How To Handle Collection Agencies & Collectors

Consumers have often expressed their concerns to me about harassing calls from debt collectors and how to deal with collection agents. Some even complain that even though they have made an assignment in bankruptcy (i.e. filed for bankruptcy) or made a Consumer Proposal, some credit collection agents continue to call.

First of all, it must be understood that the job of all debt collectors is to convince debtors to pay the debt. These debt collectors take their job seriously and because they work on commission, they are highly motivated to collect.

It should also be noted that filing for bankruptcy provides immediate relief in the sense that once bankruptcy proceedings have started, unsecured creditors will not be able to take legal steps to recover their debts from you nor will they be able to seize your property or garnish your wages. Each of the creditors listed in your bankruptcy are sent a Creditors Package with a notice advising them of your bankruptcy. However, should any creditor call after you have filed for bankruptcy, all you need to do is refer them to the Trustee’s office.

Why a debt collector might try to contact you before you have filed for bankruptcy:

• Your creditor has not received payment from you within the timeframe discussed in the credit contract.
• You could be a victim of an identity theft, meaning someone used your identity to obtain credit and didn’t pay it off. The creditor may be looking for some clarification about such a debt.
• You may have been mistakenly contacted by collectors looking for someone other than you.

Why a debt collector might try to contact you after you have filed for bankruptcy:

• They may not have received the Creditors Package from the Trustee’s office (highly unlikely) in time.
• The address of the creditor provided by the bankrupt may be incorrect or the collection agency has changed hands.
• The actual creditor received the Creditors Package from the Trustee’s office but did not call off the collection agency acting on their behalf.

In any event, there is no need to be alarmed when contacted by a collection agency or any collector. Simply take as much information as possible from the caller that can help you bring the matter to a satisfactory resolution. When a collection agency leaves a message from an automated call system, they must leave a contact number for you to call back. Collection agencies across Canada are governed by specific pieces of legislation, such as the Collection Agencies Act in Ontario.

What you should do when a debt collector calls:

• Ask for the name of the company, address, the caller’s name, fax and phone number, amount owned and the name of the creditor who passed your account to them.
• Tell them you expect to receive a notice in the mail concerning this debt. This step is very important because you need to have proof of the debt in question in writing.

What you should never do is to:

•  Sign any documents or try to pay off without verifying the debt in question.
•  Ignore the collector calls. They will not stop contacting you and may even file a lawsuit against you in a Small Claims Court.

Remedies to stop harassing calls:

If you find yourself in a situation where you are repeatedly being contacted by a collector looking for someone other than you, it may be considered a form of harassment. In Ontario, you can seek remedy from the Ministry of Consumer Affairs.

Another way to stop the calls is to tell the debt collector you want all future correspondence in writing.  

To stop harassing calls at odd hours or to your relatives, neighbours or coworkers, you will need to send a letter requesting a cease and desist of such calls.  

What the collection agencies / debt collectors cannot do under the Fair Trading Act:

• Use deceptive practices or indulge in misrepresentation. For example, threaten you with arrest or trick you into paying for collection calls.
• Contact you more than three times in seven days on behalf of same creditor, other than by mail.
• Use obscene language.
• Contact your employer, except for the purpose of confirming your employment in preparation for legal action, or call you at work after you tell them that your boss does not approve these calls.
• Deny you the right to receive a written notice (within five days after your first phone conversation) that would tell you how much you owe and the name of the creditor that says you owe the money. If you do not receive the notice within five days, call the collection agency and ask for its address and fax number. Then, send a letter to the collector noting its failure to send you the required notice. At a minimum, make a note in your file.
• Refuse to give his / her name and the name of the collection company when you ask for it.
• Place a negative remark / note on your credit report if you file a dispute. The Collection Law requires the agency to validate the debt first by obtaining a verification of the debt from the creditor or be in possession of a copy of a judgment from the creditor before continuing their collection efforts. The results of the investigation must be mailed to you.
• Give away any information about the debt to any person other than the debtor and the debtor’s representative.

Finally it is necessary to remember that the amount of debt the collection agencies / creditors claim you owe is negotiable. If you choose to deal with them directly (not advisable), you can negotiate the total amount due, number of payments and the payment deadline. Once you have worked out the payment plan, request it in writing and put a demand that upon satisfactory resolution of the debt, they provide you a legal clearance in evidence of the debt having been extinguished. Remember: the debt you owe is to your creditor and not the collection agency, who only acts on behalf of their client.

If you are seeking a permanent, legal remedy to get rid of all your unsecured debts, only a licensed Trustee in Bankruptcy / Administrator of Consumer Proposal can provide that. A Trustee in Bankruptcy will provide you with all options available to you under the federally legislated Bankruptcy & Insolvency Act (BIA).