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How to deal with debt collection

Debt collectors are the people whose job it is to collect your unpaid debts. They might call you, visit your home, or put you under pressure in various ways to repay what you owe. That's why dealing with debt collectors is so stressful for so many people. In this guide we'll highlight how to deal with debt collectors. We'll explore who they are, what powers they have, how you know if your debts have been passed to a debt collection agency, and what you should do if a debt collector calls you or pays you a visit.

What are debt collectors?

A debt collector is someone who tries to get back the money you owe. Debt collectors can be lawyers, accountants, or individuals hired specifically to represent a financial institution, while others collect debts for debt collection agencies.

Common debts a collection agent may be enlisted to collect include:

  • Debts to credit card companies
  • Old medical bills
  • Student loan debts
  • Other past due debts

Debt collectors can put pressure on people who refuse to pay their creditors, or find their debts unaffordable. Debt collectors employ a variety of tactics during the collection process, starting with phone calls and written verification of collection activity, leading all the way to court action.

Who has the power to collect a debt in Canada?


Sheriffs and bailiffs are employed by provincial or territorial courts, and play an active role in the debt collection process.

Bailiffs serve legal orders and documents, seize or repossess properties, evict tenants, and perform other related activities. They may also be employed as officers of the court or in private service as agents for creditors.

A bailiff will serve court papers on you before collecting your debts. These papers will tell you the reason that they are visiting and how much money or other property is owed. The document will also warn that if you don’t pay, you could lose your property.

Debt collection agency

A debt collection agency is a company that has been hired to collect debts on behalf of a third party. Debt collection agencies often buy debts from companies you owe money to, and then they try to get the money back.

If you have debts, then it’s likely that you have already been contacted by a debt collection agency. You might have received letters or phone calls from a company you owe money to, saying that they have assigned your account to a certain debt collection agency.

If you haven’t been contacted yet, it’s possible that the person or company you owe money to hasn’t sold your account to a debt collection agency.

How do I know if I have debts that have been passed to a debt collection agency?

It’s possible that your debts will be passed to a debt collection agency if you have debts and you…

– Have missed at least one payment on a credit card, loan, or another account or bill;

– Can’t pay your regular bills; or

– Are being contacted by a company that lent you money for a car, furniture, appliances or other goods.

If you’re worried about repaying your debts, it’s a good idea to seek legal advice before engaging with a debt collection agency.

It’s possible debt collectors will begin to reach out to you if they know where you live or have your contact information, so getting legal advice early is good protection against harassment.

What powers do debt collectors have?

Debt collectors are limited by debt collection laws that apply in Ontario, known as the Collection and Debt Settlement Services Act. Below are some of the most common tactics that you could be confronted with when collection agents call.

Home visits

Debt collectors can visit your home or workplace. But they have to respect reasonable times for visiting (usually between 8am and 9pm) and must leave if you ask them to.

They may not harass, abuse or threaten you. And they must respect your privacy. For example, they may only talk to people at home who are 18 years of age or older about your debt.

Threat of wage garnishment

Wage garnishment means the person or company you owe money to can take some of your wages.

Debt collectors may threaten you with wage garnishment for unpaid debts, but they will not be able to follow this through without first getting a court judgment against you.

Once a judgement is obtained, they will also need a court order to garnish wages, and you will be notified in writing before any money is taken from your paycheck.

Threat of legal action

Debt collection agencies commonly use the threat of legal action to try and encourage repayment, however legal action is expensive. The company pursuing you will have to hire a lawyer and cover their legal costs.

Debt collectors are therefore unlikely to pursue legal action if your debt is too small to be worthwhile, a significant amount of time has passed since the debt first occurred, or you don’t have any income that can be garnished or assets that can be seized.

How should I deal with debt collectors?

What should I do if a debt collector calls me?

If a debt collector calls and asks for money, ask them to put their request in writing. Then wait for the letter to arrive before you respond.

If you have questions about the debt or what it is for, call the company that says you owe money and ask them about it. They are required by law to tell you this information when they contact you the first time.

Also, you can tell the debt collector not to contact you again. But be aware that if you do business with this company in future, they may get in touch with you again.

What should I do if a debt collector visits my home?

If a debt collector knocks on your door, you should first ask what company or organization they are representing. If the person isn’t from any company you recognize and may have come to your home by mistake, ask them politely to leave.

If the person says they are from a company you believe you owe money to, ask them to show you their ID and tell you why they want to talk with you. You don’t have to let them in or say anything to them if they visit your home, and it’s important to remember that most debt collectors don’t have any real powers beyond making threats.

What should I do if a debt collector visit my workplace?

It’s not illegal for a debt collector to visit your workplace if they have details of your place of work, but you can ask them to leave.

If they show up at work and you don’t want them to visit you there, just tell them that. You can send them a letter or e-mail telling them not to contact you at work again.

Will debt collection visit my credit report?

Debt collection visits and interactions with debt collection agencies won’t directly impact your credit score, but the underlying debts you owe can seriously affect your credit.

If you owe money to someone and don’t pay, you risk falling into default. When you default on a payment in Canada, this information can stay on your credit report for up to seven years.

This could affect your ability to get new credit, a loan, or a mortgage during that time.

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