Last Updated: February 6, 2009
Imagine this scenario - you lost your job three months ago, and are having trouble paying your bills. You just got your third call in a week from a collection agent about your credit card account. You explained your situation to the collection agent, but she didn’t seem to care. She said that if you didn’t pay the entire amount by the end of this month, they would take you to court and ruin your credit rating. She has already called your spouse at work, and said that they would be talking to your spouse’s employer. You want to do the right thing, but just do not have the money right now. What can you do?
When a creditor has not been able to collect on a debt, one option is to hire a collection agency. The collection agency agrees to try and collect the debt on behalf of the creditor, in return for a fee – usually a percentage of whatever they receive from the person who owes the money.
However, a collection agent is just that – an agent of the creditor. In our example, the agency can do no more than the credit card company could do for itself. A collection agency can write, telephone, contact you in person or possibly begin a court claim on behalf of a creditor. A collection agency cannot seize your bank accounts, your salary or any of your assets without first going to court, just like a creditor would have to do. Going to a collection agency is not a short-cut for the creditor to get their money. In fact, the law sets out limits as to what a collection agency is allowed to do when they try to collect on a debt.
First of all, every collection agency must be licensed to do business in Saskatchewan. You have a right to know the name of the person who has called you, as well as the name of the collection agency that he or she works for. This will help you to identify a legitimate collection agency, and to keep proper records in case you need to make a complaint about the agent’s behaviour.
By law, you have a right to not be contacted on a Sunday or a holiday at any time, or any other day between the hours of 9:00 p.m. and 8:00 a.m. Any contact that you do receive cannot be so frequent or hostile as to be considered harassment or intimidation. Collection agencies cannot contact other family members, friends or relatives unless they have guaranteed the debt. Any contact with employers is limited to matters like verifying employment or serving court documents. As well, a collection agency cannot give anyone false or misleading information that could be damaging to the debtor or their family. And, they cannot demand money over and above what you owe the creditor.
Remember, the collection agency does not have any more powers than the creditor, and usually, the collection agency is paid on a commission basis. Because of this, some collection agents may be tempted to “cross the line” in the pressure that they apply to try and get a debtor to pay. If that happens, they are breaking the law and, if convicted, they could face fines and possibly the loss of their license.
If you are faced with illegal tactics by a collection agent, you can make a complaint to the Consumer Protection Branch of the Provincial Department of Justice. They will look into the matter on your behalf. You can find the telephone number in the phone book blue pages, under the Government of Saskatchewan.
Most collection agents will behave responsibly. If you do your part to negotiate in good faith, they will usually be open to consider a payment plan that will fit your circumstances. Even if a collection agency has its own lawyer, they still will face the time and money required to take any claim to court. Collection agencies have an incentive to settle without going to court, just as much as a debtor does. It may be worthwhile for a debtor to seek advice from a lawyer or a credit counsellor, to assess the creditor’s claim, or to represent the debtor in negotiations with the collection agency.
Debtors experiencing financial difficulty may wish to refer to PLEA ’s publication Debts and Credit, or contact a debt management and credit counselling service such as the Provincial Mediation Board, listed in the phone book blue pages, or a trustee in bankruptcy, listed under “bankruptcies” in the yellow pages.ISBN/ISSN number: 1918-1728