Understanding the Do’s & Don’ts of Debt Collection
The burden of debt can be a heavy one to bear, made all the more taxing by incessant reminders from debt collectors. It’s important to understand what debt collectors can and cannot do to protect yourself in the face of this financial adversity. You’ve got rights as a consumer, and understanding these is key in managing your relationship with creditors and collection agencies.
How Does Debt Work?
Debt can be classified into two main types: Secured and Unsecured. Understanding how these different types function can provide insight into the debt collection process.
Secured Debt
Secured debt refers to loans that are backed by physical assets or collateral, such as your house or vehicle. If you default on your secured loan payments, the creditor has the right to seize your assets to recover their loan amount.
For instance, if you’ve taken a car loan and fail to make the payments, the creditor can seize your car and sell it to recover their money. If the sale doesn’t cover the full amount, the creditor may sue you for the remaining balance.
Unsecured Debt
Unlike secured debt, unsecured debt doesn’t involve any collateral. This includes most credit card debts and personal loans. If you’re unable to make payments, the creditor doesn’t have rights to your assets. Instead, they can sue you, and if they win, the court will order you to repay your debt.
The Rules of Debt Collection
Debt collection is regulated differently in various jurisdictions. However, there are a few rules that are generally consistent.
Contact Regulations
Debt collectors are required to notify you in writing before taking any action to collect a debt. They must identify themselves, specify who they’re collecting for, and provide information on the amount you owe.
Additionally, they can only contact your friends, employer, or relatives to obtain your contact information. They’re not allowed to discuss your debt with anyone without your permission.
Behaviour Regulations
Debt collectors must adhere to professional conduct. They’re not permitted to lie, threaten, intimidate, or use abusive language. They cannot provide misleading information or add unnecessary fees to your debt.
In essence, they have to maintain a professional demeanor when dealing with you, and at no point are they allowed to intimidate you into paying your debts.
What if Your Rights Aren’t Respected?
If you believe that a debt collector is violating your rights, you have several options. Depending on who the debt collector represents, you can file a complaint with the Financial Consumer Agency of Canada or with the consumer affairs office in your province.
Seeking Help
If you’re struggling with debt and are fearful of potential collection actions, consider reaching out for help. Debt-relief solutions such as a Consumer Proposal may be a viable option. You can consult a Licensed Insolvency Trustee for advice on the best path towards financial freedom.
Remember, it’s important to take proactive steps if you’re struggling with debt. Don’t let the fear of debt collectors stop you from seeking the help you need.
