How to Deal With Collection Agencies & Stopping Collection Calls
The experience of receiving persistent calls from debt collectors can be overwhelming and intimidating. However, it’s crucial to know that you have rights and options. This article provides a comprehensive guide on How to Stop Collection Calls and Effectively Deal with Collection Agencies in Canada.
Understanding the Role of Debt Collection Agencies
Debt collection agencies are businesses that focus on retrieving unpaid debts. When you default on your payments, a debt collector may reach out to you. Their primary goal is to collect the money you owe on a credit card, line of credit, or loan. The company you owe money to might attempt to recover their money by:
- Utilizing their in-house debt collection department, if one exists;
- Engaging a debt collection agency to recover the money on its behalf;
- Selling your debt to a debt collection agency.
What Happens When Your Debt is Transferred to a Collection Agency
Before a collection agency initiates contact to recover the debt you owe, you will typically receive a written notice. This notice should include the name of the collection agency, the name of the person or business you owe money to, and the amount you owe.
Actions to Take Upon Receiving a Notice
Once you receive a notice that your creditor plans to transfer your debt to a collection agency, it’s essential to contact your creditor immediately.
By doing so, you might be able to:
- Settle a part of the amount or the entire amount owed to avoid the debt transfer;
- Arrange alternative payment plans with your creditor.
Impact on Your Credit Score
The moment your creditor assigns your debt to a collection agency, your credit score will take a hit.
A low credit score implies that:
- Lenders may deny you credit;
- Lenders may impose a higher interest rate for new credit;
- Insurance companies may increase your policy rates;
- Landlords might reject your rental applications;
- Potential employers may not hire you.
How to Respond When a Debt Collector Contacts You
Should a debt collector reach out to you, request and note down the following information:
- The agent’s name;
- The company they represent;
- The name of the company they are collecting money for;
- The debt collector’s telephone number.
Also, ask for specifics about the debt, such as the amount you owe, who you owe it to, and when the debt was incurred. After verifying this information, you can ask the collection agency to contact you exclusively in writing.
Meeting Your Debt Obligations with a Collection Agency
If the debt is yours and the amount is accurate, settling the full amount you owe will resolve the issue. If you’re unable to pay the full amount, explain your situation to the debt collector and propose an alternate repayment method, such as monthly payments.
What to Do if the Debt Isn’t Yours
If the debt belongs to someone else or a mistake has been made, inform the debt collector and contact the creditor to understand the steps you should take to rectify the error.
Understanding Your Rights When Dealing with a Debt Collector
Debt collectors are regulated by certain rules when collecting a debt. These regulations apply whether it’s a federally regulated financial institution or another party acting on its behalf.
Who a Debt Collector Can Contact
A debt collector can only contact your friends, employer, relatives, or neighbours to obtain your phone number or address. However, this does not apply if the person they contact has guaranteed (or co-signed) your loan, they are verifying your employment, or you’ve granted your consent for the financial institution to contact the person.
When a Debt Collector Can Contact You
Debt collectors are restricted to contacting you during certain times:
- Monday through Saturday between 7:00 a.m. and 9:00 p.m.
- Sundays between 1:00 p.m. and 5:00 p.m.
- Debt collectors are not permitted to contact you on holidays.
What a Debt Collector Can’t Do
A debt collector is prohibited from:
- Suggesting to your friends, employer, relatives, or neighbours that they should pay your debt, unless they’ve co-signed your loan;
- Using threatening, intimidating, or abusive language;
- Applying undue or unreasonable pressure on you to pay the debt;
- Misrepresenting the situation or providing false or misleading information;
- Calling you on your cell phone, unless you’ve provided that number as a way to contact you.
Making a Complaint About a Collection Agency
If you believe that a debt collector is not respecting your rights, you can lodge a complaint with the appropriate regulator. If your creditor sold your debt to a collection agency, you can lodge a complaint with your consumer affairs office.
In conclusion, knowing your rights and understanding the process can help you stop collection calls and effectively deal with collection agencies in Canada. It is essential to remember that you have the right to be treated fairly, even if you owe money.
