Can a Collection Agency Take Me to Court?

A question that constantly lingers on your mind when a debt collection agency is pursuing you to collect the debt is – “Can a debt collection agency take me to court?”

Many people think what they are in no way obliged to pay a debt collection agency.

After all, they are not the original company from whom they had procured the loan.

They cannot be more wrong.

A debt collection agency can indeed take you to the court and when you ignore them, the results can often be catastrophic.

Before we understand how does this happens and what are the ways to prevent such a situation, let us try to understand what a debt collection agency is and how do they work?

Need Help Reviewing Your Financial Situation?
Contact a Licensed Trustee for a Free Debt Relief Evaluation

Call 877-879-4770


What is a debt collection agency?

A debt collection agency is a company that collects the debt from you on behalf of your creditor.

A debt collection agency is often employed by a creditor when they have lost communication with you or they are finding it hard to collect the debt from you.

Often, the creditor sells off the unpaid debt to the debt collection agency which makes them the rightful owners of your debt.

They are in every right to pursue this amount in their own means.

However, it is their duty to intimate you about the transfer of debt to them from the creditor.

When will a debt collection agency take you to court?

A debt collection agency will never take legal action against you in the first attempt to collect the debts.

They will send multiple warnings and messages in the form of collection letters to you.

Most of the agencies adopt the legal path when you do not respond to their warnings.

Hence it is strongly advised you to respond to all the warning letters from the debt collection agency even if it is to inform them that you cannot pay them immediately.

Many people think that a debt collection agency will not take you to court if the debt amount is not substantial.

This is because the cost of filing a lawsuit is very high in many provinces.

But an aggressive debt collection agency will file a lawsuit irrespective of the debt amount if you are in provinces where the cost of filing a lawsuit is comparatively low.

On the other hand, if you are in provinces with a high lawsuit filing cost or in provinces that don’t allow wage garnishment, there are high chances that a debt collection agency will not file a lawsuit against you.

What happens when a debt collection agency sues you?

So you have not paid the debt collection agency even after their relentless attempts to contact you or collect the debt from you.

This leads to them taking a legal course whereby they will file a lawsuit against you on behalf of the creditor.

You have two options.

One is to file a defense by visiting the court that has been mentioned on the Statement of Claim.

The second option is to ignore the lawsuit.

When you do this, it implies to the court that you do not want to dispute and own up the debts.

The creditor or the debt collection agency will receive the default judgment and will lead to the seizure of your assets or the collection agency taking the money directly from your bank account.

This also means your credit score will take a huge hit thereby preventing you from taking additional loans or even a debt consolidation loan to protect you from the clutches of a debt collection agency.

Who to seek help when a debt collection agency sues you?

When a debt collection agency sues you, it is always advisable to talk to legal experts such as lawyers or Licensed Insolvency Trustees to find out what are the various options available to you.

Another option is to talk to the creditors or the debt collection agency themselves to understand if there is a payment term that is suitable for both parties.

The third option is to discuss with credit counseling agencies who can help you to come up with a debt management plan.


It is always scary to be taken to the court by a debt collection agency, especially when you do not know how to deal with the process.

It is best to consult the experts on how to go about the entire process and to understand the various options available to you.

But never ignore the lawsuit as the results can be catastrophic.

It will lead to the default judgment against you leading to wage garnishment or the seizure of assets.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.