Collection Agencies: Rules, Regulations & Your Rights

Collection agencies are businesses that are tasked to make arrangements to collect payments that borrowers owe their lenders. These agencies are usually the ones that call or contact borrowers to demand payment for bills that are past due or missed debt repayments. They can be aggressive when it comes to doing their job. Fortunately for customers, they still have to adhere to rules and regulations. Although rules may vary across Canada, there are still general guidelines that govern their operations.


Rules, Regulations & Your Rights

A letter informing you that your account has been turned over to a collection agency. This is required because without it, collection agencies will have no right to demand any payment from you. Once you receive this, the collection agency can already start contacting you.


Once your account is turned over to a collection agency, you will be dealing with them and them alone. They will be the ones to discuss your payment options and arrangements. You should not contact the company you owe money from anymore since this can create confusion. The only time that you should contact your lender is if there are discrepancies in your account. You are entitled to offer alternative payment methods like monthly payments to make your repayment more manageable.


There are no additional fees that you need to pay. Collection agencies are tasked to collect the money you owe. No more, no less. If you can, pay the full amount that you owe immediately. On the chance that you cannot do so, provide an explanation on why you cannot pay at the moment.


Collection agencies must be able to provide you with proof of receipt upon payment. This will serve as proof of payment if a situation arises that requires it. Agencies that refuse to do so will need to be investigated to avoid being a victim of scams.


Remember that collection agencies cannot start collecting payments without notifying you. In addition to that, legal or court action cannot be stated or recommended without proper notification as well. This is illegal and can be considered harassment.


Collection agencies are prohibited to communicate with you and your family in a very aggressive and threatening manner. There are also specific times when agencies are prohibited from contacting you about your debt payments. These are all acts of harassment that are illegal and forbidden.


Before you entertain their calls, be sure that they have provided you with enough information about themselves and who they are representing. They will need to introduce themselves properly. Failure to do so could make any attempt to collect payments illegal.


They are not allowed to contact your friends, employer, relatives or neighbors for information other than:

  • Your telephone number and address
  • Confirmation of employment, job title, and work address (for employers only)


An exception can be made if these people have guaranteed your debt or if you implicitly asked the agency to contact them to discuss the debt.


If any of these guidelines are violated, then you can contact your provincial or territorial consumer affairs office. Do not take debts lightly as they can make your life harder. You can also face court orders and property seizures if your debt situation gets out of hand. You would not want to get to a point when you need to face collection agencies.