Dealing with Debt Collectors

If you are in debt and have fallen behind in your payments, you may have received phone calls or letters demanding payment. If you’re far enough behind, you may even be threatened with court action, or the seizure of your car or furnishings. Sometimes you might even receive calls about a debt that isn’t yours. If so, you should know your rights.

The law protects debtors from unreasonable collection practices

Without debt collection laws, there is the potential for abuse by people trying to collect a debt, including midnight phone calls demanding payment, complaints to a debtor's employer about the debt, and threats of terrible consequences. The law protects debtors (people who owe money) from these types of unreasonable collection practices.

How does the Business Practices & Consumer Protection Act protect debtors?

In British Columbia, the Business Practices and Consumer Protection Act (administered by Consumer Protection BC) ensures the collection of debts is reasonable. The Act has two important aims:

• to license debt collection businesses and collection agents
• to regulate the conduct of creditors and debt collection businesses

The Act recognizes that creditors have a right to collect money owing to them and outlines how and when a collector may contact a debtor, but at the same time, it recognizes that debtors should be protected from unreasonable debt collection activities.

What are debt collectors and how do they operate?

A debt collector is someone who carries on the business of collecting debts for others for a fee. If you bought a suit from a local store and haven't made the payments, the store owner may eventually give up on you and hire a debt collection business to recover the money from you. Normally the debt collection business charges the creditor (in this example, the store owner) a fee related to the amount they recover from you. If the debt collector recovers nothing, they get no fee, so they are more aggressive in their collection tactics than creditors who are doing their own collecting.

The Business Practices and Consumer Protection Act prohibits debt collectors from suing to collect debts unless the debtor has been given notice that the debt has been assigned to them from the creditor, or the debt collector has given notice to the debtor that they intend to sue. The notice is usually a letter to the debtor demanding payment and describing the debt claim, the nature of the default, the terms for resolution, directions for reply, and a specific deadline for the reply. But if the collection has not been assigned to a debt collector, a creditor can sue without first sending the debtor a letter demanding payment.

Creditors and debt collectors cannot harass you

The general rule is that anyone collecting a debt—either a creditor or a debt collector—cannot communicate or attempt to communicate with a debtor or their family, acquaintances, or employer in such a way that the communication is harassment. Harassment is defined in the Business Practices and Consumer Protection Act to include:

• using threatening, intimidating, profane, or coercive language
• exerting excessive, undue, or unreasonable pressure
• publishing or threatening to publish the debtor’s failure to pay what they owe the creditor

The Business Practices and Consumer Protection Act also prohibits debt collectors from continuing to communicate with a debtor directly, once the debtor has told the debt collector to communicate with the debtor’s lawyer and provided the lawyer’s address.

Beyond the Business Practices and Consumer Protection Act, the Criminal Code also prohibits direct threats of harm to persons or property, extortion, and conveying false messages with intent to alarm.

Creditors and debt collectors cannot intimidate you

A debt collector is not allowed to contact you, your family, or your employer in such a way that it may cause alarm, distress, or humiliation. For example, they cannot phone your home every ten minutes all day long demanding payment, because it is likely that the tactic will cause distress to your family members. Similarly, they aren’t allowed to stand on your front lawn with a megaphone, demanding payment, for all your neighbours to hear. Those are extreme examples, but many more subtle techniques are forbidden as well.

Creditors and debt collectors cannot mislead you

Creditors and debt collectors can’t use forms or documents that look like they come from a court or the government. For example, they can’t mail you a letter that looks like a court summons or document and demands payment because that would be misleading.

Can creditors and debt collectors contact your employer?

Yes, but creditors and debt collectors must be careful when contacting your employer. They can do so only to confirm your employment. So they can’t harass your boss, or harm your reputation by suggesting that you should be fired because of your debts. But a creditor or debt collector can make one attempt to collect a debt from you while you’re at your place of work, if they can’t reach you at home or if you won’t respond.

Only the right amount can be collected, and only from the right person

Debt collectors cannot collect or try to collect money from someone who doesn’t owe the money, or try to collect more money than is owed to the creditor. But interest can continue to accumulate on an outstanding debt, and they can collect that, if it is reasonable.

If you experience harassment or unreasonable collection practices

You have three options:

• complain
• accept only written communications
• ask the creditor to sue you

Complain

Ask to speak with a supervisor at the debt collection agency. If that gets you nowhere, you can complain to Consumer Protection BC. They can explain how to deal with the complaint directly with the debt collector. If the unreasonable collection behaviour continues, Consumer Protection BC may investigate and stop the debt collector or creditor. To make a complaint, call Consumer Protection BC at 1.888.564.9963 (toll-free).

Accept only written communication

If the type or frequency of the collection telephone calls is upsetting you and the calls won’t stop, you can request that all future communication be in writing only. It’s an offence if a debt collector doesn’t follow your request. Put your request in writing and keep a copy for your records.

Ask the creditor to sue you

If you disagree with the debt, you can notify the creditor and debt collector that you dispute the debt and want the creditor to sue you so a court can rule on whether you owe money. Once they receive your written notification, they must stop all other types of collection. Keep a copy of your communication to the creditor and debt collector for your records. A debt may still show on your credit report while you are disputing it.

What if you’re contacted about a debt that isn’t yours?

Tell the debt collector that you are not the debtor. If the calls continue, contact Consumer Protection BC, who can help you.

If you’re in debt, you have a legal obligation to repay the money

You have to pay the debt, But the Business Practices & Consumer Protection Act regulates the practices that debt collectors can use in trying to recover their money.

More information

• See the consumer help section of Consumer Protection BC, Or call 1.888.564.9963 (toll-free).
• If you are in financial difficulty or have trouble paying your bills, check script 253 on “When You Can’t Pay Your Debts”.

[updated December 2016]

The above was last reviewed for accuracy by Daniel Hsu via John Carlisle, and edited by John Blois.

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