The topics in the Dial-A-Law series provide general information on legal issues within the Province of Alberta. The purpose of this topic is to inform you of your legal rights and responsibilities. This is not legal advice. If you require legal advice, you should contact a lawyer.
This topic discusses the regulation of collection agencies by the Fair-Trading Act.
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:
- Contact you before 7:00 a.m. or after 10:00 p.m. for the purpose of demanding payment of a debt on any day
- Threaten you directly or indirectly with an action that the collection agency or collector does not have lawful authority to do so. For example, collectors cannot tell you that if you do not pay the debt you will be sued or your wages will be garnisheed. They cannot give you specific Court dates or tell you that you be required to pay all costs of going to Court. These are decisions made only by the Courts.
- Collections Agencies cannot threaten to send one of their agents to seize your property. Only an authorized civil enforcement agency can seize property and can only act when certain requirements are met. A bailiff who works for a civil enforcement agency is the only person who can seize property. For example, the civil enforcement agency may act if a judgment has been granted against you by a Court and instructions are received from the creditor who obtained the judgment. There will be more documentation than a phone call from a collection agency.
- It is a criminal offence to threaten to physically harm you, your family or your property if you do not pay. The police do not get involved in collecting debts unless there is a criminal offence committed, such as writing an N.S.F. cheque. Although failure to pay alimony or child support can lead to jail, collection agencies cannot institute such a penalty. If any collector does this, charges may be laid under the Criminal Code of Canada. If this happens, call the police and inform Service Alberta.
- The collection agency cannot use, profane, intimidating or coercive language.
- The collection agency cannot discuss your debt or the existence of your debt with any person except you (unless you have given your express consent to do so), a guarantor of the debt, the creditor or someone you have identified in writing as your representative. If you want the collector to contact your representative to discuss your debt, you must provide that person’s current address and telephone number.
- The collection agency cannot discuss your debt with a minor child.
- The collection agency cannot call you with such frequency as to constitute harassment of you, your spouse, or any member of your family. This includes more than three unsolicited contacts in any period of seven consecutive days not including contacts with a third party to locate you or mistaken contacts with a third party or contacts by traditional mail.
- Give you false or misleading information. For example, tell you that they are part of a law firm or the legal department of a particular business.
- Contact you employer unless it is to verify your employment. They cannot jeopardize your job. If your employer threatens to fire you because of the calls, consider complaining to the Consumer Investigations Unit at 1-877-427-4088.
- Contact you at work if you ask them not to contact you there and have made reasonable arrangements to discuss the debt with them and have done so.
- Contact your spouse, relative, neighbor or friend unless it is only to get information on you such as your address or telephone number. If you co-signed a loan, you are also considered a creditor and responsible for the debt. If you agreed to relieve a spouse from debt in a separation agreement, the collection agency can still collect from either spouse or both.
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.
Dial-A-Law is a Calgary Legal Guidance public service project funded in part by the Alberta Law Foundation.