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What collection agencies can and cannot do

Creditors retain collection agencies to collect debts from debtors on their behalf. Collection agencies also purchase debts from creditors at a discount, then try to collect the original amount owing for themselves.

Collection agencies contact debtors directly to collect debts. Being contacted by a collection agency may indicate significant financial problems. It is in the interest of both you and the collection agency to resolve the outstanding debt. You may be able to negotiate a payment schedule or a reduced lump-sum amount. If an agreement can be reached between you and the collection agency, collection calls may stop for as long as you keep your side of the arrangement.

It might be appropriate to obtain credit counseling or other financial advice to determine how much you can afford to pay, and how fast.

The law places restrictions on behaviour by collection agencies. In Ontario, the Collection and Debt Settlement Services Act impose restrictions.

What collection agencies can do

Collection agencies are persistent and permitted to be persistent within limits. Collection agencies must first send you written notice by mail. After sending this notice to you, the collection agency must wait six days before contacting you. That notice must contain certain information:

  • Name of the creditor who claims you owe money;
  • The amount the creditor claims you owe;
  • Name of the collection agency; and
  • Proof of agency’s authority to demand payment on creditor’s behalf.

What collection agencies cannot do

There are limits on a collection agencies activities and their efforts to contact you. A collection agency must stop contacting you if:

  • You send a registered letter disputing the debt they are collecting and suggesting that the matter be resolved in court;
  • You or your lawyer send a registered letter directing the agency to communicate only with your lawyer, and providing the lawyer’s contact information; and
  • You have told the collection agency that you are not the person they are looking for.

There are other restrictions on a collection agency’s activities. They include:

  • An agency may not contact you on Sunday, except between 1:00 p.m. and 5:00 p.m.;
  • An agency may never contact you between 9:00 p.m. and 7:00 a.m.;
  • An agency may not contact you on a statutory holiday;
  • An agency may not use profane, intimidating or coercive language;
  • An agency may not threaten you by mail, email, text, over the phone, in person, or in any other way;
  • An agency may not give you false or misleading information;
  • An agency may not tell you they have started a court action if they have not done so; and
  • An agency may not charge additional fees on amounts you owe to the creditor.
For more information about rules governing collection agencies and submitting complaints about them, visit Consumer Protection Ontario.