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What should I know about collection agencies?

If you owe money, you may be contacted by a collection agency.

Collection agencies work on behalf of your creditors (the businesses you owe money to) in order to recover debts. You may feel intimidated if you are contacted by a collection agency, but you should know there are laws that regulate their actions.

Collection agencies must:

• Be registered with the Government of Ontario and follow the Collection and Debt Services Act.
• Mail you a written notice outlining how much money you owe and why.
• Wait 6 days after sending you this notice before they can contact you by phone or in person.

They cannot:

• Harass you or use threatening language.
• Contact your friends, families or neighbours without your permission unless they have guaranteed (formally assumed responsibility for) your debt.
• Contact your employer more than once without your permission. They can only contact your employer more than once if your employer guaranteed your debt or if they are contacting them about a court order or salary deductions.
• Give you, or anyone, wrong information.
• Charge you fees beyond the amount of your debt.

Collection agencies can only call you at certain times. They can contact you between 7am and 9pm most days but only between 1pm and 5pm on Sundays. They cannot contact you on holidays. They also cannot contact you (talk to you, leave a voicemail or email) more than 3 times in a 7 day period.

What should I do if I am contacted by a collection agency?

If you are able to pay off your debt, you should do this as soon as possible. If you cannot pay off your debt right now, but you can in the future, explain this to them and make arrangements for the payment. For example, many small payments may be easier to make than a few larger ones.  Make sure that you get written confirmation of any arrangement you make with the collection agency. When you pay a collection agency, do not use cash and make sure that you get a receipt.

You can also ask them how often they will be contacting you and what their registration number is.

You may want to get help from a credit counsellor if you have a lot of debt.  They may be able to negotiate with collection agencies on your behalf and support you in preparing a plan to pay off the debt. Working with a credit counsellor could mean that collection agencies stop contacting you.

Making a Complaint

If you believe that a collection agency has acted illegally, send them a letter explaining what you think they did wrong. If this does not solve the problem, you can file a consumer complaint.  Make sure to include all the evidence you can with your application. Evidence can include letters and emails from the collection agency, recordings of voicemail messages or phone calls, letters from friends or employers and anything else you think would help prove your case.

For More information

• Newcomer’s Guide to Consumer Protection - A guide that contains useful information for newcomers about buying goods and services. From Consumer Protection Ontario.
• Collection Agency – Your rights – Written information and videos on your rights when dealing with collection agencies. From Consumer Protection Ontario.
• Credit Counselling Canada – A non-profit organization that provides information about credit counsellors in Ontario.
• Credit Counselling and Debt Settlement Services - This resource covers the differences between non-profit credit counsellors and debt settlement companies, how they work, the rules they must follow, and the legal rights of people who use their services. From CLEO (Community Legal Education Ontario).
• My bills are bigger than my income and I can't seem to pay off my debts. Could I get help? – An article on the benefits of credit counsellors and the importance of managing debt carefully. From Settlement.Org.