Here are some key things you need to know about collection agencies:
- They cannot seize any of your assets unless they have a court judgement against you allowing them to do so.
- They cannot threaten, swear, intimidate, or put unreasonable pressure on you.
- They cannot lie or continually harass you.
- Your employer can only be contacted ONCE to get your job information. However, if your employer guaranteed your debt or it’s about legal action (i.e garnishee or court order), then they contact them without limits.
- Same thing goes for family, friends, neighbours, and acquaintances – one time only to get your address and phone number, but if any of them guaranteed your loan or you gave permission for them to be contacted – all bets are off.
- They must notify you in writing before they tell your creditor to begin legal action against you.
- They cannot charge you any fees.
One other point to note is that before a collection agency can start calling you, they must send you a written letter by Canada Post – no emails! It must state the creditor’s info, the amount of money they claim is owed, the name of the collection agency, and a statement that the creditor has asked them to collect the debt. There are also certain times a collection agency can and cannot contact you:
- If it’s Sunday, it can only be between 1 p.m. and 5 p.m.
- Any other day, it cannot be between 9 p.m. and 7 a.m.
- No holidays
It’s important to ask the right questions when a collection agency calls you. This will help you feel less intimidated and arm you with the tools to know your rights and take proper action. Make sure you have a pen and paper and ask the following:
- What is your Ontario registration number?
- Have you sent me a written notice?
- How often will you be contacting me?
- Who am I speaking with – the original creditor or collection agency?
- What is your name, company, and phone number?
- What is the amount owed, to whom, and when did it start? If their answers don’t sound familiar, let the collections agent know you will call them back and check your statements.
If you are sure the debt is not yours, tell the collection agency and contact the original creditor to find out next steps. If it turns out that the debt is yours, it is best to pay it right away which will resolve the issue. If you can’t, offer a payment plan that works with your finances. The end goal for everyone is to eliminate the debt - the sooner, the better. Follow up in writing with the first payment – but never send cash! Always get a receipt for any payment and only deal with the debt collector, not the original creditor.
Get into the habit of checking your credit report as mistakes can occur. You can order a free copy from Equifax orTransUnion. If there is an error, contact the credit reporting agencies and the original creditor to have it corrected. Leaving errors on your report can affect your ability to get credit in the future.
If you are ever unsure or concerned about the identity of the debt collector or whether they really can collect the debt, contact the original creditor to confirm the information you retrieved from the collections agent in the initial call.
Should the calls become unbearable, you can make them stop. Send a registered letter to the agency either disputing the debt, asking to take it to court, or demanding communication by mail only. Once they have received any of these requests, the calls must stop. However, be aware that means they can report the debt to the credit bureau or initiate legal action. Only take this route if communication has totally broken down.
What’s most important is that you get control of the situation before it gets control of you. And of course, you can always talk to a financial advisor who will guide you through the process of debt reduction or consolidation.
Ian Webster's nearly two decades of recognized experience at several well-known financial organizations has given him the inside track on the upsell of products such as mortgages and mutual funds and allowed him to help clients with everything from lowering their taxes to developing profitable investment portfolios.
His expertise has been featured in The Globe and Mail, Toronto Star, Toronto Sun, and Time. He has also been a featured financial speaker at many high-profile networking functions.
Find Ian online at www.financialfighter.com and on Twitter, Facebook, Linkedin, and Instagram.