If the debt was sold to a collection agency, don’t stress too much. These agencies are regulated and must follow laws and regulations when trying to collect money from you. Depending on where you live in Canada, these laws and regulations will vary. In Ontario, these laws dictate how long debt collectors may legally contact you to collect money. These collection agencies will attempt to contact you by phone, text, email, and letter until the debt is paid. If you don’t pay, then these agencies may take action to collect.
What Collections Can Do in Ontario
When it comes to collecting debt in Ontario, collectors must follow specific rules and regulations. This is known as the Ontario Debt Collection Act or the Collection and Debt Settlement Services Act. This dictates how collection agencies can contact you, when they can contact you, and what rights you have as a debtor.
Contact Process
When a collection agency is first trying to get in touch with you, the first means of contact that they must use is a letter. This letter must include:
- Creditor’s name
- The amount of the debt and its original due date
- The current debt balance
- A breakdown of the amount due
- The name of the collection agency, as well as the collector
- Information regarding the collection agencies’ registration in Ontario
- A consumer disclosure statement that states your rights regarding collections
- Contact information for the collection agency,y such as phone number and mailing address
After they have sent this letter containing the required information, the collection agent must wait 6 days (including weekends) before contacting you by other means. This usually involves making frequent phone calls and contacting friends and family to get your current contact information. They can even contact your employer once to confirm your employment status.
When They Can Contact You
Once a collection agency starts contacting you, they are restricted in when they can contact you. They are permitted to make contact only between 7:00 am and 9:00 pm, Monday through Saturday. On Sunday, it must be between 1:00 pm and 5:00 pm. That being said, they are not allowed to make contact on statutory holidays and may do so no more than 3 times in 7 days without your permission. These restrictions don’t just apply to collection calls; they apply to any form of contact, including:
- Answered phone calls
- Text messages
- Emails
- Voicemails
Can Debt Collectors in Ontario Call You At Work?
Yes, in fact, debt collectors in Ontario can call you at the workplace to demand payment. However, with that in mind, they do have to comply with the Limitations Act. Here’s what you need to know.
- They can only legally call your employer to verify your employment status, business title or business address, which is also referred to as the debtors business address.
- They aren’t allowed to discuss your debt with anyone other than you.
- If you ask them to stop, they have to stop calling you at work.
Recording Calls With Debt Collectors
Since Canada only requires one party consent, you can legally record debt collectors in Canada if you consent to the recording. This means that the debt collector does not need to be informed that you’re recording them.
Ignoring a Debt Collector
If you have a debt owed or multiple unpaid debts with a registered collection agency, then ignoring the debt isn’t usually the best option. This is because you’re risking a court order and legal proceedings, as well as damage to your credit score.
That said, if you want them to stop calling you, submit a written request and ask them to stop contacting you to request debt repayment on your unsecured debts. If you want to settle, then you can make a payment plan or a settlement offe.r
Collection Agencies and Your Credit Score
In addition to taking multiple approaches to contact you, collectors can also check your credit score. They can also register the debt you owe on your credit report. Once this happens, it negatively impacts your credit score and can make it difficult to rebuild your credit afterwards.
What Collectors Can’t Do
Just like the act dictates what collectors are allowed to do, it also dictates what they can’t do.
- They can’t add any additional fees to your debt. All they can do is try to collect the debt that you already owe.
- They can’t harass you. This includes threatening, inappropriate or coercing language. They also can’t use any excessive or unreasonable pressure.
- They can’t supply false or misleading information. The information a collection agency or collector gives you must be accurate.
- They can’t give any of your debt information to friends and family. While they can contact these people to get your current contact information, they can’t provide any information regarding the debt unless you have given permission or the person is a guarantor who has agreed to take on the debt if you can’t.
- They can’t recommend a creditor to take legal action without notifying you. They must inform you before making this recommendation.
How Long Can Collection Agencies Collect Debt For
When collecting debt in Ontario, collectors only have 2 years to pursue legal action against you to collect payment. This time period starts when you last made a payment or acknowledged the debt. That being said, even once the statute of limitations expires, you do still owe the debt; it doesn’t disappear.
Statute of Limitations
As mentioned above, the statute of limitations on a debt in Ontario is 2 years. Once this has passed, the collector can no longer pursue legal action against you. That being said, if you acknowledge the debt or make a payment at any time during the 2 years, the 2-year period restarts from that date.
