Dealing with a collection agency can be an incredibly, frustrating, scary, and confusing process. Unfortunately, with consumer spending on the rise, debt is likely to follow and so collection agencies are currently not going away anytime soon. They are within their rights to collect a debt so long as they follow certain guidelines. Below is information pertaining to 10 common concerns when dealing with a collection agency
A Debt can be passed to a collection agency if 90 days have gone by since you’ve paid the original creditor.
If the debt is passed to the collection agency then they can begin collections activity and they can choose to sue you if they have full ownership of the debt or on behalf of the original creditor.
There are different timelines for how long a collection agency or original creditor has to sue you, this varies by province, and can be anywhere from 2 years from the last payment or activity to 10 years from the last payment or activity.
Even if the statute of limitation has expired, a collection agency can still continue trying to collect, they just can’t sue at this point.
The time frame for how long a debt stays on your credit report is based on the last time you made a payment, or based on the last activity if no payment was ever made. For e.g., if your debt slipped into collections in October 2018, but you didn’t complete your payments for the debt until May 2020, then the debt falls off around May 2026. Another example would be, if you had a debt that has been delinquent since June 2017, you never made a payment, but you suddenly come into money in August of 2022 and decide to pay it off, that debt will now be on your credit report until around August of 2028. In some provinces, simply acknowledging that the debt is yours can count as an activity.
Oftentimes, consumers report that a collector has told them that if they pay a certain amount for the debt, then they, the collection agency, can have it removed from the consumer’s credit bureau, but this isn’t completely true. Collectors can hold off for 60 days or so from the time the debt is passed to them before they report it to a consumer’s credit report, but if the consumer is uncooperative then it can be reported immediately. Once placed on the credit report, the credit bureau won’t let the debt be removed even if paid in full unless there is a clerical error that can be proven. The creditor can update saying paid in full or file closed, but there is no “pay for clearing up arrangement.”The Credit Bureau won’t allow the debt to purge until about 6 or 7 years have passed.
Just because a debt is no longer on your credit report, it does not mean the debt has disappeared completely, sometimes the debt will be sold to another collection agency who may still try to collect years later, and they may even try to put the debt back on your credit report. This does not happen all the time, but it is possible.
Different provinces have different rules for when collectors can call. Still, for the most part, they are not allowed to contact you on holidays, on Sundays except between 1 pm to 5 pm and on other weekdays they are only allowed to contact you between 7 am and 9 pm. They are normally only allowed to make 3 contacts in a 7-day period, but contact only includes you actually speaking to them or them leaving you a message. So they may keep calling until you answer.
A collection agency can under certain situations, call you at your work, or they may contact your family, friends, or employer. Agencies can call and confirm employment before a Judgment, but they can’t get salary information and they are not allowed to disclose details. In provinces like New Brunswick, they are not allowed to call your employer at all. If you provided the information for your family or friends as contacts then a collector will try to call them if they cannot get a hold of you.
You can report a collection agency for misconduct or harassment. See here.
Owner of collection agency Kingston Data and Credit, Blair Wettlaufer
Some Key Terms (as used in relation to collections activity)
Judgment: the result of a legal process where a court rules on what decision has been made about the debt. This goes on the public records section of your credit report and can stay up to 10 years.
Delinquent: the state of being past due on your account
Creditor: the person/ entity to which the money is owed. An original creditor is the company/ individual you first went into business with. For e.g, if you took out Internet service from Telus but became delinquent so the debt is passed to DNA debt solutions, the original creditor would be Telus.
Debt: Money that is owed or outstanding based on a loan, service, or product supplied.
Credit bureau: Also known as credit reporting agencies are private organizations that collect and share your information via credit reports. The two major credit bureaus in Canada are Equifax and TransUnion.
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