Your Debt Collection Questions Answered

Understanding Debt Collection: Your Questions Answered

Life can be unpredictable and often lead to financial instability. Even the most financially stable individuals may find themselves dealing with debts and collection agencies. This article aims to tackle common Debt Collection Questions and provide you with the necessary knowledge to navigate such situations.

Regulation of Debt Collection Agencies

Debt collection agencies operate under the strict supervision of the Ministry of Government and Consumer Services in Ontario. They must register with the Ministry of Government and Consumer Services Registrar of Collection Agencies. This registration is renewed biennially.

Debt collection agencies and individual collectors are obligated to adhere to the Collection and Debt Settlement Services Act, failing which enforcement actions may be taken against them.

Debt Collection Fees and Tax Deductions

Debt collection agencies cannot impose any fees on you. Thus, there is no scope for tax deductions in this context.

Legal Actions by Debt Collection Agencies

Ignoring collection calls is not advisable. If you fail to communicate your intention to pay, negotiate, or dispute the debt, the collector may escalate the matter to legal action. They may advise the original creditor to file a lawsuit against you. The collector cannot, however, take you to court without the written authority of the lender, although there can be exceptions.

In certain cases, the debt collections agency can act as the plaintiff in a court proceeding if:


  • The creditor has no interest in the debt;
  • The collection agency notifies the debtor about a legal proceeding before assigning the debt; or
  • The creditor has not initiated a legal proceeding before assigning the debt.

A debt collection agency must also notify you if they intend to advise legal action to the creditor. Be aware of the statute of limitations on your debt. If enough time passes, a creditor or debt collection agency cannot sue you in court for the debt.

The Debt Collection Process

If you miss payments on your debt, the amount becomes delinquent debt. Your creditor may assign your overdue debt to a collection agency. When collecting debts, an agency must first contact you with a letter. Written notice is legally required before escalating to other actions. Six days after serving written notice, a debt collector can start calling to collect, but they cannot call more than three times a week.

Debt collection agencies may persistently call you for weeks or even months to collect. They might also contact your family or employer to obtain your personal information, such as your address or telephone number. The calls stop once you pay or address the debt.

Disputing Debt Collection

You can dispute debt collection by reaching out to the collection agency and informing them of your dispute. Consider using email or a mail courier for this purpose, as these methods provide proof of your communication. Debt collection disputes can lead to legal consequences. The creditor who passed your debt to the agency may take legal action against you, such as filing a lawsuit.

The benefit of disputing debt is that it legally prohibits the collection agency from contacting you without your consent after a dispute.

Negotiating with Debt Collection Agencies

You can contact the collection agency and propose a payment plan to settle your debts. Agencies are usually willing to negotiate if it means they will receive payment. They cannot access funds from your bank account, and they rely on your communication to settle the debt.

Before you call, you should:


  • Understand your rights and the responsibilities of debt collection agencies;
  • Verify that the debt is yours;
  • Assess your finances and determine how much you can pay.

During the call, you should:


  • Start negotiations with a lower number than you’re willing to pay;
  • Avoid disclosing too much information;
  • Remain calm and composed;
  • Take notes;
  • Insist on a written agreement.

If you’re unsure about your negotiation skills, consider using the services of a credit counsellor or a debt settlement company.

Reporting Harassment by Debt Collection Agencies

If a debt collection agency harasses you, you can file a complaint with the Ministry of Government and Consumer Services or send a cease and desist letter to the agency. Harassment can include:


  • Pressuring you;
  • Contacting you on a statutory holiday or more than three times in a week without your consent;
  • Sharing misleading or false information about you;
  • Threatening, swearing at, or intimidating you.

Before filing, inform the agency of your intent to file a complaint. Keep a record of incidents with the debt collector to assist with your complaint. When filing your complaint, include:


  • The debt collection agency’s name;
  • Description of rights violation and harassment;
  • Whether or not you’ve contacted the Ministry of Government and Consumer Services.

You can file your complaint online. The Ministry will review it and respond within 15 business days.

Impact of Debt Collection on Your Credit Score

Debt collection agencies can report your debts to credit bureaus, which can negatively impact your credit score. The debt can stay on your credit report for seven years.

Effect of Paying a Debt Collector on Your Credit Score

Paying a collector does not further damage your credit score. If you pay the debt, the agency should report the payment to the credit bureau. However, it will likely remain on your credit report for a few years.

Providing Personal Information to Debt Collectors

You are not obligated to provide your social security number to a debt collector. If asked for this information, file a complaint immediately.


Dealing with debt collectors can be overwhelming, but understanding your rights and the rules that debt collection agencies must follow can make the process less stressful. If you’re struggling with debt, considering debt relief may be a viable option.

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.