Collection agencies and collectors are in the business to collect money for creditors. Creditors are those persons or companies that you owe money to. If you believe that you do not owe money to a creditor, contact that creditor directly. If the creditor does not want to deal with you directly, try to arrange a repayment schedule with the collection agency.
You may also contact any number of not-for-profit services in Alberta to assist you in negotiating a reasonable repayment plan, and for credit and budgeting advice. One such service, Money Mentors, can set up an Orderly Payment of Debts Plan, where the Court consolidates your debts and sets a monthly payment amount. Money Mentors can be reached at 1-888-294-0076.
A more serious step is to file for personal bankruptcy. You will require a licensed Trustee in Bankruptcy to assist you with this process.
If your debts are consolidated in the Orderly Payment of Debts Plan, or if you declare bankruptcy, the collection agency must stop contacting you. The collection agency must also stop contacting you if you have told the agency that you have a representative and you would like the agency to communicate only with the representative; the agency must also stop contacting you if you have told the agency that you intend to dispute the debt with the creditor in court.
If you have told the collection agency that you are not the person they are looking for, they must stop contacting you. They may contact you again if they have reasonably investigated and still believe that you are the correct person.
Collection agencies are paid a fee or a percentage of the money they are able to collect from you. If they don’t collect any money – they are not paid. Consequently, collectors are often aggressive in their collection methods. They must be licensed under the Fair-Trading Act and its Regulations. You may check with the Consumer Contact Centre at 1.877.427.4088 to find out whether the collection agency or collector that is calling you is licensed.
The Fair-Trading Act sets out collection practices that are not permitted. A collection agency or collector may not use any of the following practices:
Sometimes, the collection agency or collector may demand the entire amount of the debt owed even if you are late in only 1 or 2 payments to the creditor. The collection agency must be authorized to make such a demand by the creditor and there must be an acceleration term in the contract. Check the wording of your contract to see if they can make this demand.
The collection agency owes duties to the creditor. They cannot, on their own, negotiate or accept lower payment than the full debt.
If you think that the action of a collection agency or a collector are illegal or heavy-handed, you may contact the Alberta Government Services, Consumer Investigations Unit toll-free from anywhere in Alberta at 1-877-427-4088.