A collection agency is a business that collects debts for a creditor, or that has bought the debt outright. In Canada, collection agencies are licensed and regulated by the provinces, so the rules on when they can call, who else they can contact and what they can’t say depend on where you live. This page covers what collectors may and may not do, how to respond to a collector step by step, what a collection account does to your credit, and where to complain. It’s about private debts such as credit cards, loans and phone bills; the CRA collects taxes under its own powers, covered in what happens if you don’t pay the CRA. The debt strategies hub lists the other guides.
Who regulates collection agencies
Every province requires collection agencies and their collectors to be licensed. A few examples of the laws and regulators:
| Province | Law | Regulator |
|---|---|---|
| Ontario | Collection and Debt Settlement Services Act | Ministry of Public and Business Service Delivery and Procurement (complaints to Consumer Protection Ontario) |
| British Columbia | Business Practices and Consumer Protection Act, and the Debt Collection and Repayment Regulation | Consumer Protection BC |
| Alberta | Consumer Protection Act, and the Collection and Debt Repayment Practices Regulation | Government of Alberta, consumer protection |
| Quebec | Act respecting the collection of certain debts | Office de la protection du consommateur |
| New Brunswick | Collection and Debt Settlement Services Act | Financial and Consumer Services Commission |
The other provinces and the territories have their own acts, administered by their consumer protection office. Regulators such as Ontario’s and British Columbia’s let you check whether an agency is licensed, and an agency that isn’t licensed in your province is itself something to report.
What collectors cannot do
The details differ, but provincial rules share the same core prohibitions. Ontario’s rules, for example, bar a collection agency from:
- contacting anyone about a debt between 9 p.m. and 7 a.m. Monday to Saturday, on a Sunday except between 1 p.m. and 5 p.m., or on a public holiday;
- contacting you more than 3 times in a 7-day period after the first conversation, unless you agree to more or the contact is by mail;
- using threatening, profane, intimidating or coercive language, or excessive or unreasonable pressure;
- giving false or misleading information, or publishing (or threatening to publish) your failure to pay;
- contacting your employer except in narrow cases, such as once to confirm that you work there, your job title and your business address;
- contacting you directly once your lawyer or licensed paralegal sends notice asking the agency to deal only with them;
- asking you to pay its own charges, such as commissions, on top of the debt.
Other provinces set different hours. Alberta, for example, lets a collector contact you at home between 7 a.m. and 10 p.m. Alberta time. A collector can’t bring in the police or send you to jail over an unpaid consumer debt, and a threat of arrest is false or misleading information.
Sources: Ontario, Stop collection agency calls and Guide for collection agencies: prohibited practices; Alberta, Creditors, collection agencies and debt repayment.
What collectors can do
A licensed agency can contact you within the permitted hours by phone, letter, email or text once it has sent its written notice (in Ontario, not by a method that costs you money, such as text or long-distance calls); report the account to the credit bureaus; negotiate a payment plan; and recommend that the creditor sue you after telling you it intends to. Garnishing your pay or bank account for a private debt takes a court judgment first: an agency can’t garnish wages on its own, because a creditor first needs a judgment and then a garnishment through the court. A bank is different for money you owe it: in Alberta, for example, it can use set-off against your accounts without going to court. Wage garnishment explains that process and the provincial limits on how much can be taken.
How to respond to a collector
1. Get the details before agreeing to anything
On a first call, note the date, the caller’s name, the agency’s name and the account it’s calling about, and ask for the details in writing: the original creditor, the account number, the amount owed and how it was calculated, and whether the agency owns the debt or collects for the creditor. Paying, giving banking information or confirming the debt on that first call isn’t required. In Alberta, an agency has to give you an account of the debt if you ask for it (it only has to do so once every 6 months), and if it can’t do so within 30 days it must stop collecting until it does.
2. Check the debt against your records
Match the account number and amount to your own statements, check whether it was already paid, and look at your Equifax and TransUnion credit reports. Check how old the debt is, too: every province sets a limitation period after which a creditor can no longer sue, and a payment or a written acknowledgment can restart it in many provinces. The limitation periods by province page covers the periods and what resets them.
3. Control how they contact you, where the province allows it
The rules on stopping calls differ by province:
- British Columbia: you have the right to ask for communication in writing only, which stops calls from the collector, and a collector must stop contacting you about a debt you have properly disputed.
- Ontario: a request for written communication only doesn’t stop phone calls. What does stop contact is a notice sent by verifiable means (such as email, registered mail or courier) saying you dispute the debt and suggesting the matter be taken to court. The agency may then advise the creditor to sue, so this suits a debt you genuinely dispute.
- Ontario and British Columbia: a notice from your lawyer (in Ontario, also a licensed paralegal) asking the agency to deal only with them moves communication to them.
Your provincial regulator’s site sets out the exact steps where you live.
4. Dispute a debt that isn’t yours or is wrong
If the debt isn’t yours (a mistaken identity, an error, or identity theft) or the amount is wrong, say so in writing, keep a copy, and ask the agency and the original creditor to correct it. If the account appears on your credit report, file a dispute with Equifax and TransUnion as well.
5. If the debt is yours, decide how to deal with it
A valid debt can be paid in full, paid under a payment plan, or settled for less with a lump sum; agencies that bought a debt often accept less than the balance. How to negotiate debt covers settlement amounts, what to say, written agreements and pay-for-delete requests. Whatever is agreed, get it in writing before paying.
6. Don’t ignore a court claim
If a creditor sues, you’ll be served with a claim. Ignoring it lets the creditor get a default judgment, which can lead to garnishment of wages or a bank account. Responding by the deadline, or getting legal advice from a legal clinic or lawyer, keeps your options open.
What collections do to your credit
| Event | Effect on your credit report |
|---|---|
| The account goes to collections | A collection entry is added, which counts as negative information |
| You pay it in full | The entry stays on the report until the reporting period ends |
| You settle for less | The entry can show as settled instead of paid in full |
| The agency agrees to remove it (pay-for-delete) | The entry comes off, but agencies don’t have to agree |
| Time passes | The entry drops off after the reporting period set by the credit bureau, whether or not it was paid |
The reporting period and the limitation period are different clocks: a debt can still be on your credit report after the creditor has lost the right to sue.
Where to complain
Keep a log of every contact (date, time, name, what was said) and copies of letters and emails. Complaints about an agency go to the provincial regulator: Consumer Protection Ontario, Consumer Protection BC, Alberta’s consumer protection office, Quebec’s Office de la protection du consommateur, or your own province’s consumer protection office. A complaint about a bank collecting its own debt starts with the bank’s complaints office, then its external complaints body; the Financial Consumer Agency of Canada supervises banks’ compliance with consumer protection rules.
If collection calls are a sign of a bigger problem
Calls from several collectors at once usually mean the debt load itself needs dealing with. Filing a consumer proposal or bankruptcy through a Licensed Insolvency Trustee stops collection action by the creditors included; consumer proposal vs bankruptcy explains both, credit counselling covers the non-profit route of a debt management plan, and the debt relief options guide compares them all. If several bills are behind at once, what to do when you can’t pay your bills covers which to deal with first.