Personal Debt Solutions Canada - Collection Agencies
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Dealing with Debt Collectors and Collection Agencies
If you are having debt problems, a collector or collection agency may contact you seeking payment. While they have a right to do so, is doesn't mean you have lost your right to be treated fairly. Understanding how collection agencies work and your rights under the Business Practices and Consumer Protection Act is an important step in resolving your debt problems successfully.
How Collection Agencies Work
Debt collection agencies act as agents for creditors. They collect debts and may request payment in full when they first contact you because most debts include a clause that renders the remaining amount of debt immediately due and payable if the payments on the debt are made late or not received at all.
The collector/collection company may also indicate possible courses of action they could undertake to recover the debt, such as court action. Since a creditor usually has the right to sue if payments are made late, stating that possibility is not considered harassment. If that occurs, and the judge determines that you had an ability to pay and weren't making payments, you could also incur court costs. It is therefore important to provide as much information at the earlier stages to prevent any court action. Failure to pay a judgment issued by the court may result in garnishees of your wages, bank accounts or the seizure and sale of your assets. However, such actions are not permitted to a creditor or collection agent until the matter has decided by the court.
Although debt collection companies do not extend credit, in some cases they may be willing to discuss repayment arrangements. You will likely be required to provide detailed financial information in order for the payment plan to be considered. A financial disclosure outlining all sources of income coupled with all monthly expenses gives the company a clear picture of your ability to pay (something that would be required by you if the case proceeds to court). If a monthly payment schedule is agreed upon , ask for confirmation of the agreement in writing.
In some cases, a creditor may be prepared to accept less than the total amount owed. If you are offered a settlement or have one accepted, the collection agency will provide you with a letter confirming the settlement arrangements BEFORE you are required to pay the settlement amount.