Understanding Your Rights When Contacted by Collection Agents
Anyone who’s ever been on the receiving end of calls or visits from a collection agent, knows how stressful, and sometimes even frightening it can be when the calls never seem to end. It can be particularly intimidating if you don’t know what your rights are.
Contrary to popular belief, you do in fact have legal rights when it comes to interacting with collection agents, and there are some things that collection agents are not legally permitted to do.
Understanding when an agent is crossing the line, and knowing what steps you are allowed to take, is highly important, as it will enable you to take back your power and focus on paying off your debts without being fearful of collection agents.
With that being said, let’s look at who collection agents are, what actions they are permitted to take, and how you can handle the situation if calls start rolling in.
Who Are Collection Agents?
Collection agents, also known as debt collectors, are employed by collection agencies hired by lenders to help them collect outstanding debt. Whether it’s through phone calls, letters, or even in-person visits, these agents can be quite aggressive and persistent when contacting you regarding your outstanding debt. In Ontario, collection agencies must be licensed and registered with the provincial government to conduct a collection business. The statue that regulates them is called, the Collection and Debt Settlement Services Act.
Actions Collection Agents Are Legally Allowed to Take
In Canada, there are rules and regulations in place that govern the professional conduct of collection agents and agencies. While there are limitations to what they can do, debt collectors are legally allowed to take the following actions.
Call and Write to You
Once a creditor has transferred your debt to a collection agency, a collection agent can, and likely will, begin contacting you to recover your unpaid debt. This must begin with a letter or email informing you of the debt and that the creditor has retained them to collect it.
Collection agents have developed a poor reputation for harassing debtors with endless phone calls; however, it’s important to know that there are strict rules in place regarding when and how frequently they can call you
In Ontario, Alberta, and Nova Scotia, for instance, the law states that once they have spoken to you once during a particular week, collection agents cannot email you, leave a voicemail, or speak with you more than three times within the subsequent 7 days. They must also not call on a public holiday or on a Sunday, except from 1 p.m. to 5 p.m.
In addition, the collection agent cannot call you if you advise them the debt is disputed, and you request that the matter be taken to court.
Put Pressure on You to Pay
Debt collectors can, and likely will, attempt to pressure you to pay them. They may do this provided they don’t use abusive language, make threats, harass you, or use excessive or unreasonable pressure.
Sue You for Payment
With the creditor’s approval, a collection agency may sue you or retain a lawyer to sue you. If sued, you will receive the creditor’s statement of claim and other documents, including notice of the date, time, and place of the hearing. If the legal action is successful, your wages could be garnished.
Sell Your Debt
Yes, you read that correct – debts can be sold. While this may seem like an unusual concept, it is very common for a creditor to sell your debt. The new owner of the debt may then hire another agency to begin contacting you to collect payment. An owner of a debt may also retain ownership of your debt, but hire another agency if the first agency has been unsuccessful in obtaining payment from you after an extended period of time.
Things Debt Collectors Cannot Do
As previously mentioned, there are limitations when it comes to the tactics debt collectors can use to try and get you to pay them. This means that if a debt collector acts in any of the ways mentioned below, you can file a complaint against them and their agency with the Financial Consumer Agency of Canada, or the Ontario Ministry of Government and Consumer Services.
Call You at Any Time of Day
You don’t have to worry about being hounded with phone calls in the middle of the night, as collection agents are only able to call you during certain times of the day.
In fact, in most provinces, collection agents can only contact debtors between 7:00 am and 9:00 pm from Monday through Saturday, and between 1:00 pm and 5:00 pm on Sunday. Furthermore, collection agents cannot contact you on statutory holidays.
As previously mentioned, there are limits on how many times within a week that a collection agent can call you. This means that they cannot harass you by calling you several times a day at any hour or use threatening or abusive language.
Visit Your Work
Consider your place of employment as a safe haven from collection agents, as they are legally not allowed to visit your workplace to collect payment. They can contact your employer, however. This may be done if your employer guaranteed the debt, you gave the creditor or collection agent permission to contact your employer, or the contact is about a court order or garnishment.
Arrest You (Or Threaten To)
Contrary to what some unethical collection agents may tell you, you cannot be arrested for unpaid debt owed to a debt collector. In fact, a collection agent is not even allowed to threaten to arrest you if you do not pay them.
Discuss Your Debt with Others
While debt collectors may contact your family, friends, neighbours, and employer in order to obtain your contact information, they cannot discuss your debt. It’s also important to note that once they have contacted these individuals, a collection agent cannot contact them again. However, there are exceptions. For instance, if they are contacting an individual who co-signed your loan or you’ve previously given your lender permission to contact them.
Steps to take When Contacted by a Collection Agent
While receiving a call from a debt collector can be nerve-wracking, it’s important to remain calm and collected when speaking to them. Be honest about your current situation and when you will be able to pay them. While this may not put an end to the phone calls altogether, it may help to reduce the call frequency.
Keep a Call Log
Every time you receive a call from a debt collector, write down their name and the date and time of the call. This allows you to see exactly how many calls were made in a given week. If you find that the debt collector has exceeded the number of calls that they are legally allowed to make, you can use this as evidence when filing a complaint.
Ask Them to Stop Calling You
What many people do not realize, is that you can ask a collection agent to stop calling you, and legally, they have to comply, if you tell them you are disputing the debt and you ask that the matter be taken to court.
Consider Debt Relief Solutions
If you are facing a large amount of debt that you cannot pay and have been contacted by collection agents, consider speaking with a Licensed Insolvency Trustee about debt relief solutions such as a consumer proposal or bankruptcy.
A consumer proposal is a debt settlement agreement that allows you to repay a portion of what you owe, without interest, over an agreed-upon period of time. Once you have filed a consumer proposal, collection agents must cease all contact with you, and any collection lawsuits will be stayed/suspended unless the court grants permission for the lawsuit to continue.
A consumer proposal is a more desirable option compared to bankruptcy, as it allows you to keep all of your assets, and to work towards paying off your debt with interest-free payments you can afford, without fear of legal action or harassing phone calls from collection agents.
If your debt is keeping you up at night due to endless calls from debt collectors and threats of legal action, contact a Licensed Insolvency Trustee today to learn more about what debt relief options you have available.
Baker Tilly Ottawa Ltd. is a Licensed Insolvency Trustee and Consumer Proposal Administrator. Its professionals have assisted thousands of individuals successfully resolve their debt crises and overcome financial turmoil since 2002. Its passion – its mission – is your health and well-being!