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If you’re heavily in debt and are overdue on some of your bill payments, you can bet that the creditors you owe will do whatever they can to get that money back. After sending you multiple notices in the mail about your past-due payments, you’ll probably wind up receiving a phone call from a collection agency who has been hired by your creditor to get you to repay your debt obligations.

Sure, this can be incredibly stressful and even a bit frightening, especially if the people on the other end use threatening language and instill fear in you that you could be taken to court. A natural reaction to these phone calls is to simply not answer them at all.

Having trouble understanding your credit score and credit rating? Look at this.

If you have call display, you might be tempted to ignore any phone number that doesn’t look familiar to you. Even if you don’t have this telephone feature, you might not even want to answer the phone at all in an effort to avoid having to deal with these unpleasant conversations.

But ignoring the calls aren’t going to make the problem go away. Instead, you’d be better off dealing with the issue and getting it over with sooner rather than later. They’re going to keep harping on you, so the sooner you handle the situation appropriately, the sooner you can end the calls and go on your merry way.

If you think ignoring the calls will help you avoid having to deal with your creditors until the problem just magically disappears, you’re sorely mistaken. Instead, you should take that call, no matter how uncomfortable or unpleasant it may be and here are just some of the reasons why.

Want to know what a collection agency can do to you in Canada? Find out here.

You’re Still Being Charged Interest

Any debt that you owe is typically charged interest. The exact interest rate charged will depend on your original contract. Any outstanding monies owed will be charged interest until they have been repaid. The longer your debt goes unpaid, the more interest will accumulate, making your debt end up costing you more over the long run.

When debt falls into collections, it can still accumulate interest and grow by the day. Every phone call you ignore means more time has passed and more interest has been tacked on. If you just answer the phone call and work out some sort of payment arrangement, you can stop the interest from accumulating and minimize the amount you owe.

For more information about the debt collection process in Canada, read this.

Accounts in Collection Show Up on Your Credit Report

You might be able to get away with a late payment or missed payment and not have it reported to the credit bureaus if you manage to make that payment before 30 to 60 days have elapsed. After this time frame, however, your missed payments will be reported and will show up on your credit report.

Not only that but once your debt has gone to collections, your credit report will have another negative mark added to it, which will lower your credit score and make it more difficult for you to get approved for a loan in the future. Even if you do get approved, you will likely be given a much higher interest rate, which will make your loan product more expensive than it has to be.

Click here to find out how the money you owe affects your credit score.

If you don’t want your credit report to suffer any more than it already has, you might want to answer the phone when it rings and deal with the situation appropriately.

You Can Start Rebuilding Your Credit

Your credit score is not going to increase as long as a collection agency is still on your tail. If your credit score could use a little improvement, you’ll have to start by dealing with any debt issues you have right now, especially those that have gone to collection. While it might seem daunting, speaking directly with the collection agent and establishing an arrangement can help give you a clean slate upon which to start rebuilding your credit.

Trying to improve or fix your credit score? Check this out.

You Can Stop the Harassment

It’s not a very good feeling to know that a harassing phone call is inevitable. Every time the phone rings, it might cause a level of anxiety to build in you, which is not fun to deal with. You could even be left with voicemails that are littered with harassing language and threats.

If you think your debt collector is a fraud, click here.

By finally speaking with the collection agency and coming up with a payment plan that you can handle, you can finally end all of those harassing phone calls, allowing you to get some peace back in your life.

Common Illegal Collection Tactics and How to Protect Yourself

Just because collection agencies are allowed to call people who owe creditors doesn’t mean they can use whatever means necessary to get their point across. There are times when collection agencies cross the line in terms of harassment that goes against the law. You don’t have to put up with such harassment, and your first line of defense is knowing what’s legal, and what isn’t.

Collection agencies have certain rules to follow when it comes to communicating with you. In order to follow the law, they must:

  • Notify you in writing through the regular mail before calling you on the phone
  • Include a disclosure form on the first notice they send you which explains your rights
  • Wait six days after written notice before contacting you
  • Not call more than three times in a 7-day period without your consent
  • Not contact you on a Sunday outside the hours of 1 pm and 5 pm
  • Not contact you any other day of the week between 9 pm and 7 am
  • Not contact you on a holiday
  • Not use threatening or intimidating language
  • Not use excessive pressure
  • Not charge you any money
  • Only contact your employer once to obtain your employment information
  • Not contact your spouse, family member, neighbour or friend except to obtain your address and telephone number
  • Not give information to anyone about you
  • Not recommend that your creditor sue you without notifying you in writing first

If you feel that the collection agency that is trying to contact you has breached the law, you can file a formal complaint. You can send a letter to the agency and detail what you think they did wrong in hopes that they’ll stop. If this doesn’t work, you can file a complaint with the Ministry of Government and Consumer Services in your province.

When filing a complaint, be sure to include evidence to support it, such as letters, voicemails, and statements from others who have been contacted by the agency.

Need to know how to stop collection harassment in Canada? Read this.

Final Thoughts

If your debts are in arrears and have been sent to collections, you’d be well-advised to pick up the phone and deal with it. The problem isn’t going to go away on its own, as much as you’d like it to. Instead, speak with these people and try to establish some sort of workable arrangement that you can comfortably handle and that your creditors can be happy with. If you feel that the agency is treating you unfairly, you can file a complaint with the government. Ath the end of the day, it’s always best to just take the call to give you some peace of mind and protect your finances from taking any more hits.

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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