It's not unusual to experience anxiety when you have a lot of debt. You might have to deal with loan denials, sleepless nights, and arguments with loved ones. But perhaps one of the most distressing consequences of debt is getting phone calls from a debt collection agency or collections department.
Over the years, Credit Canada has talked with many clients who’ve resorted to unplugging their landlines and putting their cell phones on silent just to stop the constant ringing caused by debt collection in Ontario and other provinces. But where does Canadian law draw the line when it comes to collection calls?
A lot of people might wonder “what can a collection agency do to me in Canada?” or “how do collection agencies work?” Before answering these questions, it’s important to examine the debt collection laws and what limits they impose on collection agencies.
What Are The Debt Collection Laws in Canada?
Debt collection calls can be relentless, and debt collectors will often say anything they can to get you to pay up. The following thirteen questions are the ones we hear most from our clients. Many answers are based on the rules and regulations set forth by each province.
For example, the debt collection agency rules in Ontario are collected in the Collection and Debt Settlement Services Act which prohibits companies from engaging in abusive practices in the collection of consumer debts. The law also requires debt collectors to adhere to time and place restrictions and provide consumers with a method for disputing and obtaining validation of debt information.
A lot of people don’t really know exactly what the debt collection laws in Canada are. This can lead to a lot of questions about what a collection agency in Canada can or cannot do. It can also lead to some confusion when less scrupulous collectors leverage that ignorance of the law to exploit the most vulnerable among us.
So, to help raise awareness and prepare you to better deal with debt collection in Ontario and other provinces, here’s a list of common questions people have.
14 Most Common Questions About Debt Collection Agencies in Canada
The biggest question a lot of people have is: “what can a collection agency do to me in Canada?” This is often followed by “How do collection agencies work in Canada?” However, these questions are a little broad. So, let’s break them down into a series of more specific questions that address the things that collection agencies can and cannot do—as well as some questions about what to do about debt collectors.
- “How long can a creditor pursue a debt in Canada?”
- “Can collections call your work?”
- “How long can a collection agency collect on a debt in Ontario?”
We’ll answer these and other questions here:
1. What Should I Do when a Debt Collector Calls?
It’s tempting to just put the phone on vibrate, but they’re not going away any time soon (plus, you want to know if they even have a legitimate claim). So, answer the call, get the details of the debt, and be sure you owe it. If you do and you can make the payment, that’s your best option.
But if you’re unable to make the payment, see if they’ll work out an arrangement with you. Remember to always get everything in writing and keep a log of your discussions.
2. Can I Ignore a Collection Agency?
If you can deal with the calls and letters long enough, it’s possible the debt collector may eventually give up; however, they can be very persistent. And sometimes, just when you think the calls have ceased and you’re in the clear, you may receive a summons and be taken to court.
So, it’s best not to ignore your creditors, and simply explain that you’re not able to pay the debt and why. Sometimes, they may be willing to accept a smaller monthly payment over a longer period of time. And remember, even if the calls have stopped, the debt can still be dragging down your credit score.
3. When Can a Debt Collector Call Me?
The laws in most provinces state that debt collectors are only allowed to contact you during the following times:
- Monday through Saturday between 7 am and 9 pm (in some provinces, the hours may be 7am to 10pm or 8am through 10pm)
- Sundays between 1pm and 5pm
And debt collectors are not allowed to contact you on statutory holidays. If a debt collector breaks any of these collection laws in your province, you can file a complaint with the appropriate consumer protection office.
Want to stop collection calls? In most provinces you can request that the agency stops calling you and that they only communicate with you by mail. Laws regarding debt collection requests can be complicated and vary across provinces, so you should first check with your provincial laws in the Canadian Consumer Handbook.
4. How Many Times a Day Can a Collector Call You?
The collection agency rules in Canada generally prohibit collectors from calling you more than once per day. Multiple daily calls could constitute harassment and should be reported.
