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If you currently have a credit account in collection or if you’ve ever had to deal with a debt collector then you understand that the process can be both intimidating and complicated. No one ever plans to have a credit account go into collection. This means that when it comes to dealing with and speaking to a debt collector, the average Canadian is underprepared and ill-informed.
The great news is we have you covered. We’re going to teach you everything you need to know about debt collectors in Canada and how to deal with them should one of your credit accounts ever go into collection.
For an in-depth look at the debt collection process in Canada as a whole, read this article.
A debt collector is a company (sometimes referred to as a collection agency) that is typically hired by a credit or lending company. Debt collectors get involved when someone stops making payments on a loan or credit account. Debt collectors usually work for either a set fee or a percentage of the total debt owed to the creditor they are working for.
Depending on the creditor that you owe, you will either deal with an in-house debt collector or a debt collection company that was hired by your creditor.
If you are contacted by an outside debt collector then your original creditor has either hired them to work alongside them or has sold your account to the debt collection agency in question. Either way, you will typically be contacted in writing first and then you will begin to receive phone calls from your collection agent.
When your debt collector contacts you for the first time make sure you receive the following information and take note of it for your own records:
How to Tell if Your Debt Collector is a Fraud, here.
If the debt that your debt collector is trying to collect is, in fact, yours then it’s in your best interest to pay it off right away. Paying back the amount you owe as soon as you are contacted by a debt collector is the quickest and easiest way for you to fix the problem.
Paying off the debt right away is obviously the best step to take but we understand that that is not always possible for everyone. If the debt is yours but you do not have the funds to pay it back, consider these options:
When you are able to or decide to repay your debt:
If once you’ve verified the information provided to you by your debt collector and you’ve decided that the debt is in fact not yours, here’s what you should do:
Looking for more information on credit report errors? Click here.
Finally, if for any reason you do not trust your debt collector you may want to speak with your original creditor to verify their identity.
There are laws in Canada that protect the consumer from unfair debt collection practices. When dealing with a debt collector here are some red flags that you should watch out for:
In Canada there are federally regulated financial institutions, if one of these institutions or an organization (debt collection agency) acting on behalf of a federally regulated institution contacts you concerning the issue of debt collection, you have rights. If you have questions concerning your rights, contact the Financial Consumer Agency of Canada.
If you are being perused by a debt collection agency that is not federally regulated you should contact the consumer affairs office of the province you live in.
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