December 18, 2017 | By: Chris Northey

What to Do If a Debt Collector Calls You

Collection Agencies

When a debt collector calls to harass you about money that you owe, either from credit cards, payday loans, or other outstanding accounts, it's normal to feel anger, embarrassment, confusion, and even helplessness. Debt collectors often use aggressive and manipulative tactics, but there are things you can do to shift the balance of power to your side. Here's a step-by-step guide on what to do if and when collectors start calling.

Before the Call

Step 1: Be Prepared, Don't Panic

If you recognize the number of a collection agency on your cell phone or home caller identification system, or you just suspect a caller might be a collector, you have the right to not pick up. Despite what some desperate and aggressive collectors will tell you, you don't have to talk to them or listen to what they have to say. Ignoring the problem, however, isn't a solution to your debt problem. If you decide to answer, don't panic. You can't be forced to do anything you aren't prepared to do over the phone.

Step 2: Learn Your Rights

You have rights when it comes to debt collections, but the collections agent doesn't have to inform you of these rights or tell you what you can do if they're violated. Collection agencies have to go through regular audits, and their employees usually have to receive a license through examination, but they're allowed to use any reasonable means necessary to collect your debt. What they can't do is:

  • Try to collect on a debt older than six years, or two years in some provinces
  • Verbally abuse or intimidate you
  • Pretend to be court officials or have official court documents
  • Call at prohibited times as set by your province's Collections Act
  • Threaten to take action outside the scope of collections

If a collector is breaking one or more of these rules, feel free to contact or submit a complaint with the Consumer Financial Agency of Canada (FCAC). You also can contact your local or provincial department that handles consumer protections. A list of province/territory-specific rules can be found on the Office of Consumer Affairs website.

During the Call

Step 1: Gather Relevant Information

The first thing you need to find out from a collector calling your number is whether the debt in question is actually yours. You might be surprised how often it's not. You can do this by gathering and validating as much information about the account as possible. Here's what you should ask:

  • Name of the collector
  • Company they're working for
  • Origin of the debt, such as bank or credit card company
  • Collector's contact information
  • How much you owe and who you owe it to
  • When you started owing your debt

After you've gathered all the information about your debt, you can decide to move forward or hang up and consider further action. If the debt seems invalid, report the problem to the collector, the original creditor, and Trans-Union and Equifax. If it's legitimate, there are things you can do to reduce the amount you owe.

Step 2: Negotiate Your Debt

Your debt collector is going to initially try and get the full amount you owe on your debt in order to maximize their commission, and they'll want you to believe that's your only option. What they don't want you to know is that their company likely paid pennies on the dollar for the debt. That means you have a lot of room to negotiate the amount you owe. The collector is always going to want you pay something rather than nothing, so use this to your advantage.

Step 3: Pay the Debt, or Don't

If you have the money to pay off your debt, doing so can remove the account from your credit report and improve your credit score. You can set up a single payment or make arrangements with the agency to make monthly payments for however long it takes. Never pay with cash or another untraceable form of payment. If you're not ready to take action, it's okay to hang up and think about your debt management options.

After the Call

The best way to stop collection calls is to find ways to pay off what you owe. You can ignore the problem and wait for it to go away, but the only way to maintain good credit is to be proactive about the issue. Thankfully, you have valuable options and resources available. You can make things easier by:

At Credit Canada, we're in the business of helping people like you stop debt collection calls and build solid credit. We're ready to give you detailed advice, no matter how much money collectors are seeking. Please contact us today to speak with a financial counsellor about debt management.

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