Consumer Tips - Collection Agencies
What Is a Collection Agency?
When you owe money to a business and have not made payments recently, the business may turn your account over to a collection agency. A collection agency is a business that obtains or arranges for payment of money owed to either a person or a company.
How Do I Deal With Collection Agencies?
- In most provinces you must be notified in writing that an account has been turned over to a collection agency. The agency will contact you to attempt to collect the money you owe to its client.
- When possible, pay the money you owe. You won't have to deal with the agency once the account has been cleared.
- When it's impossible for you to pay the full amount at once, explain why.
- Offer some alternative method of repayment, either in a lump sum or a series of monthly payments.
- Never send cash. Always make payments in such a way that you have a receipt - either a cancelled cheque from your own bank or a receipt from the agency.
- Once the account has been officially turned over to a collection agency, you'll be dealing only with that agency when making arrangements for payment. It may be best not to contact the original business - this just creates confusion - unless there's an error in the account. When this is the case, advise both the business and the collection agency.
When making payments to a collection agency, be sure not to write a cheque if you have insufficient funds in your account or to miss payments. When your financial circumstances change, contact the collection agency immediately and explain your current status. Follow up in writing.
Debts should not be treated lightly. They can result in court action, which could lead to money being taken from your pay cheque or seizure of your assets.
I Feel I'm Being Treated Unfairly by a Collection Agency
While rules vary across Canada, generally collection agencies are forbidden from doing the following:
- trying to collect a debt without first notifying you in writing, at your last known address, that a collection agency has been assigned to the account;
- recommending or starting legal or court action to collect a debt without first notifying you and obtaining the creditor's (the company to whom you owe money) written permission;
- making telephone or personal calls of such a nature or frequency as to constitute harassment of you or your family, or calling to collect a debt at certain prohibited times (which vary from one province or territory to another);
- implying or giving false or misleading information to any person that could damage you or your family;
- demanding payment of a debt without identifying themselves, saying who is owed the money, and stating the amount owed;
- continuing to demand payment from a person who claims not to owe the money, unless the collector has tried every way to ensure the person owes the money;
- taking over the debt from a creditor without first advising you; and
- contacting your friends, employer, relatives or neighbours for information, other than to get your telephone number or address.
If you have concerns about the actions of a collection agency, contact your provincial or territorial consumer affairs office.
