One of the ways that I can tell how good or bad the economy is going is based on the frequency that I get inquiries from clients about collection agencies – either because they want to use a collection agency or because they are getting called by collection agencies. Not too surprisingly, I am seeing more matters lately between my clients and collection agencies.
Now, I have to say up front that I have mixed feelings about collection agencies – just like I have mixed feelings about many other trades: lawyers, dentists, doctors, police officers, real estate agents, etc. Many are very good and professional in their dealings but there are more than a few “bad apples”. I average about two or three instances per year where I am required to send a letter to a collection agency to have them tone down or reel in one of their agents. And I also appreciate that sometimes you have to break a few eggs to make an omelette, but when I have to send the letters that is because things have gone too far and the collection agent has become too aggressive.
In Ontario there is a Collection Agencies Act and, more importantly, there is a regulation under that Act which sets out what collection agents can and cannot do. That regulation can be found here and, most importantly, you want to look at Sections 20 to 25 which set out the rules more fully. By summary, though, here are some of the key rules that collection agents should be following (and that if you are the one hiring the agency, you will want them to follow and, if you are getting the calls from the agent, you will want them to follow as well):
1. The collection agency cannot simply call the debtor out of the blue. A written notice must be sent first and then the collection agency has to wait six days before they can start calling. That said, if you are the debtor, check your mail because if the letter comes and you decide not to open it, that’s not going to be sufficient – all they have to do is send the notice.
2. If you are the debtor and you dispute that you owe the money AND you suggest that the matter be dealt with in the Courts AND IF you send a letter to this effect by registered mail THEN the collection agency should stop trying to contact you. Of course, though, this will then mean that the lawsuit is on and you will have to deal with the issue in the Court. That said, if a collection agency is involved, then chances are likely that you are dealing with a matter under $25,000 so the claim will go to Small Claims Court and you do not have to have a lawyer representing you.
3. With various exceptions, the collection agency should not be speaking with your relatives or employer about your debt and trying to get them to assist in the payment of the debt in some way (either through payments on your behalf or simply to have you contact them - ie. applying pressure on you through your relations and boss).
4. There are certain times when the collection agency is not allowed to call (for example, after 9:00 p.m.) as well as certain days (such as holidays) and any communications should not be threatening or have improper (ie. profane) language used. In this regard, I’ll take a moment to mention my favourite story regarding an abusive collection agent. This guy was really bad and I had to send his bosses a very strongly worded cease and desist letter. The response I got from him was a voice-mail telling me to “F” myself this way and that way but that he wouldn’t be calling my client anymore. However, after threatening to report me to the Law Society (a threat that either he never fulfilled or, if he did, the Law Society just ignored it and never bothered telling me it was ever made because it would have been a b.s. complaint), he said that he would also be calling “Mr. Gowling” to report about my behaviour. At the time, I was working at Gowling Lafleur Henderson. Not only was I not worried about any such complaint to Mr. Gowling because I knew that I had done absolutely nothing wrong, but more importantly, I had to laugh because Gordon Gowling had died many years before that time. I figured that if the abusive collection agent was truly able to speak with Mr. Gowling about my conduct, I would have bigger problems to deal with than the collection agent and would have to call Ghostbusters!
5. Collection agencies are not allowed to threaten that if the debtor does not pay then there will be a lawsuit unless there will actually be such a lawsuit – in other words, no veiled threats.
6. The collection agency isn’t allowed to mislead the debtor in order to get the debtor to pay. So, for example, there is a two year limitation period for most lawsuits in Ontario. It is not uncommon for creditors to wait for most of the two years and then turn the matter over to collections just before it’s too late. Suppose this happens and the collection agency says that if the debtor doesn’t pay that he/she/it will be sued. And suppose further that the limitation period has now expired. And, to round things out, suppose that the collection agent does actually know that the lawsuit would be brought (even though it would die due to the limitation period having expired). In that instance, the collection agent has mislead the debtor because the lawsuit could not be brought and be valid.
Those are the main points to consider if you are dealing with a collection agent. For a more fulsome list of the rules, go to the regulation and see for yourself. And hopefully you will never have to make reference to these rules but if you have to do so, at least you now know that they are there.
Something to think about.