Canadian Debt Collection Laws: How To Stop Collection Harassment

There are tens of thousands of Canadians out there struggling with other types of debts that can stem from unpaid credit cards and loan payments. While some of us manage to pay off these debts in a reasonable fashion, others cannot. Unfortunately, when you can’t repay your debts, lenders and debt collectors get aggressive, some more than others.

In this article, we will talk about how you can stop debt collection harassment in Canada. We will also tell you a bit about the debt collection laws in Canada so that you will be prepared with the knowledge you need when the time comes.

Who Can Collect Debt In Canada?

There are laws in Canada that govern how unpaid debt can be collected and who has the right to collect overdue payments. In Canada, creditors and debt collection agencies may collect your unpaid debt.

Lenders & Creditors

Your lender or creditor will attempt to collect an overdue payment by reaching out to you to inform you of your failure to meet the payment due date. You could be faced with interest charges on the overdue amount. 

If your payment is overdue by 30 to 60 days, your lender will report the missed payment to the credit bureaus. This missed payment will remain on your credit report for up to six years from the reporting date. 

If your lender is unable to collect the missed payment, they may enlist the help of a debt collection agency. In this case, the lender will sell the debt to the debt collection agency, who will then take steps to get you to pay what you owe. 

Right Of Offset 

The right of offset (or set off) refers to a lender’s right to recoup the debt you owe them. Loan contracts typically include a clause that gives financial institutions this right. When a financial institution exercises its right of offset, it can take money you have on deposit with them and use the funds to cover your outstanding debt. For example, if you have a credit card and a chequing account with the same bank, your bank can extract payment from your chequing account to cover your credit card payment. 

Financial institutions don’t have to get your permission or let you know that they are executing their right to offset. Depending on how much money you have in your account, you could eventually be left with a zero balance.  

Debt Collection Agencies

Debt collectors are tasked with getting you to pay off your debts and, generally speaking, they are much more aggressive and persistent than your lender. If you don’t pay back this debt or make some other arrangement with the collection agency, they can be quite annoying to deal with. The things they do can often feel like harassment, especially if you have never dealt with a similar situation before.

What Is Collection Harassment?

To understand how to stop collection harassment, we must first understand what it is. Collection harassment can come in different forms but it usually refers to when a debt collector oversteps their boundaries and begins intentionally annoying or abusing you. This type of harassment can come in the form of repetitive calls when they are not allowed to call, threats of violence, obscene language, not letting you know who they are when they call, and more.

These activities can end up being a daily occurrence and can become extremely upsetting to deal with. Now, there are laws in place in Canada to prevent harassment from debt collectors. Unfortunately, these laws aren’t always followed. Because of this, it is important to know the debt collection laws in your specific area, so that you’ll realize when you are being harassed and be able to stop it. With that in mind, let’s now take a closer look at the debt collection laws in Canada.

What Are The Canadian Debt Collection Laws?

Because of the somewhat aggressive and persistent nature of the debt collection process, there have been some laws set in place to protect consumers from harassment. These laws will largely depend on the province you are in, but some rules remain constant throughout the country. 

Canadian Debt Collection Laws For Federally Regulated Financial Institutions

• Debt collectors cannot reach out to your friends, families, or neighbours unless one of them is a cosigner, you permitted them to be contacted, or the debt collector is trying to confirm your employment, phone number, or address.
• Debt collectors cannot ask anyone other than you to pay the debts unless that person is a cosigner.
• Debt collectors cannot use threatening or abusive language in calls or letters to you.
• Debt collectors cannot give you false or misleading information, or apply unreasonable pressure on you to pay off your debts.
• Debt collectors cannot add any collection-related costs to your debt and can only charge you for what you owe, except for legal fees.
• Debt collectors cannot call you on your cell phone unless you give it to them as a means of communication.
• The times a debt collector can call you will vary depending on which province you are in.

Debt collectors are required to follow specific rules when it comes to collecting unpaid debt. These rules are roughly the same across Canada, though each province has specific regulations. 

Canadian Debt Collection Laws: Alberta 

In Alberta, debt collectors are allowed to do the following:

• Contact you at home from 7 am to 10 pm only
• Contact you at work to reach you, unless you specifically say not to
• Contact your spouse, partner, relative, friend, neighbour, or acquaintance to get your contact information

Conversely, debt collectors cannot do the following:

• Use threatening, coercive, or intimidating language
• Discuss your debt with anyone else without your explicit consent, unless they are the original creditor, a guarantor of the debt, or someone representing you 
• Contact you more than three times in seven days

Visit the Government of Alberta’s website for a full list of actions debt collectors cannot do. 

