Area of Law: Credit, Debt and Bankruptcy
Answer Number: 252
Collection agenciesRegion: Ontario Answer Number: 252
Collection agencies are either hired by creditors to collect debts on their behalf, or collection agencies purchase debts at a discount and keep the entire amount if they are able to collect it. If a collection agency phones you, this probably means you have more severe financial difficulties than you think. You may consider credit counselling or at least work out your budget and consider what payments you can realistically make. You can try to negotiate a payment schedule or payment of a reduced lump-sum amount. The collection agency should stop calling if you are able to reach an agreement.
In 2013, the Collection and Debt Settlement Services Act became law, providing stronger protections for Ontario consumers.
What a collection agency can do
Although collection agencies can be very persistent, the law places limits on their behaviour. There are procedures a collection agency must follow. The first is that they must send you a written notice through the mail. This notice must include: the name of the creditor (the person or business that says you owe them money); the amount the creditor says you owe; and, the name of the collection agency and proof of its authority to demand payment on behalf of the creditor.
After sending the notice, the agency must wait six days before it can contact you.
What a collection agency cannot do
There are a number of restrictions on what collection agencies cannot do. They cannot continue to contact you if: (1) you send them a registered letter saying that you dispute the debt and suggest the matter be taken to court, (2) you or your lawyer send them a registered letter providing your lawyer’s contact information and notifying the agency to communicate only with your lawyer, and (3) you are not the person they are looking for and you have told them so.
In addition, a collection agency cannot:
- contact you on Sunday, except between the hours of 1 p.m. and 5 p.m.
- contact you on any other day of the week between the hours of 9 p.m. and 7 a.m.
- contact you on a statutory holiday
- use profane, intimidating or coercive language, or threaten you in any way, whether by mail, email, text, over the phone, or in person, etc.
- tell you false or misleading information
- tell you they have started a court action when they have not
- add any extra fees or amounts to the money you owe
- contact you anymore if you have gone bankrupt and your licensed bankruptcy trustee has informed them
If you need help dealing with a collection agency, or if you think the collection agency is breaking the law, you may make a complaint to the Ministry of Government and Consumer Services. You may also be entitled to bring an action against them in Small Claims Court.
For free information, tools, and help to manage your debt, contact our preferred debt consolidation non-profit agency, Credit Canada Debt Solutions.
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