Know Your Rights: Collection Agencies

Safeguarding My Rights When Dealing With a Collection Agency in Canada

Debt collection is a common occurrence in the financial realm. Whether it’s a personal loan, a credit card balance, or a line of credit, the possibility of debt accumulation is ever-present. When an individual defaults on their repayments, a collection agency may come into the picture to recover the debt. However, it’s critical to understand My Rights When Dealing With a Collection Agency in Canada to ensure fair treatment and adherence to the laws. This article will comprehensively explore these rights, the limitations imposed on the collection agencies, and the steps to take when dealing with them.

Understanding the Role of a Collection Agency

A collection agency, often appointed by your creditor or sometimes buying your debt from the creditor, takes on the responsibility of collecting the outstanding debt. They may use various methods such as phone calls and letters to encourage you to pay up. However, it’s essential to remember that these agencies must operate within the boundaries of Canadian law.

Key Rights You Possess When Dealing With a Collection Agency

In Canada, federally regulated financial institutions and collection agencies must respect certain rights when interacting with debtors. This rule also applies to any third party acting on their behalf. Here are the central rights that you hold:

Right to Detailed Information About Your Debt

The institution or agency must inform you about the specifics of your debt, such as the amount and type, and any person who is collecting the debt on their behalf.

Right to Privacy and Freedom from Harassment

Collection agencies are restricted from contacting anybody for information other than your telephone number or address. They cannot reach out to your employer, except to confirm your employment. They are also barred from contacting you during certain hours, on holidays, and at your workplace under specific circumstances.

Moreover, they cannot resort to threatening, intimidating, or abusive language, or use undue pressure to coerce you into paying the debt. They are also forbidden from publicizing your failure to pay or misrepresenting the situation.

Identifying a Legitimate Collection Agency

Before engaging with a collection agency, it’s crucial to verify their legitimacy. The agent should be licensed, and you can check their credentials on the Consumer Protection BC website. However, be cautious not to acknowledge the debt or make any promises before confirming their legitimacy, especially if the debt is old and may fall outside the statute of limitations.

Requesting Written Notice and Setting Communication Preferences

Always ask for a written notice of the debt if you haven’t received one already. You can also request that they only contact you in writing or through your lawyer. They are legally obliged to comply with this.

What Happens When Your Debt is Transferred to a Collection Agency?

Your creditor will send your debt to a collection agency after exhausting their efforts to contact you. They will send a written notice detailing the collection agency handling your account, the creditor you owe money to, and the amount you owe. However, receiving this notice doesn’t mean all hope is lost. You can still negotiate payment arrangements directly with the creditor to protect your credit score.

Impact on Your Credit Score

Your credit score will take a hit once your account goes into collections. This could make it difficult to secure new credit, increase the interest rates on any credit you do receive, and may even affect your ability to rent an apartment or secure a job.

How to Handle Calls from Debt Collectors

Once your account is transferred to a collection agency, you’ll begin receiving calls from debt collectors. Do not make any payments without confirming some key details. These include the agent’s name, the name of the collection agency, the total amount owed, who you owe the debt to, and when the debt originated.

The Legality of Collection Agencies Taking You to Court

Yes, a collection agency can take you to court. However, they usually will not pursue this route for debts that are less than six months overdue. Also, they must respect the statutes of limitation that apply in each province or territory. If a debt is old enough, it cannot be recovered through the court.

Dealing with Incorrect Debt Claims

If a collection agency claims you owe a debt that you do not recognize or believe is incorrect, let them know and contact the original creditor. Check your credit report to see if the debt appears there.

Paying Your Debt to a Collection Agency

Once you’ve verified that the debt is yours, you’ll need to pay it. You can discuss with the debt collector your financial situation and propose a payment plan that suits you. Many debt collectors can arrange for monthly payments, but always get the details of the repayment plan in writing.

Your Rights Regarding Collection Practices

Collection agencies must abide by certain limitations. They cannot harass you, call you excessively, or contact you outside of normal hours. They can only contact third parties such as your friends, employers, relatives, or neighbours to get your phone number or address, or a confirmation of employment from your employer. They cannot ask them other questions or provide them with your details.

When Collection Agencies Overstep Their Bounds

If a collection agency has violated your rights, you can make a complaint to regulators such as Consumer Protection BC or contact a Licensed Insolvency Trustee to discuss your situation.

Concluding Thoughts

Understanding your rights when dealing with a collection agency in Canada is crucial to ensuring fair treatment. If you ever find yourself on the receiving end of a collection agency’s calls, remember that you have the power to protect your rights, negotiate your repayment terms, and seek help if the agency steps out of line.

Always remember to handle your financial obligations responsibly to prevent the need for a collection agency intervention. However, if the situation arises, knowing your rights will empower you to navigate the process more effectively.

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.