Dealing with a debt collector

A debt collection agency is a company that specializes in recovering unpaid debts. If you don't make your debt payments, a debt collector may contact you. Their objective is to collect money you owe on a credit card, line of credit, or loan.

Your creditor, that is, the company that you owe money to, may try to get their money back by:

using their own debt collection department if it has one
hiring a debt collection agency to get the money back on its behalf
selling your debt to a debt collection agency

What happens when your debt is sent to a collection agency

You'll usually receive a written notice before a collection agency contacts you to collect the debt you owe.

The written notice should include:

the name of the collection agency
the name of the person or business you owe money to
the amount you owe

Steps to take when you receive a notice

If you receive a notice that your creditor will send your debt to a collection agency, contact your creditor immediately.

You may be able to:

pay a portion of the amount or the full amount owed to avoid having the debt transferred
make alternative arrangements with your creditor to pay back your debt

What happens to your credit score

Once your creditor sends your debt to a collection agency, your credit score will go down.

A low credit score means:

lenders may refuse to give you credit
lenders may charge you a higher interest rate for new credit
insurance companies may charge you more for your policy
landlords may refuse to rent to you
employers may not hire you

Find out how long information stays on your credit report.

What to do when a debt collector calls

If a debt collector calls you, ask for and write down the following information:

the agent's name
the company they work for
the name of the company they are collecting money for
the debt collector’s telephone number

Ask for details on the debt, such as:

the amount you owe
who you owe it to
when you started owing it

Tell the debt collector that you'll call them back as soon as you verify the information. Review your bills and bank statements to confirm if the debt is yours. This may also help you confirm if the amount you owe is correct.

You can ask the collection agency to contact you only in writing. Ask your legal advisor to send a written request to your creditor by registered mail. Make sure to include an address and phone number where they can reach you.

Paying your debt once it's with a collection agency

If the debt is yours and the amount is correct, paying the full amount you owe will resolve the issue.

When you pay back your debt:

don’t send cash
always get a receipt for any payment you make
only deal with the debt collector who contacted you to make payments
don’t contact the creditor that lent you money, as this might create confusion

If you're not able to pay the full amount:

explain your situation to the debt collector
offer an alternate method of repayment, such as monthly payments
follow up with them in writing
include a first payment to show your commitment to paying back the debt, if possible

What you should do if the debt isn't yours

If you think that the debt is someone else's, or that they made a mistake:

tell the debt collector
contact the creditor to find out what steps you should take to correct the error
check your credit report to see if the debt appears on it

Learn how to check for errors on your credit report.

Your rights when dealing with a debt collector

You have rights with respect to how a debt collector collects your debt. This applies if it's a federally regulated financial institution or another party acting on its behalf.

Who a debt collector can contact

A debt collector can contact your friends, employer, relatives or neighbours only to get your telephone number or address.

This doesn't apply in the following cases:

the person they contact has guaranteed (or co-signed) your loan
they contact your employer to confirm your employment
you've given your consent for the financial institution to contact the person

If you give verbal consent to your financial institution, they must provide you with confirmation, in writting, without delay.

When a debt collector can contact you

A debt collector can only contact you at the following times:

Monday through Saturday between 7:00 a.m. and 9:00 p.m.
Sundays between 1:00 p.m. and 5:00 p.m.

A debt collector can't contact you on holidays.

What a debt collector can't do

A debt collector can't do the following:

suggest to your friends, employer, relatives or neighbours that they should pay your debt, unless they've co-signed your loan
use threatening, intimidating or abusive language
apply excessive or unreasonable pressure on you to pay the debt
misrepresent the situation or give false or misleading information
call you on your cell phone, unless you've provided that number as a way to contact you

A debt collection agency can't add any collection-related costs to the amount you owe other than:

legal fees
fees for non-sufficient funds on payments that you submitted

Learn more about your rights when dealing with debt collectors.

Making a complaint about a collection agency

If you feel that the debt collector you're dealing with isn't respecting your rights, contact the appropriate regulator.

If you're dealing with:

the debt collection department of a federally regulated financial institution
a debt collection agency hired by a federally regulated financial institution

You can make a complaint with the Financial Consumer Agency of Canada.

Contact the Financial Consumer Agency of Canada.

If your creditor sold your debt to a collection agency, you can make a complaint with your consumer affairs office.

Find the consumer affairs office in your province or territory.

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