debt, learn more about what the agency can and cannot do. Understanding your rights will help you deal with specific tactics.
Collection laws vary from province to province, and you can find the collections laws for your province by visiting your local government website. Generally, Canadian collection agencies are not allowed to:
- Try to collect a debt without first notifying you in writing or making a reasonable effort to do so.
- Recommend or start legal or court action to collect a debt without first notifying you.
- Communicate with you or your family in a harassing manner.
- Call to collect a debt at certain prohibited times. These prohibited times vary from one province or territory to another.
- Imply or give false or misleading information.
- Communicate or attempt to communicate with you without identifying themselves, saying who is owed the money and stating the amount owed.
- Continue to demand payment from a person who claims not to owe the money, unless the agency first takes all reasonable steps to ensure that the person does, in fact, owe the money.
- Contact your friends, family, or neighbours for information—other than to get your telephone number or home address.
- Exceptions would be granted if any of these people have guaranteed the debt or if you have asked the agency to contact them to discuss the debt.
- Ask your employer for information other than your employment status, job title and work address.
If you feel the agency contacting you is not complying with regulations, or to see your local regulations, contact your provincial or territorial consumer affairs office.
Can a Collection Agency Sue You in Canada?
Often clients are concerned about being sued by collection agencies. They do have that right, and will often remind you of that. While they can try to collect the outstanding balance indefinitely, there is a time limit during which they can commence this legal option.
This limitation period is specific to each province, as shown here as of the date of publication. It’s a good idea to check your provincial consumer affairs office, to be certain it hasn’t changed.
- Alberta- 2 Years
- British Columbia – 2 Years
- Manitoba – 2 years
- New Brunswick – 2 Years
- Newfoundland and Labrador – 2 Years
- Northwest Territories - 6 Years
- Nova Scotia – 6 Years
- Nunavut – 6 Years
- Ontario – 2 Years
- P.E.I - 6 Years
- Quebec – 3 Years
- Saskatchewan – 2 Years
- Yukon – 6 years
It is especially important to understand that the limitation period starts at the date of the last payment. So, this makes it possible to reset a starting point if the time has not yet expired. The limitation period will start over if you:
- make a payment even if the payment is small
- acknowledge that you owe the debt In writing
Once the limitation period is expired, the starting point cannot be reset.
Keep in mind that these provincial limitations cannot be used to avoid court judgements when it comes to the following:
- Secured Debt
- Government debt, including student loans and tax (Canada Revenue Agency) debts
- child and supposal support, fines, and obligations from fraud
- One last note on legal action: suing you for an unpaid debt must be worth the debt collector's time and money. A small debt may not be as high a priority.
Take the Call, and Keep Your Cool
Ignoring the call won’t make the problem go away. It’s best to answer the phone and get all the details. It’s possible to receive calls or letters regarding someone else's debt, so this is a good time to make sure they have the right person. They could be looking for someone with a similar name or phone number, and until you clarify this they’ll keep calling. Always make sure you have time to talk. If it’s not a good time, ask them to call back at a time that works for you.
If you’re speaking with a collection agent on the phone, via email, or even in a chat, remember the person on the other end is doing a job. These circumstances are generally quite emotional, and it can be easy to express this frustration. Escalating the situation may feel good in the moment, but it will not make your situation any better. Try to keep this in mind and keep calm. This will help you negotiate with them.
If you like to know more about top questions asked about collection agencies, click here.
Collection calls are an unpleasant reminder that you have lost control of your spending or abandoned your budget. You can reduce this stress by reviewing your budget and getting your spending back on track. This could include cutting expenses, setting up payment plans with creditors and/or adjusting spending habits.
Money problems can consume your life, leaving no time for your relationships with family and friends. If your debts are starting to feel overwhelming, contact the professionals at Bromwich+Smith. As a Licensed Insolvency Trustee, we can bring all collections activity to a halt, and stop all the accrual of interest. We provide free, confidential, no obligation consultations to Canadians, all across the country Monday through Saturday. Speak to one of our compassionate Debt Relief Specialists now.
Taz is a Community Engagement Partner at Bromwich+Smith and has been in the finance industry for nearly two decades and has always been passionate about education and empowerment.
Kimberly is from Viking, AB. She is a Birth Doula who is looking to better her business with blogging. She completed up her digital marketing diploma from Robertson college and her practicum at Bromwich and Smith. She is excited to see what the future in digital marketing has for her.