While it's common for some collection firms to phone debtors daily, in some provinces, this is actually illegal. For example, Yukon Territory legislation states that collection agents cannot make calls so often that it could be considered harassment. Unfortunately, what constitutes harassment isn’t clearly defined.
However, in Ontario, Alberta, and Nova Scotia there is a “three strikes” rule, limiting collection agents from emailing you, leaving a voicemail, or speaking with you more than three times within a seven-day period after having an initial conversation with you.
5. How Long Can a Credit Card Company Pursue a Debt in Canada?
How long can you legally be chased for a debt? If you’ve been hounded for years, or if you’re being haunted by a 20-year-old debt, you may be wondering if it’s even legal anymore.
Unfortunately, the answer is yes. There is no statute of limitations on how long a collection agency or creditor can try to collect an outstanding debt. So, if you’re wondering “when do collection agencies give up in Canada?” the answer is that they may never give up—especially if the debt is large enough to warrant collection.
However, Canadian legislation does set a statute of limitations on the amount of time a creditor has to sue you based on acknowledgement of the debt.
While collection calls can continue long after this time frame is up, any legal action they threaten would be an empty threat. You can always file a complaint with the consumer protection office in your province if such threatening language is used.
6. Can a Collection Agency Take You to Court?
Collection agencies use a variety of unscrupulous tactics to try to wring money out of debtors. One tactic involves threatening a lawsuit, criminal prosecution, wage garnishment, or even jail time when they have no authority to do so. They might even produce phony documents showing that any of these actions are going to take effect within a certain time period.
A debt collector or creditor can pursue a civil case against you in court and seek judgment to have your wages garnished to repay the debt. However, this can only be done within a set time period. How long can debt collectors try to collect in Canada through the court system? This time frame varies by province and the clock starts ticking based on when the debt was acknowledged:
- 2 YEARS: Alberta, British Columbia, New Brunswick, Ontario, Saskatchewan
- 3 YEARS: Quebec
- 6 YEARS: Manitoba, Newfoundland, Labrador, Nova Scotia, Prince Edward Island, the territories
Collectors, on behalf of the creditor, must take you to court first and win before any garnishment of wages or similar actions can take place—with the exception of money owed to the government or to a credit union. These organisations can issue wage assignments, which is similar to wage garnishment but without having to go through the courts.
While nearly every province or territory has consumer protection laws addressing (and forbidding) such tactics, that doesn’t stop collection calls from using them because most debtors are unaware of their rights.
You can read more about the court process with creditors in our blog titled: What Happens if a Creditor Takes Me to Court?
Collection services may continue to call and threaten legal action after the time period allotted for filing law suits, but it’s a hollow threat. Let them know the time period has elapsed (your knowledge will likely surprise them!) and the calls will probably stop. If they don’t, you may attempt to file a complaint with the consumer protection office in your province.
7. Can Collection Agencies Take Money from My Bank Account in Canada?
There is a chance that a collection agency in Canada can have money taken from your bank account (or, more likely, garnish it from your wages before it goes to your bank). However, collectors, on behalf of the creditor, must take you to court and win before they can garnish your wages (the exceptions being federal debt recovery and money owed to a credit union).
Alternatively, you can enter into a voluntary garnishment plan with a creditor of your own volition. Some creditors may be willing to waive or reduce certain fees or interest charges in exchange for not having to go to court to collect their money (since it’s so expensive to file a lawsuit) or risk a consumer filing for bankruptcy.
8. Can a Debt Collector Use Threatening Language?
No. By Canadian government law, collection agents are not permitted to use profane or intimidating language when dealing with debtors, and they are never allowed to threaten physical harm.
If you believe that a collections agency in Canada has violated the rules regarding threatening language, you should contact the consumers’ affairs office of your province to register a complaint. If a federally regulated financial institution’s collection department or an agency hired by one has violated the rules, contact the Financial Consumer Agency of Canada.
