A practical guide to dealing with collection agencies

Consumers across Canada know the stress of getting a call from a debt collector. For some, it’s a reminder of missed payments they’re struggling to catch up on. For others, it’s a frustrating case of mistaken identity or even identity theft. In certain cases, those calls keep coming even after filing for bankruptcy or making a Consumer Proposal.

Knowing your rights and the steps you can take to handle these situations can make all the difference. This guide explains why collection agencies might contact you, what they’re allowed to do under Canadian law, and how to respond in a way that protects your rights and reduces stress.

Why collectors contact you

Collection agencies act on behalf of creditors to recover money owed. They’re often paid on commission, so they have a strong incentive to reach you and secure payment.

Before bankruptcy or a Consumer Proposal, a collector may call if:

• Your creditor hasn’t received payment within the agreed time.
• Someone has used your identity to open a credit account and failed to repay it.
• They’ve reached out to you by mistake, believing you’re someone else.

After bankruptcy or a Consumer Proposal, while rare, calls can still happen because:

• The notice from your Licensed Insolvency Trustee hasn’t reached them yet.
• The contact information on file was incorrect or outdated.
• The creditor received the notice but hasn’t told the agency to stop pursuing payment.

How to handle a call from a collection agency

Staying calm is key. Use the call to gather details, confirm the debt, and protect your rights.

1. Get complete contact information: Ask for the agency’s name, address, phone and fax numbers, the name of the caller, and the original creditor’s name.
2. Confirm the claim in writing: Request a mailed notice that includes the amount owed and the name of the creditor. This ensures you have documentation.
3. Keep a record: Note the date, time, and content of each conversation in case you need to dispute the debt or file a complaint.

Mistakes to avoid

• Paying before confirming the debt: Always verify that the debt is legitimate and the amount is correct.
• Signing documents without understanding them: You could be agreeing to unfavourable terms.
• Ignoring the situation: Avoiding calls entirely could escalate the matter and even lead to legal action.

What to do if the calls feel excessive or harassing

Not all collection activity is legal. If the calls become excessive, come at unreasonable hours, or involve contacting people in your life unnecessarily, you may be able to take action.

You can:

• Request all future communication in writing.
• Send a formal letter directing the agency to stop contacting you at certain times or through certain channels.
• File a complaint with your provincial or territorial consumer protection office if the contact violates local rules.

It’s also noteworthy to understand that debt collection laws are set at the provincial and territorial level. While many rules are similar, such as limits on call frequency and prohibitions on sharing debt details, always confirm the specific regulations in your jurisdiction.

What collectors can’t do

Canadian laws generally prohibit debt collectors from:

• Misrepresenting the debt or using deceptive tactics
• Threatening arrest or legal action that they aren’t authorized to take
• Contacting you more than the allowed number of times within a set period, for example, three times in Ontario
• Using offensive language or behaviour
• Sharing information about your debt with your employer, co-workers, family, or neighbours (except in very limited situations allowed by law)
• Continuing to contact you at work after you’ve told them not to
• Refusing to give their name or their company’s name when asked
• Adding negative remarks to your credit report without properly verifying the debt

Negotiating with a collector

The amount a creditor says you owe isn’t always set in stone. If you choose to deal directly with a collection agency, which generally isn’t recommended, you can try to negotiate the total amount, payment schedule, or deadlines. Always get agreements in writing, and make sure they confirm in writing when the debt is paid in full. Remember, you owe the debt to the original creditor, even if the collection agency is handling the calls.

When you need a permanent solution

If your debts have become unmanageable, a Licensed Insolvency Trustee can help you explore all the options available under Canada’s Bankruptcy and Insolvency Act. Whether that’s filing for bankruptcy or entering into a Consumer Proposal, they can guide you toward a legal, lasting resolution that stops collection activity for good.

MNP Ltd. offers a free confidential consultation with no obligation to file. You’ll learn your options, understand the steps involved, and get the clarity you need to make the best decision for your financial future.