The recovery process in Canada
If you find yourself unable to repay any type of unsecured debt, you will most likely have to deal with a collection agency. Credit card companies and other types of lenders who grant unsecured loans hire collection agencies to recover the money their clients have to pay back.
Unfortunately, dealing with a collection agency is never a pleasant thing and often if you borrowed from a less reputable lender, you may have to deal with illegal collection tactics. That is why it is imperative that you, as a borrower, have a general idea of what the collection process should look like in Canada.
We will show you everything you should know, the good, the bad, the legal and the illegal. This article will be a reference for anyone going through a debt collection process. We want you to know all your rights and even your responsibilities, because if you do not pay your debts responsibly, consequences will ensue.
The process: A step-by-step overview
First, you should know that collection agencies are regulated at the provincial level. This means that the rules, regulations and laws relating to debt collection vary depending on the province in which you live. That being said, in general, the process and resulting steps should look like this:
Step 1: First Contact
The first contact you have with a collection agency is usually made through a written letter. This letter will be a general request that you start repaying your debt. It could also include information that your credit is now part of a recovery.
Step 2: First phone call
5 days after sending the first letter by the collection agency, it is legally allowed to call you. If they are unable to reach you or your phone number has changed, your collection agency is legally allowed to call your friends, family members, neighbors and employers. While the latter may seem invasive as a tactic, collection agencies are allowed to do so for the sole purpose of obtaining your new phone number or new address. It is still possible to refuse to provide any information to a collection agency.
Step 3: Proof of Debt
Once the collection agency has contacted you, it must then provide you with the following information in writing:
- What is the name of the collection agency
- Which creditor bore the initial debt
- The date on which the debt was transferred from the original creditor to the collection agency
- Finally, how much do you need
Step 4: Pay off the money you owe
Now that you are aware of all the information from your collection agency, you should find a way to pay off your debts. While we can understand that no one wants to deal with a collection agency and that they may seem insensitive and harsh, if you really owe money, this is a good time to find a way to repay it .
Step 5: toe 5: Last pre-judicial application will be made
If you continue to refuse to pay off your balance due, your collection agency will probably make a final pre-legal request to get you back on track.
Step 6: Start Legal Action
If you still refuse to repay, your collection agency will take legal action against you if it believes this is necessary. You will receive a legal notice at least 21 days in advance.
Step 7: Audience
As part of the lawsuit against you, you will have to attend a hearing in court. If you really owe the amount of money your collection agency is trying to recover, the judge will likely sign a judgment that you are legally required to repay your debt.
Step 8: Conclusion
Now that your debt is being judged, your collection agency can seize your salary. The only way to not pay off your debts is to declare bankruptcy or file a consumer proposal.
Keep in mind
All debt collection claims are unique and may not exactly observe the process, but in general, this is what you should get through.
You can repay your debt at any time and stop the collection process.
By making one payment to your debt, it becomes your property in court. You will not be able to dispute this fact in court.
Agreeing with your collection agency on a repayment plan will eliminate the entire collection process and save you a lot of time and energy.
Legal issues to watch for
As mentioned above, since each of the 10 provinces and 3 territories of Canada all have their own laws regarding the protection of creditors and debtors, the collection process may seem disorienting. While collection agencies are regulated by law, there are some that are not. Here are some of the legal issues you should be watching:
While debt collectors are allowed to communicate with your friends, family members or neighbors in the event that you have changed their phone number or address recently, they can not ask for other information or act with behavior. which might seem harassing.
- A collection agent can not lie or provide you or anyone you know with false information for the purpose of obtaining answers to questions.
- You must be notified in writing before an officer tries to recover his money or lodge a legal appeal against you.
- Depending on the province in which you live, debt collectors can not contact you during certain prohibited periods.
- One of the first things a debt collector needs to do is to identify himself, name the company he’s working for, where your debt comes from and the balance is due.
- If you declare that you do not owe money, your collection agent must go through all the necessary steps to verify the truth and get back to you.
We will not recommend you enough to visit the Government of Canada site if you have specific questions about a collection agency.
Your Debt, Your Liability
Having debts in a collection agency is a serious problem that should not be taken lightly. We understand that any financial problem can happen out of nowhere and that there may be grueling circumstances that prevent you from paying off your debts. But ignoring them or ignoring a collection agency is never a good idea; it’s always better to manage your problems head first. Contact your creditor before your account goes to recovery or if your account is already, talk to your debt collector immediately. If you owe the money effectively, it is your responsibility to repay it.