Canadian Debt Collection Laws: Ontario

In Ontario, debt collectors may do the following: 

• Contact you Monday to Saturday from 7 am to 9 pm, and on Sundays from 1 pm to 5 pm
• Contact your spouse, partner, family, friends, or neighbours to obtain your contact information
• Contact your employer once to confirm your employment
• Contact you on statutory holidays

For a full list of actions debt collectors cannot do, visit the Government of Ontario’s website. 

Debt collectors in Ontario cannot do the following:

• Charge you additional fees
• Use harassing or abusive language
• Contact you more than three times in seven days 

Canadian Debt Collection Laws: BC

In BC, debt collectors are allowed to do the following: 

• Start contacting you once your debt is due and payable
• Contact you Monday to Saturday from 7 am to 9 pm, and on Sundays from 1 pm to 5 pm

Debt collectors in BC cannot do the following:

• Discuss the details of your debt with anyone without your permission
• Contact you on statutory holidays
• Contact you in a way that will cost you money

Visit the Government of British Columbia’s website for a full list of actions debt collectors cannot do. 

Canadian Debt Collection Laws: Quebec

Debt collectors in Quebec may do the following:

• Contact you Monday to Saturday from 8 am to 8 pm
• Contact you if they have obtained a legal permit to collect overdue debt
• Contact your spouse, partner, family, friends, acquaintances, neighbours, or employer to obtain your contact information only if they do not already have these details

Collectors in Quebec are not allowed to do the following:

• Contact you on holidays
• Threaten, harass, or intimidate you
• Continue calling you if you request contact to be only in writing

Visit the Government of Quebec’s website for a full list of actions debt collectors cannot do. 

When Can Debt Collectors Collect Debt?

Debt collection agencies cannot indefinitely pursue you to collect unpaid debt. While they have the right to take you to court to collect your debt, they only have so much time to do so according to the statute of limitations in your province. This regulation protects consumers from debt collectors who try to take legal action to collect money at any point in the future.

The statute of limitations for legal action varies from province to province, as follows:

Steps You Can Take to Stop Collection Harassment In Canada

Every province has rules that state that debt collectors cannot use abusive, threatening, or profane language when communicating with consumers in default. Unfortunately, there may be some cases in which debt collectors cross the line and use aggressive behaviour to collect overdue payments. 

If you are experiencing harassment from a debt collection agency, you can take steps to stop it. 

Report Harassment To Authorities 

One of the first things you should do is report the abuse to your local authorities. The following is a list of provincial offices and their contact information:

Send A Letter

Send the debt collector a written letter which states that you believe they are breaking the law and that they should cease doing so immediately. If you are going to make this claim, you need to have evidence such as letters, recordings, or testimonials that back up your story. If they don’t do anything and continue to break the law, you need to reach out and file a complaint with the government.

Get A Lawyer Involved

However, if you don’t want to deal with debt collectors at all, there are a few ways to make this happen. If you have a lawyer, you can arrange it so the collector will only contact your lawyer, and not you. Similarly, if you are working with a licensed credit counsellor, you can have the debt collector contact them. And if you simply hate dealing with the annoying calls, you can ask that the collectors only contact you in writing.

If Possible, Pay Your Debts In Full

Of course, another way to stop collections harassment (and the debt collection process as a whole) is to simply pay off your debts. Once you pay them, the debt collection agency should get off your back and leave you alone. That being said, we realize this isn’t always a viable solution for some people.

Instead, you might want to seek out professional assistance to satisfy your creditor’s debt.

• Speak to a credit counsellor. With the help of a credit counsellor, you can come up with a budget that will help you reallocate your finances so you can gradually pay off your debt. A credit counsellor might also suggest a debt consolidation program, which involves consolidating your debt and negotiating a new payment plan.
• File a consumer proposal. If a debt management plan doesn’t work, you may consider filing a consumer proposal, which is a legal agreement between you and your creditors to pay back part of the debt you owe.
• Declare bankruptcy. As a last resort, you can file for bankruptcy, which will eliminate your unsecured debts. 

Additional Reading

What Is The Statute Of Limitations For Debt In Canada?

Why Did An Account In Collections Disappear From My Credit Report?

Can A Collection Agency Charge You Extra Fees?

Bottom Line

Even though collection harassment isn’t allowed in Canada, that doesn’t stop some debt collectors from doing it. However, if you educate yourself on the debt collection laws in Canada and your province, you will be well-equipped to stop collectors from illegally harassing you.

Debt Collection Law FAQs