What debt collectors can - and can't - do

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When you're already stressed about money, the last thing you want is the added pressure of collection calls. But it could happen, and it's important to know your rights.

What can a collector say and do? It's not a simple black-and-white answer.

"The exact protections that a consumer is entitled to depend upon what province they live in and which category of bill collector is calling them," says Mark Silverthorn, former collection agency insider, author of The Wolf at the Door: What to Do When Collections Agencies Come Calling and founder of Comprehensive Debt Solutions.

"There's also some federal law that is relevant, particularly as it deals with monies that are owed to a federally regulated financial institution, so that would be like a chartered bank," says Silverthorn. These rules apply to the banks, as well as anyone collecting money on the banks' behalf.

You may receive calls from four types of bill collectors, and the laws for each may differ, Silverthorn says:

  • The original creditor, typically in the first three to six months.
  • A third-party collection agency.
  • A law firm. "There's a few law firms that actually operate as de facto collection agencies," Silverthorn says. "They're exempt from the provincial rules, but they're subject to rules that the provincial law society has."
  • A debt buyer. "A creditor may sell their debts to another party," says Silverthorn. "In some provinces, debt buyers are subject to sort of the same rules as collection agencies, and in other provinces they're not."

The Financial Consumer Agency of Canada (FCAC) website lists some of your rights and responsibilities when it comes to federally regulated banks. For a comprehensive list of specific rules by province or territory, see the Office of Consumer Affairs' website.

There are some general rights you have when collectors contact you:

How a collection agent can contact you
In some jurisdictions, an agency must attempt to provide written notice before they can start calling.

"This written notice should have the name of the creditor, the amount that you owe, and the name of the collection agency that has the authority to demand payment," says Jonathan Bishop, research and parliamentary affairs analyst with Public Interest Advocacy Centre (PIAC).

When the collection agent does call, you might be able to ask the agent to contact you only in writing.

"That varies by province in terms of under what circumstances that can occur," says Silverthorn.

There also must be a verification process to ensure that you are indeed the debtor.

Bishop, who authored PIAC's 2015 report "All Along the Watch Tower: A Review of the Canadian Consumer Debt Collection Industry," says, "From what we learned during our report, sometimes the information that collection agencies have may not be complete."

For instance, people move, or they share the same name as someone else. "Once it's known that the person contacted is not the debtor, the calls are supposed to end in many provinces," Bishop says.

Time and frequency of calls
"They're allowed to contact you, but they're not allowed to harass you. There is a big difference," says Bruce Cran, president of the Consumers' Association of Canada. However, what constitutes harassment can be open to interpretation.

Some provinces spell out the frequency of contact, such as Alberta, which allows three contacts in a seven-day period.

"Contact means the agents must actually speak to you, or e-mail or leave you a voice message," says Bishop.

There are also rules covering the time of day that collection agents can call.

"Usually it's somewhere in the realm of 7 a.m. to 9 p.m. local time Monday through Saturday, and then on Sundays, it's only in the afternoons," says Bishop. This also varies by province.

Workplace calls
A bigger concern for you might be calls by a collection agent to your workplace, and there is some legislation to protect against that.

"They're allowed to verify your employment by calling your employer," says Cran. "Once they've done that, they are not allowed to contact them again."

While collectors may call your workplace, "They can't disclose the existence of the debt," says Silverthorn.

Once again, whether collection agents can call you at work and to what extent they're limited depends on the province where you live.

In Ontario, for example, "A person can send a registered letter to a collection agency, after which the collection calls have to stop," says Silverthorn. "In Newfoundland, calls from a collection agency to a workplace are prohibited." In other jurisdictions, there may be no restrictions at all.

Calls to family members
"A collection agency or a bill collector can call people solely for the purposes of obtaining your address or phone number," says Silverthorn.

There are a couple of specific exceptions to this.

"They're not supposed to contact a family member unless that family member has guaranteed the debt or they have permission for the person to be contacted to act on your behalf," Bishop says.

As with workplace calls, the collector can't disclose the existence of a debt.

Social media contact
"I don't think there are any specific rules in regard to social media at this point," says Bishop. "Most of the rules are in regard to contacting you by mail or especially by phone."

