What can a Collection Agency do to me in Canada?

Powers Collection Agencies Have in Canada

Creditors don’t like waiting for late payments.

While some may be more understanding or patient than others, most will pass your case to a collection agency if you fail to address the situation.

Collection agencies can cause a lot of stress to debtors as they get in touch to collect the money you owe.

The first contact you may have with a collection agency is via a phone call to demand payment or explain that your unpaid invoices have been escalated for collection.

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When our clients come for advice, they often have already received several calls from a collection agency.

Debt can be a situation that has devastating consequences on your mental health.

When you feel exposed to collection companies, anxiety and panic can settle in.

Our trustees are here to help you understand your options and find a way to regain your financial freedom.

Here we answer your questions about the collection process and what agencies are authorized to do:



Why do collection agencies come after you?

The first and most important thing to understand when it comes to collection agencies is that not all debtors will encounter them.

Indeed, creditors don’t refer your unpaid invoices to a collection agency, unless they know there is no other way for them to collect the money you owe.

In other terms, one late payment isn’t going to land your case on the desk of a collection agent.

On the contrary, your first point of contact when you can’t make payments on time is your creditor.

Indeed, most creditors will send a reminder of the unpaid invoice.

Creditors are used to a variety of payment mishaps, such as when a client switches bank and forgets to set automatic payments.

You should receive a reminder of the invoice from most creditors with all the information you need to make the payment as soon as possible.

If you have failed to inform your creditors about a potential payment delay, you can reply to the reminder to let them know when you will pay your debt.

If you are able to pay it swiftly, creditors will more likely overlook the incident.

Similarly, if you can inform them about your financial misfortune and explain how and when you intend to repay, some creditors are open to negotiating payment terms.

However, if you choose to stop making payments with any notice, your creditors will likely grow impatient and escalate to a collection agency.

Even if you are experiencing financial difficulties, it’s a good idea to maintain close communication with creditors.

What can stop collection agencies?

As collection agencies solely exist to collect, the simplest way to stop them is to repay your debts.

Once the debt is repaid, creditors automatically stop money collection.

However, if you are unable to repay your debt, you will need to assess your financial options.

A debt management plan that negotiates debt repayment – either partially or totally –, or that settles debts will stop collection companies from contacting you.

Credit counselling companies can reach out to your creditors to agree on payment terms for full debt repayment.

However, credit counsellors are regulated in most jurisdictions.

Not all creditors may agree to negotiate with a credit counsellor.

You can also reach a debt settlement deal with your creditors to agree on the repayment of a smaller amount than what you owe.

Negotiating a debt settlement is something you can do yourself, or you can also entrust a debt settlement company.

Beware, however, some debt settlement companies charge high costs to take your case with no guarantee of success.

Finally, you can reach out to a licensed insolvency trustee to administer a legally-binding debt settlement plan, either personal bankruptcy or consumer proposal.

This will immediately stop all creditors’ actions, including collection agencies.

Can a collection agency take me to court?

A collection agency can take you to court on behalf of the creditors.

They are entitled to file a lawsuit if they can’t collect any payment from you.

However, filing a consumer proposal or personal bankruptcy with a trustee will immediately stop all legal proceedings, including lawsuits that are in progress.

If you can’t cancel your debts, you will need to answer the notification of legal pursuit.

You will have either the choice of filing a defense or not.

If you choose not to, your creditors automatically win, and they can obtain a judgment against you.

Should the the lawsuit goes to trial, you can win, which will stop any further action from the collection agency.

If you lose, a judgment can be awarded to the creditor and collection agency.

Can a collection agency charge interest on my payments?

No, a collection agency cannot charge new interest to your debt.

By the time the debt reaches collection companies, most creditors would have included interest in the amount you owe them.

Collection agencies, however, will try to force payment, which they can do in many ways:


  • They can call you every day;
  • They can ask you to make a payment on a voluntary basis;
  • Depending on the province you live in and the type of debt you’ve incurred, they can garnish your bank account;
  • They can obtain a Writ of Execution from the country to seize non-exempt personal property that will be sold to pay for your debts. This, however, occurs only after a trial;
  • After a lawsuit, they can also file the judgment in Land Titles against your home or any other property you own, which can be sold with a court order if you can’t pay.


How can I avoid all the collection agency stress?

If you are unable to pay your debts, you will need an expert by your side to advise on the best course of action.

Our trustees can help you understand your rights and what collection companies can do in your province.

They can also help you stop collection companies from harassing you and selling your assets.

Don’t let collection companies sell your assets or take you to court.

Call (879) 877-4770 to talk to a licensed insolvency trustee about your debt problems.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?

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?

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