Collection Agencies

What is a Collection Agency?

A collection agency is a business that obtains or arranges for payment of money owed to either a person or a company. When you have an account with a business that is “past due” or in default, the business may turn your account over to a collection agency.

How do I Deal with Collection Agencies?

  • In most provinces and territories you must be notified in writing that an account has been turned over to a collection agency. (Agencies are required to do this or to make a reasonable attempt to do so.) The agency will contact you to attempt to collect the money you owe to its client.
  • Once the account has been officially turned over to a collection agency, you'll be dealing only with that agency when making arrangements for payment. It may be best not to contact the original business—this just creates confusion—unless there's an error in the account. When this is the case, advise both the business and the collection agency.
  • When possible, pay the money you owe. You won't have to deal with the agency once you have paid back the full amount. The agency is not allowed to collect more than the amount you owe and cannot charge for its costs to collect the debt.
  • When it's impossible for you to pay the full amount right away, explain why.
  • Offer some alternative method of repayment, either a lump sum at a later date or a series of monthly payments.
  • Never send cash. Always make payments in such a way that you have a receipt—either a cancelled cheque from your own bank or a receipt from the agency.
  • Always be sure to have enough money in your account to cover any cheques you write to pay back your debt and never miss payments.
  • When your financial circumstances change, contact the collection agency immediately and explain how things have changed. Follow up in writing.

Do not treat debts lightly. Leaving them unpaid long enough can result in court action, which could lead to money being taken from your paycheque and/or your assets being seized.

I Feel I'm Being Treated Unfairly by a Collection Agency

While rules vary across Canada, generally collection agencies are forbidden from doing the following:

  • Trying to collect a debt without first notifying you in writing or making a reasonable attempt to do so.
  • Recommending or starting legal or court action to collect a debt without first notifying you.
  • Communicating with you or your family such that the communication amounts to harassment, or calling to collect a debt at certain prohibited times (which vary from one province or territory to another).
  • Implying or giving false or misleading information to anyone.
  • Communicating or attempting to communicate with you without identifying themselves, saying who is owed the money and stating the amount owed.
  • Continuing 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.
  • Contacting your friends, employer, relatives or neighbours for information, other than to get your telephone number or address. An exce ption would be if any of these people have guaranteed the debt or if you have asked the agency to contact them to discuss the debt or, in the case of your employer, to confirm your employment, your job title and your work address.

If you have concerns about the actions of a collection agency, contact your provincial or territorial consumer affairs office.

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