"What bill collectors use social media for is skip tracing," says Silverthorn. "They try to find people using social media."

Language and misrepresentation
Collectors "are not supposed to use threatening, profane or intimidating language, and they're not supposed to use excessive or unreasonable pressure," says Bishop. "The agents aren't supposed to provide any information that may be false or misleading."

Some collectors find that being nice gets better results, "But it's quite common for collectors to be quite stern and aggressive," Silverthorn says. "A lot of psychology is involved in getting somebody to pay."

Cran agrees. "What these collection people are selling is relief from harassment," he says.

"Unfortunately, bill collectors will often misrepresent the jeopardy people are in," says Silverthorn. They might threaten to sue you if they don't have the money by next Friday. "In many circumstances, they're bluffing."

"They may threaten consequences that aren't there," Silverthorn says. "Certain things like garnishments and putting liens on houses and things like that." He says they can't do any of these things until they've successfully sued you and won a judgment against you.

"What happens is that people tend to make poor decisions," says Silverthorn. "They may cash in money on an RRSP or they may go out and get a high-interest loan."

You're liable for what you owe -- but nothing else
After establishing that an individual owes the delinquent debt, collectors in any province may demand full repayment, according to Blair DeMarco-Wettlaufer, a collections expert and managing partner of Kingston Data and Credit. Some shady borrowers deliberately hold back payment expecting that creditors will negotiate smaller amounts than are legally owed.

However, as a nationwide rule, agencies cannot charge you for their collection services, says Tatiana Chabeaux-Smith, corporate spokesperson for Consumer Protection BC. Generally speaking, the only charges that can be added to the outstanding balance are interest charges or a financial institution's penalties for bounced cheques.

These items must be clearly laid out in the contract between the creditor and debtor, which, in the case of credit card debt, is the cardholder agreement. You can also be held liable for reasonable lawyer fees for collection services.

What collection agents can do
A late payment or delinquent account will be reported to the credit bureau and will impact your credit score.

"An outstanding payment is going to show up in a person's credit report for six years from the date of last payment," says Silverthorn.

Beyond that, creditors may be able to take you to court for the money, and they may be able to obtain a judgement against you. However, there are statutes of limitations, which vary by province, that may limit their ability to do that.

"It's important to appreciate that the debt doesn't magically disappear," Silverthorn says. When the statute of limitations runs out on a debt, you can use that as a defence if you were to be sued, and you would be successful.

"As a practical matter, creditors rarely sue people beyond the date of the limitation period, but they certainly try and collect that," says Silverthorn. "In Newfoundland and Alberta, six years from the date of the last payment, they have to stop calling you. But everywhere else, a creditor or its authorized collection agent can call you for an indeterminate period."

So what can you do?
"The advice we give people in collection is not to speak to them at all," says Cran. "People don't have to talk to them. They've got no standing."

"Unfortunately, what that means is somebody could get called 20 times a week," says Bishop. If the agent doesn't leave a voice mail message and you don't pick up, it doesn't count as a contact. They're permitted to call again ... and again.

Robo calls, which may or may not be allowed, depending on where you live, can be a huge problem, says Cran. "You can straighten that out by reporting them and complaining to the telephone company," he says.

If you are being harassed, or you feel a collection agent is using threatening language, then Cran suggests complaining to your provincial consumer protection office.

"We're telling people to complain about the harassment, not whether they owe the debt or not," he says. "The other thing you could do, and we recommend when you have wind enough and time enough is to write directly to your local member of legislative assembly."

"It's a real struggle because it's largely a ‘he said, she said' situation," says Bishop. "It's very difficult to prove." So keep records of the calls to increase your credibility if you do complain.

"If it were me, I would refer to someone who has expertise in this area," says Bishop. If you're contacted by a collection agency, he says, take a step back. Request the information in writing, and then determine what avenue of recourse you may have.

"My advice is that you should be making your decision properly informed," says Cran.  Find out what your rights are in your particular situation, and make your decision from there.

See related: How to detect a fake debt collector, Can the statute of limitations erase your debt, What to do if your debt is sold to a collections agency

Updated August 11, 2017

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