Step 1: Get the Facts About Collection Agencies
If you are falling behind with payments to creditors you will begin to receive phone calls. At first these calls will be coming from the original creditor. If an amount owing falls far enough into arrears the original creditor will write the account off then decide whether to send the account to a law firm to file a lawsuit against you, or to send the account to a third-party collection agency.
If the creditor feels that the amount owing is large enough to merit paying a lawyer, and if they feel that they would be able to recover this amount after getting a judgment against you – perhaps through a garnishment of your wages or a lien placed on your assets, such as a home – the account will be sent to a law firm with instructions to proceed with legal action. In this case, a process server will deliver a notice from the court to you, indicating that legal action has been filed. DO NOT ignore paperwork that has come from a court, ever!
If the creditor feels that legal action is not merited, the file will go to a collection agency. The agency will then send you a letter informing you that they are now the organization that you should be dealing with in regard to this debt. Within a few days a collection agent working for this agency will begin calling you.
What Is a Collection Agent Allowed to Do?
- A collection agent is allowed to contact you regarding the debts that you owe, and is allowed to use reasonable means to get you to pay the debt.
- A collection agent is not required to tell you what your rights are. It is up to you to find that out for yourself.
What Is a Collection Agent NOT Allowed to Do?
- A collection agent can't make charges or threats that have nothing to do with the collection of the debt.
- They can't make abusive calls in which they lose their temper or use profanity or other verbal abuse.
- They can't talk to your employer without your permission, other than a single call to confirm your employment.
- They can't make frequent calls that constitute harassment.
- They can't call at times that are prohibited for calling under the provincial Collections Act. (These times vary from province to province.)
- They can't give you a document that is made to look like an official court document when it is not.
Step 2: Learn About Your Rights
It is important to learn about your rights – including your right to make a complaint – when dealing with collection agencies. For Ontario residents, contact the Consumer Protection Branch, part of the Ontario Ministry of Consumer Services. They can be reached as follows:
- Phone: Toll-free at 1-800-889-9768; Toronto area at 416-326-8800
- Website: http://www.sse.gov.on.ca/mcs/en/Pages/Consumer_Protection_Branch.aspx
Step 3: Take Action to Deal With Your Debts
If Possible, Pay the Money You Owe
If paying at once is not possible, determine whether it is possible to offer an alternative method of payment, such as a series of monthly payments. Make this offer to the collection agency in writing, and provide a good-faith payment.
Never Send Cash!
Always have some record (such as cancelled cheques) of any payments you have made to the collection agency.
Put It in Writing
Any offers – whether made by you or by the collection agent – should be put in writing before being acted on. Remember this: If it's not on paper, how can you prove that an agreement exists?
Keep a notebook by your phone, and when a collection agent calls, write down the following:
- The agency's name
- The agent's name, phone number, and extension
- The time and date of the call
- The debt that they are calling about
- Any other information that is discussed in the course of your call, such as settlement offers and plans for payment