In Ontario, debt collection laws dictate how long debt collectors can legally chase you for debt.
These rules are in place to ensure you are treated fairly when dealing with a debt collector.
Before we look at Ontario’s debt laws, we’ll briefly explain what they do so you know what to expect if a debt goes into collections.
What is a debt collection agency?
If you owe money to a creditor, they can pass the debt to a debt collection agency that will attempt to collect the money owed.
As a result, they will send you a letter telling you that the account has been passed to them.
Debt collection agencies in Ontario will typically call your cell phone and send text messages, emails and letters until you pay. If you don’t pay, they can take legal action against you, leading to wage garnishments or seizure of assets.
Ontario debt collection laws
In Ontario, debt collection agencies must be registered and follow the rules set out in the Collection and Debt Settlement Services Act and its regulations.
These laws govern debt collection in Ontario, and companies are registered and regulated by the Ministry of Government and Consumer Services.
How can a collection agency in Ontario contact me?
In Ontario, a collection agency must first send you written notice by letter or email. This should include:
- The creditor’s name.
- The amount of the debt on the date it was first due and the balance currently owed on the account.
- A breakdown of the balance on request.
- The name of the collection agency and collector.
- Information that the collection agency is registered in Ontario.
- Contact information for the collection agency, such as mailing address, phone number and email address.
- A disclosure statement explaining your rights.
What happens after a collection agency sends the letter?
Once a debt collection agency sends the letter, they must wait six calendar days before the next attempt to contact you about the debt.
What happens after six calendar days?
Debt collection agencies are very persistent and will use several tactics to make you pay:
- You will receive frequent phone calls.
- They may call friends and family to obtain contact information (they cannot disclose information about your debt).
- They can call your employer (once) to get your employment information.
- Legal action if you do not pay, which could lead to action such as wage garnishments.
When can a collection agency in Ontario contact me?
A collection agency in Ontario can call you between 7:00 am and 9:00 pm on weekdays and Saturdays. They can call you between 1:00 am and 5:00 pm on Sundays, but they cannot contact you on statutory holidays.
Important: A collection agency cannot contact you more than three times in seven days without your consent.
Contact only occurs when they speak with you, text, email, or leave you a voicemail.
If they don’t speak to you or fail to leave a voicemail, this is not a form of contact. Similarly, receiving a letter is not a form of contact.
Can a collection agency in Ontario contact my friends or family?
A collection agency can contact your spouse, family member, relative, neighbour or friend to confirm your contact information or if you’ve given them written permission to do so.
If they contact someone who has guaranteed the debt, they can contact that person for any reason.
Can a collection agency in Ontario contact my employer?
In Ontario, a debt collection agency can contact your employer one time to confirm your employment status.
They may also contact your employer if they have guaranteed your debt or if you gave the collection agency permission to do so.
A collection agency can call your employer regarding a court order or wage garnishment.
Can a collection agency in Ontario do a credit check?
What collection agencies cannot do in Ontario
In Ontario, a collection agency cannot:
- Contact you on weekdays and Saturdays between 9:00 pm and 7:00 am.
- Contact you on a Sunday other than between 1:00 pm and 5:00 pm.
- Contact you more than three times in seven days without your consent.
- Add any additional fees to the debt that you owe.
- Harass you by using threatening, profane, intimidating or coercive language.
- Harass you by using undue, excessive or unreasonable pressure.
- Contact you on a statutory holiday.
- Supply false or misleading information to anyone when attempting to collect a debt.
- Disclose information about a debt to friends or family.
- Recommend that a creditor take legal action against you without notifying you of their intention to make this recommendation.
Source: Consumer Protection Ontario
Ontario debt statute of limitations
Under the Ontario debt statute of limitations, a debt collection agency can only take legal action for two years, starting from when you acknowledged the debt or last made a payment.
Once this expires, Ontario collection agencies cannot take further legal action.
If the statute of limitations hasn’t passed, you are obliged to pay, and creditors and collection agencies can take legal action against you. If ignored, it could lead to wage garnishment, seizure of property (assets) or a lien on your property.
A collection agency must give you a written warning that they intend to pursue legal action.
When you make a payment or acknowledge the debt before the original statute of limitations expires, this will reset the time, and debt collectors have another two years to collect.
How long can a collection agency collect on a debt in Ontario?
In Ontario, a debt collector has two years to take legal action against you, starting from when you acknowledged the debt or last made a payment.
When the statute of limitations expires, you still technically owe the debt. So, a debt collector can still contact you in an attempt to make you pay, but they have lost the power to take legal action against you.
You should also consider the impact on your credit score, as debts in collections appear on your credit report for six years.
Tips for dealing with debt collection in Ontario
If a collection agency contacts you, take action quickly to avoid damaging your credit rating and the threat of legal action.
Ignoring it will make things worse, so here are some tips for dealing with a collection agency in Ontario:
- Don’t ignore collection calls and letters; act quickly to resolve the situation.
- Ensure that the collection agency is legitimate; check that you owe the money.
- When speaking to a collection agency, don’t provide personal information or answer any questions.
- Write to the collection agency through registered mail, courier or email asking for written confirmation of the debt and inform them that you will only respond to written communication.
- Collection agencies must communicate in writing if you have sent them a notice in writing requesting to do so.
- If you want the phone calls to stop, you can request in writing that the collection agency stops calling (this will only stop the calls and won’t stop legal action).
- If you don’t owe the debt, write to the collection agency and say that you dispute the debt and want the matter to be resolved in court.
- If you do owe the debt and are unable to pay, tell the collection agency your situation, who might be able to offer a reduced settlement or freeze interest for a while.
See also: Dealing with a Debt Collection Agency
If you need help resolving a debt, talk to a Licensed Insolvency Trustee who will advise you on how to resolve your debts.
How to pay a debt collection agency in Ontario
The good news is if you pay the debt, a collection agency will stop any action. If you cannot pay the total amount, be honest and explain why.
When it comes to paying a collection agency:
- Pay the collection agency rather than the original creditor.
- Get any payment agreement in writing before paying anything.
- Arrange a monthly repayment plan that you can afford.
- Don’t be forced into making a commitment you can’t keep.
- If paying a lump sum, offer less than the total amount.
- Always request a receipt when making a payment.
A collection agency can only collect what you owe and can’t charge you fees for collecting the debt.
How to resolve debt collection in Ontario
There are several ways to resolve debt collection in Ontario:
- Pay the entire amount.
- Arrange a payment plan that you can afford.
- Negotiate a settlement by offering a lump sum for less than the total amount.
- Dispute the debt.
- Consider contacting a non-profit credit counselling service.
- Arrange a free consultation with a Licensed Insolvency Trustee for advice.
If the amount that you owe is wrong
If the amount owed is incorrect, contact the collection agency or the creditor to get more information. Collection agencies are obliged to provide you with a breakdown of the balance on request.
How to complain about a collection agency in Ontario
If a collection agency is contacting you regarding an outstanding debt and you feel they are acting unlawfully, you should contact them by email, letter, or phone to make a complaint.
If you are not satisfied with the outcome, you can file a complaint through Ontario’s consumer affairs office.
If you want to complain about a debt collection department or agency for a federally regulated financial institution, contact the Financial Consumer Agency of Canada.
Ontario’s debt collection laws are there to protect you
Dealing with a debt collection agency can be a horrible experience, so it’s essential to understand Ontario’s debt collection laws.
If you are overwhelmed with calls from collection agencies and need some advice, speak to a Licensed Insolvency Trustee or a non-profit credit counselling service that can help you with your debts.
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