What Can a Collection Agency Do To Me in Canada?

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What Can a Collection Agency Do To Me in Canada?

Written by Kale Havervold
Fact-checked by Caitlin Wood

What Can a Collection Agency Do To Me in Canada?


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When taking out a loan from a lender, you are basically entering an agreement saying that you will repay them that amount (plus interest and any fees) over an agreed upon payment schedule. If you are late on these payments or stop making them altogether, you will likely hear from your lender via a letter, over the phone, or by email. How often or how many times they contact you will vary depending on who your lender is, how much your loan was for, etc.

However, if you are still delinquent in paying off your loans after all the requests and contact attempts, the lenders may take a more extreme approach in trying to get their money back. This may include enlisting the services of a collection agency.

What happens if you stop paying your credit card bill? Click here to find out.

What is a Collection Agency?

A collection agency is hired by a lender to try and help collect the debt that is owed to them by you. These companies/agents are often more aggressive and persistent when it comes to collecting your debt and will put much more pressure on you. They will begin with a letter, then move to phone calls until you pay off your debts or come to an agreement. These collection agencies make money by agreeing to a set fee with the lender. The fee they charge will depend on which lender it is, the size of the account in question, and much more.

So, now that you know more about what a collection agency is and how they operate, let’s look at what they can do to you in Canada and address any concerns that you might have about their practices.

What Can a Collection Agency Do To You In Canada?

Collection agencies are something no one wants to deal with, but thankfully, there are rules and regulations they have to follow. We will now take a look at some common questions asked about debt collection agencies in Canada.

Click here to learn more about the debt collection process in Canada.

Can a Collection Agency Charge Interest in Canada?

Yes, a collection agency might be able to charge interest on the debts they are collecting. However, this can be no more than what was originally described in the contract with the lender and borrower. So, while they can charge you interest just like a lender can, they cannot manipulate how much the interest is and cannot tack on any extra or charge you for their collection service.

Can a Collection Agency Sue You in Canada?

Yes, a collection agency can indeed pursue legal action against you if you refuse to pay your debts for an extended period of time. They will send you a notice of legal action and you will likely need to attend a court hearing as a result. However, there is ample time between when they warn you of legal action and when they can actually go ahead and sue. If you continue to disagree to pay what you owe and a judge signs a Judgement, your debt collector can legally garnish your wages. Because of this, it is best to deal with your debt before it ever gets to this stage in the first place.

For more information about wage garnishment in Canada, read this.

Can a Collection Agency Call You At Work?

Yes, a collection agency can call your workplace. However, there are some caveats here. The only reason they are allowed to call your workplace is to verify your employment and once they have done that, they are not allowed to contact your workplace anymore. Also, when they do make that one call to your workplace, they cannot disclose the existence of your debts, so you don’t have to worry about everyone at work knowing about your financial issues.

Can a Collection Agency Call Your Friends and Family?

Unfortunately, yes they can. However, it is not as bad as you might think. Collection agencies can only call friends and family and inquire about your address and phone number, that’s it. They cannot pester them or suggest they pay the debts unless they are a co-signer. They also cannot act or speak in a manner that could be deemed as harassment.

Can a Collection Agency Call You Any Time?

No, there are strict rules about when and how a collection agency can call you. They can call you between 7 am and 9 pm on Monday to Saturday and between 1 pm to 5 pm on Sunday. However, they cannot call you at all on holidays. And, unless you’ve given them your cell phone number as your primary contact information, they are not allowed to call you on your cell.

If you still have questions or concerns about dealing with a collection agency and what they can and cannot do, be sure to visit the website of the Government of Canada, as it can help address these concerns and has other helpful links present.

What Should You Expect When Dealing with a Collection Agency?

Now that you are aware of what a collection agency can do to you, what is the process of dealing with them like? Dealing with these collection agencies can be very intimidating and knowing a bit about what their process looks like can help you become a little more comfortable when working with them.

Well, the first contact they will make with you is via a letter, which should explain that your account is in collections. The letter will also be a request that you start your payment plan once again. Their next contact will come about 5-7 days after their initial letter and will be in the form of a phone call. They will keep calling until they are able to get ahold of you.

Once they are able to make contact with you, they will give you all the information you need, such as who they are and what you owe. Next up, it’s time to pay off your debts. While we understand it’s not fun to work with these agencies, paying your debts is always the best way to go, because if you don’t, you could potentially face legal action.

What Should You Do If You Are Being Pestered By a Collection Agency?

So, what should you do if they won’t leave you alone? Well, the best answer is to, of course, answer them and agree to pay your debts. This can be done by paying in full, setting up a payment plan, or settling your debt. Each option will have its pros and cons, depending on your financial situation and preferences. Generally speaking, it is best to pay the debt in full. However, we realize that can be difficult, especially if the amount of debt you owe is quite substantial. Any way that you are able to get this debt off of your credit report and off of your back is positive, so any of the previous methods is better than simply letting the debt get worse.

Need to know how to qualify for debt settlement? Find out here.

In conclusion, there are a number of somewhat annoying and pestering things that collection agencies can do to you in Canada. However, be sure to know your rights and ensure that the collection agent or agency isn’t going beyond what they are legally allowed to do. Simply put, it is not fun at all to deal with a collection agency and you should do your best to avoid them by paying off all of your debts in full and on time.

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