If you are still within the 2 years before the statute of limitations has passed, the collector can take not only legal action but also other measures. They can:
- Garnish your wages
- Seize property (Collateral)
- Put a lien on your property
Before they take any legal action, though, collection agencies must provide written notice to the debtor.
It is important to note that certain types of debt are not subject to the statute of limitations. Some examples of these types of debts are:
- Taxes
- Government guaranteed student loans
- Child support debts
Debt Beyond the Statute of Limitations
After two years, creditors can no longer take legal action. While some may have taken legal action within the 2 years, others won’t for various reasons. One reason is that court is expensive, and if the amount of your debt is less than the cost of going to court, it may not be worth it to them.
Even though the collector can’t collect anymore, you do still technically owe the debt. This amount stays on your credit report for up to 6 years and will definitely affect it. The only way to avoid this is to get in touch with the agency immediately, as they start contacting you. You may be able to pay it off before the collector adds it to your credit report.
Since the collector can’t collect any more, they may decide to sell the debt to another collection agency, which will attempt to recover a portion of the debt and settle it.
The Rules on Wage Garnishment in Ontario
Wage garnishment in Ontario is governed by the Wages Act. With court proceedings to legally require an employer to deduct a specific portion of an employee’s earnings to recover some of their debt. They’re allowed to garnish up to 20% of gross wages. However, with the Canada Revenue Agency, they can garnish anywhere from 30% to 100% of your wages. This means that they will take the money before it even hits your bank account.
To stop these collection efforts, you can contact a credit counselling agency(consumer counselling agency) or file for a consumer proposal. Even filing for bankruptcy will stop the garnishment of the alleged debt.
How Revived Old Debts in Ontario Work
In Ontario, the basic limitation period is also referred to as the two-year limitation period, meaning that you can no longer be sued for that debt. However, under provincial law, if you make a partial payment or acknowledge the debt, the limitation period restarts. So, the same creditor will be able to sue you, or take legal action, for the next 2 years.
Requesting a Debt Validation Letter
In Canada, a debt validation letter is a formal written request to to a debt collector for proof of the debt’s legitimacy. If you send a letter requesting written authorization of the debt, and it was done in the first 30 days after initial contact, then this stops the collection efforts.
The details that you should include in this letter are:
- The debtor’s home address
- The debtor’s full name
- The debtor’s telephone number
- The full mailing address (business address) of the creditor
- A clear statement that you’re disputing the debt and requesting validation.
To verify the debt, you should also request:
- The name and address of the original creditor
- The original account number
- An itemized statement of the debt
- Proof of the contract that has your original signature
- Proof that shows the transfer of the debt
Even though the creditor will have a toll-free telephone number, it’s best to request in writing through registered mail. If you’re unsure what to do, you can also contact Consumer Protection Ontario.
What if a Collection Agency Does Take You to Court?
If a debt collection agency has decided to take you to court, what happens really depends on how you respond. Once they file the lawsuit, you have to file a defence against the lawsuit. If you don’t, then the collection agency will win by default. If you do file,e then you will get a court date.
At that court date, you will either win the case, and there will be no judgment awarded, or the creditor will. The collection agency will win,n and a judgment will be awarded. How this money is collected depends on whether you pay the judgment. Based on what you owe and where you live, the agency can pursue wage garnishment or even sell your home if the judgment isn’t paid.
If your collection debt gets to this stage, it is best to contact a lawyer and/or a licensed insolvency trustee. They will be able to help you either avoid going to court or prepare for it.
How long does a judgment last in Ontario
Once a judgment has been entered, the creditor will contact the debtor to arrange payment. You can then discuss a payment schedule with them and what you can afford to pay. Keep in mind, though, that even a judgment debt paid in full still stays on your credit report for about 6 years. After this period, it will fall off your credit report.
Complaining About A Debt Collection Agency
If you think a collection agent isn’t complying with the Debt and Collection Settlement Services Act, you can contact the agency. This information should have been provided to you in the initial letter you were sent. You can always look it up as well.
If this didn’t resolve this issue, or you aren’t happy with the resolution, you can also contact the Ontario consumer affairs office and file an official complaint. If the complaint you want to make is regarding a federally regulated financial institution, then you can file the complaint with the Financial Consumer Agency of Canada instead.
