In Canada, the debt collection process is dealt with on a provincial basis; each province has its own distinct collection laws and rules that debt collection agencies must follow. Ontario is no different.
In this guide we’ll explore Ontario debt collection laws in more detail, including what a debt collection agency is, what debt collectors can and can’t do under the law, and the steps to take if you feel a collection agent has acted unlawfully.
What is a debt collection agency?
Just as it sounds, a debt collection agency is an organization that specializes in the collection of unpaid debts. If you owe money to a company or individual and you either can’t or won’t repay, they may bring in debt collectors to force your hand.
Debt collectors usually operate independently from the original creditor you are in debt to, and are brought in specifically to lead the debt collection process.
As third party agencies, debt collection agencies might work for any number of private or public organizations, and can collect a wide range of debts, including credit card debt, payday loans, and other unpaid debts.
How do debt collection laws work in Ontario?
Debt settlement services act
In Ontario, debt collectors must operate within the rules as laid out by the debt settlement services act, however it’s important to note that only third party agencies are subject to these rules – not the collection department of your original creditor.
Under the act, collection agencies can collect on a wide range of debts, and are legally able to charge a fee for their services. That said, there are strict rules around how the agency can contact you, how often they can get in touch, and how much they can demand you repay.
Debt collection agencies are also regulated by the Ministry of Government and consumer services, which reserves the right to withdraw licenses if rules are broken during the collection process.
When can a collection agency begin contacting me?
It’s not uncommon that a debt collection agency calls a debtor demanding payment of outstanding debt, but they can’t just begin collection calls out of the blue.
Under Canadian law and Ontario law, a debt collector is required to send you a written notice before beginning the debt collection process. The notice should include information like:
- The creditor you owe money to
- How much money you owe
- The type of credit (i.e. credit card, mortgage etc.)
- The name of the debt collection agency
- Confirmation the debt collection agency is registered in Ontario
Once you have received a written notice with the above information, you will be given a 6-day period before collection calls can begin, giving you time to come to an agreement with the creditor before things develop further.
What debt collection agencies can and can’t do in Ontario
Dealing with debt collectors can be stressful, especially if you’re not sure what powers they have to force you to repay a debt. Below we’ve outlined some of the most important do’s and don’ts for collection agencies in Ontario.
How the collection agent contacts you
Debt collection agencies will typically contact you over the phone, although it’s not uncommon that a debt collector calls you on the wrong number or the wrong device.
You are within your rights to choose a preferred method of communication, especially if certain forms of contact cause you to incur costs. If the collection agency is notified of your situation and continues to contact you via the wrong channel, they will be obliged to reimburse you for any costs you incur.
How often a debt collection agency calls
It’s legal for a debt collector in Ontario to contact you between the hours of 7am and 9pm on a weekday, and between 1 and 5pm on weekends.
If a debt collection agency calls you outside of those hours, or tries to get in contact with you during statutory holidays, then they will be considered in breach of Ontario debt collection laws.
Who else the debt collector can contact
In certain circumstances a debt collector may contact your friends or family as part of their collection efforts.
This is legal as long as the agent is contacting your family in order to get information that will help them get in touch with you. Any contact with your family outside of those parameters would constitute a breach of collection laws. For more information on the rules for collection agencies, visit https://www.ontario.ca/page/guide-collection-agencies#section-5
How much money debt collectors can ask you to repay
Debt collection agencies shouldn’t demand payment over and above the amount you owe to the original creditor – they’re allowed to recoup the money you owe, and nothing more.
If a collection agency collect more than the amount you owe, you should ask for a breakdown of the costs involved, and dispute any fees or charges added outside the original debt.
Is there a time limit for the debt collection agencies in Ontario?
There is a statute of limitation on debts accrued in Ontario. If more than two years have passed since any attempt was made to collect on a debt, then your creditors will no longer be able to pursue legal action against you.
If you encounter a debt collector during this time, be sure not to acknowledge the debt in question; any acknowledgment of the debt can restart the two-year clock and make the debt a live issue once again.
What can I do if a collection agent breaks Ontario debt collection laws?
If you feel a debt collection agency has provided you with false or misleading information, or acted inappropriately in any way, you can make a complaint to the Ontario municipal government via their website.
Filing a complaint may not free you of responsibility for the original debt, but it could result in punishment or sanctions for the debt collector.
Where can I get advice on my debt relief options?
If you owe money to the credit card company or another lender that you can’t afford to repay, they may bring in a debt collection agency to collect the money you owe.
Not only is dealing with debt collection calls extremely stressful, it can lead to financial problems that can seriously damage your credit report. Luckily, we can help.
As a licensed insolvency trustee operating in Ontario, A Fisher & Associates (Debt Relief Canada) is well-placed to help you keep debt collectors at bay. If you need help handling the debt collection process, get in touch with us today.