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Consumers - Credit

Collection Agencies

Jack hangs up the phone. It’s the fifth time this month that he has had to listen to a threatening voice on the other end: “It’s time to pay up! You’ve owed us money for five months now. If you don’t pay by tomorrow, you’re going to find yourself behind bars.” Jack has been in debt for a while, but he is trying to do whatever he can to pay up. He isn’t facing an easy task, especially since this collection agency won’t stop harassing him.

Have you been through a similar experience? Do you know your rights when it comes to debt collection? What if you are a collection agent? How far can you go? In this Infosheet, Éducaloi explains the practices surrounding the work of collection agencies.

What is a collection agent?

A collection agent is an organisation or a person who gets paid to collect money owed to others. The agent takes care of contacting the people that haven’t paid to encourage them to do so. Businesses sometimes give agents contracts to allow them to act in their name. The collection agent can also buy the debt for a reduced price from the business in the hope of collecting more money than what they paid to buy the debt.

A collection agency has contacted me in the middle of the night. Is that legal?

No, this practice is forbidden by law. A collection agency is only allowed to contact you from Monday to Saturday, from 8 a.m. to 8 p.m. The law also prohibits them from contacting you on holidays or Sundays.

I don’t want to get any more phone calls from the collection agency. What can I do?

You have a right to insist that the agent only communicate with you in writing. You simply have to send your request (in writing) to the collection agency. You should note, however, that your request will only be valid for 3 months. So you will have to renew it every 3 months if you still do not want to be contacted by phone. If you do not mind being contacted by phone, you should know that the agent calling you must identify himself each time he calls. Keep in mind that it is your right to know who you are talking to.

In addition, you should also know that the law prohibits collection agencies from contacting you by phone the first time they try to reach you. Rather, the law requires that their first contact with you be in writing.

How can I check that the collection agency is really registered with the authorities?

When an agency contacts you, you have the right to get their collection agent permit number, given to them by the Office de la protection du consommateur (Consumer Protection Agency). If you are questioning the validity of the number that the agency gave you, you can check its authenticity with your regional Consumer Protection Office or online  (http://www.opc.gouv.qc.ca/WebForms/PES/Profil/Informations.aspx).

I am finally able to pay my debt – but when I contact the collection agency to pay, they demand an extra $50 to close the file. Can they do this?

No. The law forbids collection agencies from claiming extra fees from the person who owes the debt. Interest accumulated on the debt from the moment that you missed the deadline to pay is not to be confused with extra fees. The agent can ask for what was agreed to in the contract in terms of interest but he cannot claim "collection fees", "file closure fees" or a "percentage" of what is owed just because he extended your payment deadline.

In addition, if you pay in cash, it is important to make sure the agency gives you a receipt. The agency is obliged to give you one, but it is a good idea to make sure you request it. If you do not pay in cash, you can also get a receipt but you have to make a request for it in writing.

The payment receipt has to be given to you within 10 days of your cash payment or within 10 days of when they receive your written request.

Is the collection agency allowed to tell my family or employer about my financial problems?

No, it is illegal to communicate this type of information to anyone but the person concerned by the debt. It is therefore prohibited to tell anyone about your financial situation (family members, friends, neighbours, employer).

There are two exceptions to this principle. The agency can contact any person who guaranteed your debt by agreeing to pay it if you didn’t (this person is called a “surety”).

The agency can also contact, only once, someone that you know to find out your address or your telephone number.

The agency cannot use your employer to put pressure on you. It can only call you at your workplace once if it doesn’t know your address and telephone number or if it already tried to call you at home and you didn’t pick up.

Can I require the collection agency to give me all the information they have in my file?

Yes. You can at any time make a written request for a summary of the payments you have made so far and the amount you still have to pay. As with the payment receipt, the collection agency has to answer you in writing within 10 days of receiving your request. The agency cannot charge you fees for consulting your file. Moreover, it must provide you with the following information:

• the date the debt is due;
  
• the creditor’s name;
  
• the address of the place where the debt was contracted;
  
• the type of debt you owe.

During the last phone call, the agent threatened to send me to prison if I don’t pay my bill right away. Is that possible?

Absolutely not. Your inability to pay your bills won’t get you arrested and trying to convince you of that is false representation. This is an illegal practice that is simply aimed at frightening you. Also, any attempt to threaten, intimidate (insults, yelling, etc.) or harass you is illegal.

I think that the collection agency contacting me is using illegal practices. What can I do?

If the collection agency is not respecting the law, you can file a complaint with the Office de la protection du consommateur (Consumer Protection Agency). A collection agency that is not respecting the law may face fines. The fines range from $300 to $6,000 and, if this isn’t the first time, from $600 to $12,000. If the collection agency is incorporated (in the form of a company) it can face a fine of $1,000 to $40,000 and of $2,000 to $80,000 for a repeat offence.

In addition, you can personally sue the collection agency. If you feel you have been wronged, you can ask for damages (financial compensation). You should note that you have a time limit of three years in which to file your lawsuit.