How Long You Can Legally be Chased for Debt in Canada
In Canada, the statute of limitations for debt varies by province. Depending on where you live, this amount of time will vary.
| Province/Territory | Statute of Limitations |
| BC | 2 |
| Alberta | 2 |
| Saskatchewan | 2 |
| Manitoba | 6 |
| New Brunswick | 6 |
| Newfoundland and Labrador | 6 |
| Quebec | 3 |
| Ontario | 2 |
| Nova Scotia | 2 |
| Yukon | 6 |
| Prince Edward Island | 6 |
| Nunavut | 6 |
| Northwest Territories | 6 |
How Long Until Debt is Uncollectible in Canada
How long debt can be collected for depends on the statute of limitations in your state. Even if that has ended, the collectors may sell the debt, and other collectors will try to settle the debt. Many think that after 6-7 years the debt disappears, but that isn’t the case.
After this period, it just falls off your credit report, whether it has been paid or not. While it is unlikely that a collector will attempt to collect a full or partial payment after this period, they can still do so. They can no longer sue you for the debt.
Filing a Complaint Against a Debt Collector in Ontario
How to Handle a Collection Agency Calling You For Someone Else
If a collection agency begins trying to collect debt from you and the debt isn’t yours, the first thing you should do is let the collection agency know. After that, call the creditor. See if you can verify why you are being called for the debt and how to correct it. It’s also a good idea to check your credit report to see if the debt is listed there.
Another reason a collection agency calls you is to obtain contact information for a friend or family member who owes a debt. At this point, all they can ask for is a phone number, and they can’t disclose any information regarding the debt.
How to Avoid Collections
Dealing with a collection agency can be a very stressful experience. No matter what you owe the money for, there are debt relief options you can consider before your debt reaches collections or once you have been notified of the collections.
Paying off or dealing with that debt is often more doable than you think. One option to consider is debt consolidation. If you are having a hard time managing your credit card debt, this can be a good way to reduce your interest rate. By doing this, you are converting your debt into manageable payments and reducing the total time it will take to pay it off.
Another option would be to talk to a licensed insolvency trustee and/or debt settlement companies. These companies contact your creditors and can reduce the amount of debt you owe, making it more manageable. Because some of your debt is usually written off, it still hurts your credit score, but it is much easier to deal with than collections.
The last option, while not ideal, may be to file for bankruptcy. Before you do this, though, it is best to get a second opinion. When it comes to bankruptcy, there are certain stipulations, and it ultimately depends on the amount of debt you have. Having a large amount of debt is usually recommended for this option, but getting a second opinion will help you assess your financial situation and whether it is worth it.
Differences Between Debt Collection Agencies and Original Creditors
When ti comes to debt collection agencies and original creditors, there are some pretty large differences. The first is that the original creditor is the one that you owe the money too. The debt collection agency, on the other hand, can be contracted by the original creditor or by the original creditor or could have purchased the debt from the original creditor.
When it comes to collection methods, that depends on who is collecting the debt.
Original Creditor: The original creditor usually handles in-house collections first, before passing the debt off to a collection agency. This is done to try to recover the funds before they lose you as a customer. They also have more leeway with correspondence rules and normally won’t contact a debtors family regarding their debt problems.
Collection Agency: Their whole job is to collect money. They often invoke more aggressive tactics like coercive language that could constitute harassment. They’re also known for using unfair practices when speaking to the debtor directly. In certain circumstances, they can contact the debtors employer, the debtors spouse, and the debtors lawyer, regarding the debtors failure to pay.
When it comes to collection agencies, they’re regulated by provincial laws from prohibited practices. This means that you can file a complaint
Overview
Overall, you have more rights than you think when it comes to debt collection in Ontario. Debt collectors are limited to when and how often they can contact you. They also have to notify you of your debt, as well as any intended legal action, in writing. This gives you the debtor time to resolve the debt or come up with a plan to deal with it.
Depending on where you live, you have between 2 and 6 years before the collector can no longer pursue legal action or attempt to collect the debt from you. Unless they have filed a lawsuit within this time period, the debt may be sold to another collection agency, which will seek a settlement, but legal action can no longer be taken. If at any point you are contacted by a collection agency, it is best to consult a lawyer or a licensed insolvency trustee to determine your options and how best to resolve the situation.
