Doing business loan with a collection agency in Canada

If you currently have a credit account in the collection or have already had to deal with a collection agent, then you know that the process can be both complicated and intimidating. Nobody wants to have a credit account in a collection agency. This means that when it comes to processing and talking to a collection agent, most Canadians are unprepared and uninformed. The good news is that we take care of you. We will teach you everything you need to know about Canadian debt collectors and how to deal with them if any of your credit accounts fall into their hands.

Who are the collection agents?

A collection agent (or sometimes called collection agency) is a company engaged by a credit or loan company. Collection agents come into play when a person stops making payments for a loan or a credit account. Generally, they work either for a fixed amount or a percentage of the total debt owed to the creditor.

Who will you deal with?

 Who will you deal with?

Depending on who you owe money for, you will face either an internal collector of the company or a collection agency engaged by your creditor. If you are contacted by an outside agent, he or she was probably hired by your creditor for joint work or sold your account to the collection agency in question. In either case, you will first receive a written notice and will receive telephone calls from your agent.

Questions to ask during your first phone contact with a collection agent

When a debt collector makes contact with you for the first time, make sure you get the following information and make a note of it for your own sake:

Ask if you are talking to your original creditor or if it is a collection agency

Ask for the name of the person you are talking to, their phone number, and the name of the collection agency they are working for

Ask for detailed information about the debt they are trying to extract from you; to whom do you owe money, how much do you owe and when does the debt start?

Make sure that the information given is familiar to you. If this is not the case, check your previous reports.

What to do if it’s your debt

If it is your debt, it is in your interest to repay it immediately. Refilling a rush as quickly as possible after being contacted by a debt collector is the quickest way to fix the problem.

Paying down the debt immediately is obviously the best thing to do, but we understand that it is not always possible for everyone. If it is your debt but do not have the funds to repay it, here are some options:

  • Be as open and honest as possible with the debt collector. Explain your financial situation and why you can not repay your debt immediately.
  • Ask your agent if there is a repayment plan. Could you make a few payments instead of just one big amount?
  • Always ask for written proof after an agreement because, unfortunately, not all collection agencies are as honest as you think.

When you are able to repay your debt or decide to do it:

Do not repay in cash

 Do not repay in cash

Without a doubt, make sure to get a receipt or other verification information regarding the payments you have made. In addition, to avoid confusion, do not try to contact your original creditor once contacted by the collection agent (unless it is really necessary)

What if it’s not about your debt?

 What if it's not about your debt?

If, after verifying the information provided by the collection agent, you decide that it is not your debt, here’s what you should do:

Talk to your debt collector and explain why you think it’s not your debt

Then enter into communication with your original creditor and see how and if they can solve the problem

Ask for a copy of your credit report at Equifax or TransUnion. If the debt you believe to be an error appears on your credit report, you will need to contact them and your original creditor so that the error is cleared. Incorrect information on your credit report may affect your rating negatively, which would prevent you from being eligible for credit or a loan in the future.

Finally, if for some reason you do not trust the collection agent who contacts you, you can contact your original creditor to verify the identity of the agent.

Your rights when it comes to dealing with a collection agent

In Canada, there are laws that protect the consumer from the dubious practices of some collection agencies. When dealing with a debt collector, here are some signs you should keep an eye on:

A collection agent has the right to contact your family, friends and employers to request your personal information such as phone number and address. However, they are not allowed to ask for further information. If a debt collector harasses you or people you know, contact Financial Consumer Agency of Canada immediately.

A debt collector should never ask anyone else to talk to you about repaying your debt.

A collection agent should never use violent, threatening or abusive language.

A collection agent is not allowed to contact a consumer after 9:00 pm or before 7:00 am, on statutory holidays, or certain hours on Sundays.

Are Canadian debt collectors regulated?


In Canada, there are federal laws that regulate financial institutions. If one of these institutions or organizations (collection agencies) acting on the back of a federally regulated institution contacts you about a debt, you have rights. If you have any questions regarding these fees, contact the Financial Consumer Agency of Canada.

If you are contacted by a collection agency that is not regulated by the federal government, you should contact the offices of the consumer agency in your province.

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