Draft Statement of Claim - Collection Agency Dirty Trick Number One

Nobody sets out to land themselves in debt, and facing financial difficulties is an immensely stressful situation.

However, it’s not only the struggle to make ends meet that causes tension.

Quite frankly, the ongoing harassments from collection agencies and the threat of court hearings are enough to send shivers down anyone’s spine.

Worse still, it’s not uncommon for collection agencies to use dirty tactics.

A Draft Settlement of Claim is undoubtedly one of the most frequently used (and successful) strategies on the market.

If you are currently facing phone calls from debt collectors, it’s imperative that you familiarize yourself with it.

Here’s all you need to know.

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Draft Settlement of Claims Explained

In layman’s terms, a “draft” Statement of Claim is a letter that is sent from a lawyer or collection agency that resembles an official court document and is designed to make debtors panic that they are required to attend a court hearing unless an immediate payment is made.

In many cases, it scares individuals into clearing the debt, even when it causes problems elsewhere.

The document itself looks like a draft court hearing order, which will be accompanied by a cover letter explaining that the debt collector is ready to submit this file should you not pay up.

It’s not hard to understand why the scaremongering tactic has such a high success rate.

After all, a court hearing and the associated costs are the last thing anyone wants, especially when they are in debt.

Worse still the Statement of Claim carries a number of key attributes, including:


  • They carry a red seal on them.
  • They are made using a template that replicates official looks.
  • The letter is addressed to the recipient with full details.
  • The letter accompanies details of the creditor.
  • A cover letter explains that they are ready to start legal proceedings.


In reality, though, they are merely a type of letter that uses aggressive tactics to scare you into making a payment.

While you should not ignore the debt or the fact that a collection agency is chasing you for money, the suggestion that they are about to take you to court is inaccurate.

Why Are Debt Collectors Allowed To Scare You Like This?

In short: they are not supposed to.

Debt collectors work on behalf of their clients and don’t really care about the debtor’s situation.

Their only interest revolves around getting money from you.

However, the use of a Draft Settlement of Claim isn’t only discouraged.

In several territories, it is against the law.

Moreover, it is a practice that has been targeted by the financial authorities for several years.

In fact, the Ontario Registrar of Collection Agencies warned collection agencies against the use of ‘draft’ legal letters back in 2008.

The rulings do vary from one province to the next, but cases have been made against high-profile collection lawyers over the last decade in relation to the use of this trick tactic.

However, this won’t stop all debt collection agencies from attempting to bully you with this tactic.

When accompanied by regular calls and communications, it can have a seriously negative impact on your wellbeing as well as your ability to regain control of your financial health.

It should also be noted that, in Ontario, collection agencies that use lawyers to send collection letters are required to disclose details of the agency that has hired them.

The Ontario Registrar states that it is in the public interest for debtors to have clear information in relation to when a creditor or the creditor’s collection agency is using a lawyer.

Again the exact rulings do vary between provinces.

So, Does That Mean That Creditors & Collection Agencies Can’t Take You To Court?

Not exactly.

When you owe money to a creditor and have failed to make the repayments, they are within their rights to take you to court.

This allows them to recover the monies by garnishing a percentage of your wages until the debts are cleared.

It is a severe outcome, though, that most creditors will see as a last resort that is only used when other avenues have been explored without success.

The time, effort, and financial costs make it an inconvenience for the creditor while there is also a potential impact on their brand image in extreme circumstances.

As such, the majority of creditors (or collection agencies working on their behalf) are happy to discuss alternative options.

These include:


  • Debt settlement plans that extend the repayment duration to make your monthly payments more affordable while allowing them to recoup their costs without the need for further action.
  • Consumer proposals in which a reduced repayment deal is struck.

    When the costs of proceedings are taken into account, it might make sense for creditors to accept this and cut their losses.

  • A debt settlement plan in which you make a one-off payment to cover a percentage of the monies owed, or perhaps the principal sum, before wiping off the other costs.


In most cases, creditors and collection agencies are far more understanding when you take proactive steps to settling the debt.

When you ignore all communication, the aggressive tactics appear.

While they can take you to court, the draft Debt Settlement of Claim letter is one that carries very little relevance – other than being a warning that debt collectors are not happy and that you should attempt to find a resolution.

Seek Help From BankruptcyCanada

If you have received a draft Debt Settlement of Claim or face regular calls and letters from collection agencies, seeking professional help from a team of financial advisors is advised.

BankruptcyCanada’s team of trustees boasts a fantastic track record in Ontario and all other provinces.

In fact, we’ve helped over 100,000 Canadians with their financial problems, including thousands that have faced debt collector letters.

We can help you too.

The sooner you act, the sooner you can put an end to the harassment and discover the road to financial recovery.

To learn more about any letter you’ve received or find out about your repayment options, give us a call on (877) 879-4770 now.

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