What are Creditors and Collection Agencies?
You already know that creditors are people to whom you owe a debt. They might include credit card companies or banks. They could also be other entities, groups, or persons to whom you owe money. A collection agency is a third-party company that creditors may hire to contact you for repayment.
Whether you’re filing for bankruptcy or creating a consumer proposal, you’re under a lot of financial and emotional stress. You already feel insecure about the future, and creditors trying to collect on their debts only adds to your anxiety.
Constant creditor harassment can be frustrating. Their tactics, such as involving a collection agency, might make you feel even more insecure. However, you can do several things to improve the situation. Whether you’ve filed for bankruptcy or are looking at other solutions, read on for advice on dealing with creditors and collection agencies.
What Rights Do You Have?
Every province has laws and regulations to prevent collection agencies from harassing you. In Alberta all debt collection agencies must be licensed and registered. All debt collection agencies must also use their correct legal name when approaching you. They must also give you necessary information about the original creditor.
How Should You React?
If a collection agency contacts you legally and refrains from harassment, there are a few things you can do to make the process easier on yourself.
First, make sure you are aware of your debt. Ignoring a debt or a collection agency won’t make the debt go away. Do what you can to address the situation head on. If you believe the collection agency is in error, ask for proof that you owe the debt and information about the original creditor.
Second, always get the collection agency’s information. Keep track of what they say and what information they provide. Record the dates and times of any phone calls. Save every letter a collection agency sends to you.
Third, if you can repay the debt, you should do so. Get a copy of all your payment receipts, and don’t send any cash directly to the company through the mail.
Visit the Alberta government consumer tips page for more information on how to deal with a collection agency.
What Collection Agencies Can and Can’t Do
Collection Agencies Can:
Call you at work, unless you specifically tell them not to.
- Call you between 7 a.m. and 10 p.m
- Call your partner, spouse, acquaintance, neighbour, or friend to verify your residential address, home phone number, and work phone number.
- Call your employer once to confirm your employment status and work address.
Collection Agencies Can’t:
- Threaten or intimidate you.
- Lie to you or mislead you about your debt.
- Threaten legal action, unless they have both the creditor’s consent and the legal authority to do so.
- Threaten to call the police or confiscate your property.
- Call your partner, spouse, neighbours, employer, or relatives multiple times, to the point that they feel they are being harassed.
- Talk about your debt with a minor (such as your child) or to anyone with whom you have not given permission to discuss your debt.
Contact you unsolicited more than three times in seven days, not including by mail.
- Threaten to physically harm you, your relatives, or your friends and neighbours (this is a criminal offence that you should report to the police immediately).
What If You Cannot Repay the Debt?
If you simply cannot repay your debt, you might consider creating a consumer proposal or filing for bankruptcy. A Licensed Insolvency Trustee oversees both of these legal processes and will help you work with your creditors.
You and your Licensed Insolvency Trustee will create a proposal to your creditors that negotiates a repayment plan. This might include paying off a percentage of the debt or giving you more time to pay off the debt. Either way, your Licensed Insolvency Trustee will oversee each payment, and he or she will repay the creditor on your behalf.
As soon as your Licensed Insolvency Trustee helps you file for bankruptcy, your unsecured creditors are legally required to stop contacting you. You will still need to meet with your creditors alongside your Licensed Insolvency Trustee, but you will not make any payments to them directly. It is important to be honest with your Licensed Insolvency Trustee about your assets so he or she can be similarly honest with your creditors.