December 18, 2019 | By: Sandy Daykin

What Can Debt Collection Agencies Actually Do in Canada?

Collection Agencies

It's not unusual to experience anxiety when you have a lot of debt. For example, 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 debt collection phone calls. These can come from third-party collection agencies hired by a creditor to attempt to collect a debt. Over the years, Credit Canada has talked with many clients who’ve resorted to unplugging their landline and putting their cell phones on silent to stop the constant ringing. But where does Canadian law draw the line when it comes to collection calls?Stop Collection Calls Now

13 Most Common Questions About Debt Collection Agencies 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, in Ontario there is 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.

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 7am and 9pm (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 often can a debt collector call me?

While it's not uncommon 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 as 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 creditor pursue a debt in Canada?

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. 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. This time frame varies by province:

  • 2 YEARS: Alberta, British Columbia, New Brunswick, Ontario, Saskatchewan
  • 3 YEARS: Quebec
  • 6 YEARS: Manitoba, Newfoundland, Labrador, Nova Scotia, Prince Edward Island, the territories

So while collection calls can continue long after this time frame is up, any legal action they threaten is an empty threat. You can always file a complaint with the consumer protection office in your province.

6. Can a debt collection agency sue me?

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.) Collectors, on behalf of the creditor, must take you to court first and win before any such action can take place, with the exception of money owed to the government or to a credit union—they can issue wage assignments, which is really just 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 this blog on What Happens if a Creditor Takes Me to Court

Also, it’s important to know that creditors have a limited window of time where they can take you to court. This time frame varies by province and the clock starts ticking based on acknowledgement of the debt:

  • 2 YEARS: Alberta, British Columbia, New Brunswick, Ontario, Saskatchewan
  • 3 YEARS: Quebec
  • 6 YEARS: Manitoba, Newfoundland, Labrador, Nova Scotia, Prince Edward Island, the territories

Collection services may continue to call and threaten legal action after this time period, 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?

Collectors, on behalf of the creditor, must take you to court and win before they can garnish your wages (the exception being federal debt recovery and money owed to a credit union).

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.

9. Can a debt collector call people I know?

Yes and no. Debt collectors are allowed to contact your family, friends, neighbours, employer, 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, if the person being contacted co-signed your loan or you’ve previously given the financial institution permission to contact the individual.

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, and sometimes it’s due to similarities in names. Plus, oftentimes collectors are getting 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. If they persist, 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 debt collections are due to identity theft?

If the debt looks legitimate but you know it’s not yours, it’s possible 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. 

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 such as emails or mail correspondence with the creditor, or payment receipts (only offer copies or scans, never provide the originals). If you don’t have this documentation, you can contact the creditor to obtain it. 

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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