If you’re in a tough financial spot and you’ve been unable to pay your credit card or electricity bills for months, collection agencies may be trying to reach you. The goal of a collection agency is to collect on unpaid accounts. Your creditor may hire a collection agency, they may sell your debt to a collector, or some creditors even have internal debt collection departments.
Here’s what you need to know to verify the legitimacy of the collection agency and protect yourself from falling victim to fraud.
What Happens When Your Debt Goes to Collections?
If your debt is sent to collections, you’ll usually get a written notice before you’re called by an agency. The notice should include the following information:
- Name of the collection agency
- Name of the business or person you owe money to
- The amount you owe
When you receive a letter, the first thing to do is contact your creditor directly to see if you can make a deal. You might be able to pay part of your bill in an attempt to stop the collection process, or see if you can make another arrangement to pay the money back.
How to Deal With Collection Agencies
If you’re contacted by a debt collector, it’s important you ask for the following information and write it down:
- Collection agent’s name
- Collection company they work for
- The name of the company the agent is collecting for
- The agent’s phone number
You should also ask a few questions about your debt, like how much you owe, who you owe, and when you started to owe the money.
Once you have this information, you can tell the agent that you’ll contact them once you’ve verified this information. You can also request that they only contact you in writing in the future.
How Can You Verify a Collection Agency?
Unfortunately, scammers are calling Canadians pretending to be from collection agencies. This is why you want to confirm you’re dealing with a legitimate agent. To protect yourself from collection agency scams, don’t share any personal or financial information until you’ve verified the legitimacy of the company. When verifying the caller, consider the following tips from the Government of Canada:
- A collector can’t try to collect money from you before notifying you in writing or attempting to do so.
- If the collection company is legitimate, they should provide information including the name of the company, their address, website, and phone number. If they don’t offer this information, you can ask for it.
- Search the name of the collection agency on the Better Business Bureau website, or contact the consumer affairs office in your province or territory.
- Once you confirm the legitimacy of the company, call their office directly to verify that they contacted you. Sometimes scammers will use a real company’s name, so it’s important to follow up.
What Are Your Rights When Dealing With a Debt Collector?
If you’re contacted by a federally regulated financial institution, like a bank or credit union, you have debt collection rights. For instance, the caller must always tell you the details of the debt they’re calling about, including the amount, type, and who is collecting the debt.
The Government of Canada outlines a list of things these financial institutions typically can’t do, though rules vary slightly across the country. Debt collectors can’t do the following:
- Harass you or your family.
- Start legal or court action to collect without notifying you first.
- Call you during prohibited times – times can vary between provinces and territories.
- Give false or misleading information.
- Communicate with you without identifying themselves and the details of the debt.
- Continue to demand payment when you say the debt isn’t yours and they haven’t taken all of the steps to confirm the debt.
- Contact your family and friends, unless it’s to get your phone number or address or because you’ve requested they are called.
- Ask your employer for details other than your job title, work address, and employment status.
If your debt was sold from a federally regulated institution to a debt collection agency, the debt collection laws can vary between provinces and territories.
Knowing your rights and the things a debt collector can and can’t do can help protect you from a potential scam. If you’re contacted outside of regular hours or if the caller is using harassing language, these actions can act as red flags, prompting you to verify the caller’s information.
If you suspect that you’ve been contacted by a scammer pretending to work for a collection agency, you can report the call to the Canadian Anti-Fraud Centre.
Manage Your Debt – Speak to a Licensed Insolvency Trustee
Receiving a call from a collection agency can feel stressful, embarrassing, and even scary. But, you don’t have to deal with this alone. If you’re unable to pay your bills and your debt is growing, it’s time to speak to a Licensed Insolvency Trustee. A LIT can assess your financial situation and help you find a solution to stop the collection calls and get out of debt.
Licensed Insolvency Trustees offer the largest number of debt solutions and are the only professionals in Canada who can administer formal debt relief actions including Consumer Proposals and Bankruptcies.
For a free, no-obligation consultation, contact us at 1-888-371-8900, or complete our online contact form. We can help!