9. Can a Debt Collector Call People I Know?
Yes and no. Debt collectors are allowed to contact your family, friends, neighbours, employer(s), and the like, but only to attempt to get your phone number and address, or to confirm your employment. In doing so, they cannot discuss your debt with these people, and once they’ve made contact, they cannot call them again.
There are exceptions, however. For example, if the person being contacted co-signed your loan or you’ve previously given the financial institution permission to contact the individual, then the institution may be able to discuss your debt with that person.
10. Can a Debt Collector Harass Me on Social Media?
Being relatively new, social media isn’t addressed when it comes to debt collection rules. However, it’s probably safe to say the basics apply, like they cannot intimidate or threaten you or anyone you know.
Because laws regarding social media are always evolving and are often vague, it’s best to always use caution when accepting friend requests from people you don’t know, as it could be a debt collector.
11. What if They’re Trying to Collect a Debt That Isn’t Mine?
It’s possible that you could begin receiving calls or letters regarding someone else’s debt; it happens more often than you’d think. Sometimes it’s due to similarities in names, phone numbers, or out-of-date information. Plus, some collectors get their information from unreliable online resources.
If this happens to you, inform the debt collector that the debt does not belong to you; that should be enough to end the matter. How long can a collection agency collect on a debt in Canada if it isn’t even yours? Not at all after you’ve informed them of their error. So, it’s important to clear up the misunderstanding as soon as possible.
If the collection agency persists, get whatever information you can and then inform them that you know it’s illegal to harass someone for a debt they don’t owe. If you continue to receive calls, file a complaint with the consumer protection office in your province.
It’s also a good idea to get a copy of your credit report to make sure the debt isn’t listed there as well. You can obtain a copy of your credit report for free once a year from both credit bureaus, Equifax and TransUnion (don’t worry, it won’t impact your credit score).
12. What if the Debts in Collections Are Due to Identity Theft?
If the debt looks legitimate but you know it’s not yours, it’s possible that you’ve become a victim of identity theft. You’ll need to contact your creditors and the credit reporting agencies (both Equifax and TransUnion).
Put a fraud alert on your credit report and get copies to see if there are other debts that aren’t yours. It’s also a good idea to file a police report. Reclaiming your identity and fixing your credit after a case of identity theft is a long, complicated, and difficult process. The sooner you can start, the better.
13. What if I’ve Already Paid the Debt in Collections?
If you’ve already settled your debt, let the bill collector know this. If they’re persistent, provide proof of payment. This can include items such as email or mail correspondence with the creditor or payment receipts (only offer copies or scans and never provide the originals). If you don’t have this documentation, you can contact the creditor to obtain it.
14. Can Collection Agencies Charge Interest in Canada?
The short answer to this question is “no.” A collection agency cannot add to the debt they’re trying to collect on. However, if you incur further debt with the original creditor, that creditor may have the collection agency attempt to collect on the new balance.
For example, say you have a credit card balance that goes to a third-party collector organisation. The debt collector cannot assess any extra interest in their collections efforts. However, the original credit card balance can continue to increase because the bank or credit card network will still assess interest. Then, the credit card company or bank will pass that on to the collections agency.
Further Resources and Help
The best defense against collection services is to know your rights! And while there are general rules that collection agencies across Canada must abide by, they do vary slightly province to province. If you would like to learn more about specific rules around debt collections for your province or territory, check out the Office of Consumer Affairs (OCA).
If you have questions or concerns regarding the actions undertaken by a collection agency, you can also contact your provincial or territorial consumer affairs office directly. For a full list, check out the Canadian Consumer Handbook.
If your debt has you feeling overwhelmed and you want to stop collection calls, book a free debt counselling session with Credit Canada and one of our certified, non-profit Credit Counsellors can give you all your best options for how to deal with debt collectors when you can’t pay (one option might be our Debt Consolidation Program).
At Credit Canada, we’ve been helping people learn how to manage debt for over 50 years, and we can make the phone calls stop. Contact us today at 1.800.267.2272 to learn more.
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