Dealing With a Debt Collection Agency in Canada

Debt Collection Agency
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It can be rather embarrassing and exhausting to deal with any debt. Once it starts to pile up and this cycle becomes endless, it’s more and more difficult to get rid of it and become financially free. You may lose your sleep, have frequent arguments with your relatives or even face serious problems at work – all this as a result of having a mountain of debt that you can’t pay down.

However, the worst scenario is when your debt is finally sold to the third-party collection agency that will make regular phone calls to try and get the money back from you. Can a collection agency sue you in Canada? Learn the right answer as well as more details and regulations on this important topic. Remember, forewarned is forearmed.

What Is a Collection Agency?

Let’s cover the basic information about these organizations and define what their aim is. Collection agencies are third-party companies that receive unpaid debt from the lending institutions and therefore try to make borrowers repay this debt. There are various tactics and methods of how they try to collect the debt from consumers. Some agencies work under country regulations while others use illegal strategies and even threaten people.

Why are these agencies so widespread? It happens because consumers take out multiple unsecured personal loans and credit cards and aren’t always accountable for their finances.

Not every consumer knows how a debit card works or how to live on a budget and avoid debt.

how to use a debit card
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According to the Statistics Canada report, the total debt of Canadian consumers was $2.3 trillion in the first quarter of 2019. This debt includes credit cards, mortgages, etc. This amount is less than it was in the previous years but it’s still a whopping figure.

“During the past 8 years, Canadians have become more responsible for their borrowing.  As a result, the average debt load goes up really slowly as consumers have become more cautious with their spending,” mentions Ksenia Bushmeneva, the economist at Toronto-Dominion Bank.

How Long Can a Collection Agency Collect on a Debt in Canada?

If you haven’t repaid the debt yet and also receive frequent phone calls from debt collectors, you may want to know if this will ever stop. The answer is “yes”. Every country has its own laws and regulations that restrict a debt collector from certain activities that are determined as illegal. In Canada, every province has particular limitations for these institutions and a limited number of years during which the agencies may try to collect the debt.

So, what is the statute of limitations on debt in Canada? Each province has its own regulations and laws. This is the average period when creditors or debt collection offices have the right to come after borrowers and try to collect debt:

  • British Columbia – 2 years
  • Alberta – 2-10 years
  • Newfoundland and Labrador – 2 years
  • Ontario – 2-6 years
  • Saskatchewan – 2 years
  • Quebec – 3 years
  • Manitoba – 6 years
  • Nova Scotia – 6 years
  • New Brunswick – 6 years
  • Nunavut – 6 years
  • NWT – 6 years
  • Yukon – 6 years
  • P.E.I. – 6 years
  • Nationwide – 6 years

Can a collection agency sue you in Canada? Well, if a borrower doesn’t answer the phone calls and rejects to negotiate or discuss possible terms of debt repayment, they can take them to court.

Can Collection Agencies Charge Interest Canada?

There are strict regulations and rules of how such companies should work. For instance, they aren’t allowed to take funds from the debtor’s bank account or garnish their wages provided that the debt wasn’t obtained from a credit union. Also, they are eligible for threatening consumers or using abusive languages. They can’t call earlier than 7 a.m. or after 9 p.m. Monday through Saturday and on public holidays.

collection agencies
Source: Pexels.com

On the other hand, even if they stopped giving you phone calls all of a sudden, it doesn’t mean all of your problems will vanish and you will be able to start your life from scratch. Even if the debt collection agency stopped calling or sending emails, they have the right to send you a summons and call you to court. This is probably the worst scenario as you will be forced to repay the debt in full. So, it’s much better to try and discuss the possible options and repayment schedule beforehand. Try to negotiate with the company and ask for a longer and more flexible repayment scheme with smaller monthly payments.

What Can a Collection Agency Do to Me in Canada?

You shouldn’t panic if you face monetary problems and can’t repay the debt on time. There are options and strategies you can always communicate and discuss. Try not to avoid phone calls or messages if they aren’t too pushy. Apart from the above-mentioned methods and rules, Canadian debt collection laws restrict these companies from being abusive or too intrusive.

When you receive a phone call, make certain you write down the name of the person who is calling, their company name and phone number. Besides, you should always make sure this is your own debt and there wasn’t identity theft which is also a common thing these days. If the debt appears to be not yours, you need to notify the debt collector about it and check the credit report for any errors. Also, get in touch with the lender to find out how they can correct this mistake.

Now you know how long can debt collectors try to collect in Canada. Experts recommend to try your best and always pay down loans and other types of debt before it’s taken to collections. This will not only help you become more frugal and savvy but also save your credit score from being damaged.

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2 Replies to “Dealing With a Debt Collection Agency in Canada”

  1. I am living in Ontario and I was wondering how long collection agencies have the right to collect on a debt. Are they eligible to garnish my salary if I didn’t repay the debt on time?

    1. The average time for debt collection is strictly regulated and varies between Canadian provinces. In Ontario, this period is between 2 and 6 years, as we’ve mentioned in the article. As for debt repayment and collection rules, this agency can’t simply take away your wages. However, it’s your responsibility to answer phone calls and try to negotiate the repayment terms. You shouldn’t panic or suggest that all a collection agency wants to do is to sue you. It’s their work to remind you about your debt and make sure you repay it. But even if your debt was taken to collections, you still have chances to resolve this issue and negotiate the terms of repayment with no hassle.

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