How to Deal With Collection Agencies


No one is thrilled with the situation when forced to deal with a collection agency.  Many Canadians find themselves in that unwelcome position because of a job loss, emergency, or other unanticipated financial setback.  Unsettled business debts that are overdue, or in default, may be turned over for collection to agencies that are in the business of actively and aggressively pursuing debtors until the debt is satisfied.  Every Canadian jurisdiction has laws detailing what collection agencies can legally do and what they cannot do.  Although the laws vary somewhat across provinces, legally, collection agencies have the right to contact consumers about debts owed.  Consumers have rights too.  Read further to find out how to deal with collection agencies.

     1. Collections

Collection agencies are legally required to contact you in writing through regular mail.  The written notice must provide the following information:

  • Name or business of creditor
  • Amount of money owed
  • Name of collection agency assigned to collect debt

Collection agencies may not contact you by phone, or in person, until six days after the notification has been sent.  Agencies cannot contact you more than three times in a week.  Contact includes actually speaking with you, emailing, or leaving a voice mail.  Mailed letters, or when agents don’t leave a message, do not count as a contact.

     2. Don’t Ignore Calls

Up to a point, creditors may legally contact you when you owe them money.  If you live in British Columbia, Ontario, Nova Scotia, Alberta, and Quebec, you can legally request that agencies discontinue calling you at your residence, and there are legal restrictions on contacting you at work.  Speak to collection agencies when it is convenient for you by screening your calls or hanging up, but do not ignore their contact attempts.  If you are having financial difficulty, and need assistance arranging workable payments and interest provisions, contact a credit counselling service.  These services contact the creditors, and negotiate feasible payment schedules on your behalf.  Creditors are asked to stop, or lower interest accruing on the debt, and any future contact is redirected to the counseling service until the debt is paid in full.

     3. Pay Off Debt

The best option is to pay the debt off completely, if it is yours, and the amount owed is correct.  If you have a lump sum, a settlement agreement may be reached that allows you to pay 60 – 70% of the debt you are paying back.  If paying off the entire debt is not possible, provide an explanation to the creditor and offer a repayment schedule that would pay off the debt, including specific payments made at a future date that total the amount owed, or monthly payments until the debt is paid off.  Make sure that you get a receipt with every payment made, such as, a cancelled cheque or a proof of payment from the collection agency.  When dealing with collection agencies, never send cash, and never miss an agreed upon payment. If you need additional help consolidating your bills into an affordable monthly payment, credit counseling services can help you formulate a budget that works with your finances.

     4. Repair Credit Rating

Debts that remain unpaid are indicated as R9 on credit reports for years, and significantly impair your ability to get loans.  Debt settlements remove the debt, can still affect your credit score, but may be a better alternative than bankruptcy.  Credit counselling services can help you avoid bankruptcy by developing workable debt management programs to repay debts over a longer time period with lowered interest rates.

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