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How to Handle Debt Collectors, Creditors and Collection Agencies

If you owe debt, and you’re not able to pay it back, your creditors or a collection agent might contact you. Unfortunately, these calls can be very stressful. Some people who are dealing with calls from creditors and collection agencies stop answering the phone all together because they’re worried about creditor calls.

Some debt collectors and creditors can be very aggressive and difficult to deal with. However, there are rules around debt collection and there are certain things that collection agencies are not allowed to do. This includes:

  • Contacting you to collect a debt without first attempting to notify you in writing
  • Giving false or misleading information
  • Continuing to demand payment from someone who claims that they do not owe the debt in question, unless the collection agency takes all reasonable steps to ensure that the person really does owe money
  • Using threatening or abusive language
  • Contacting friends, family members, neighbours, or employers to ask anything other than for verification of your phone number, address, or employment status
    • However, if someone has guaranteed a debt for you (such as someone who has co-signed on a loan with you) a creditor or collection agency is allowed to contact this person about the debt
  • In most areas, debt collectors or creditors cannot contact you frequently enough that it could be considered harassment. The specifics of this will vary depending on the province or territory in which you live

All of these rules will differ by province or territory but, in general, most jurisdictions in Canada have laws that prohibit what debt collectors can do or say.

What Should You Say to a Creditor or Debt Collector?

If you owe money and you’re not able to pay it back when you should, you may want to call your creditor first. If you can explain to them why you are unable to pay your bill (due to a job loss, accident, death in the family, etc.) they may be willing to negotiate a different payment plan with you. Be honest and reasonable. They may not be willing to change the terms of your debt, but it is certainly worth a try.

If you reach a new agreement with a creditor, be sure to get the changes in writing.

Most creditors will try to collect on debts themselves for around six months. If they are unsuccessful, they may hire a collection agency to attempt to get payment.

When someone calls you to collect on a debt, one of the first things you should do is find out the name of the person who is calling, the organization they are calling from, and which debt they are contacting you about. It’s important that you verify that the debt is accurate. If you do not owe the money or if they are claiming that you owe more than you believe you do, inform them of this fact.

It’s important that you only deal with the organization that contacts you regarding your debt. For example, if a collection agency calls you, don’t contact the original creditor to resolve the debt. This could cause confusion and could result in you paying your debt twice or winding up in a situation where the collection agency keeps calling despite the fact that you’ve made payments to the original creditor.

Whenever you speak with anyone regarding debt payments, be sure to take detailed notes that include who you spoke with, the date and time, and what was discussed. Keep these notes handy to make sure that you remember the details of the situation whenever you’re speaking with a creditor or collection agency.

If a creditor or collection agency contacts you to request or demand payment, explain your financial situation and what you are able to afford. The creditor may work with you. Typically, most creditors and collection agencies are willing to agree to fair payment plans, depending on your specific situation.

It is important to be polite and not get angry or frustrated during a call with a creditor or collection agent. This increases the chances of the person agreeing to work with you. As mentioned, make sure to get any changes to your agreement or contract sent to you in writing before you make a payment.

Never mail cash to a creditor or collection agency. Keep a record of any cheques, money orders, or other payments that you make.