What does the word ‘debt collector’ bring to mind for you? Perhaps you think of a man standing outside your house, yelling and demanding money.
Perhaps you think of a woman on the phone, calling day in and day out, asking how much longer she has before you pay up.
Perhaps you think of a legal letter, asserting that they will take everything if they have to.
Regardless of what debt collectors make us feel like thinking about them when we hear the word – it is important to understand that debt collectors are vital to our economy. This article provides an overview into how debt collectors operate in Canada and what they are legally allowed – or not allowed – do while collecting debts from clients.
Who is a debt collector and what do they do?
Debt collectors are businesses – or people – who are hired by creditors to collect debts that have not been paid. This can include unpaid credit card debts, car loans, personal loans, and bad cheques. If a debtor owes money to the creditor and has not paid back their debt in full – the creditor can hire a debt collector to go after the debtor for the money owed. Debt collectors communicate with the debtor in order to explain why they owe money when repaying loan. If you owe money on your credit card and you stop making payments, your credit card company will take some action to recover that debt. They will send you a letter asking you to pay the balance on your account.
The debt collector who is employed by that creditor then makes a call to you, explaining to you that your credit card is delinquent. Or they could have a kind person come into your home and explain through hand-written documents why you are late in paying back the funds of your credit card. You may not have been making payments on time because of unforeseen circumstances – and that is fine. However, the creditor could still take legal action against you if they find out and have proof that you have not been making timely payments on your credit card(s).
What do debt collectors do?
Debt collectors try to collect money from people who owe it. They will call, write letters, and even show up at your home or workplace – in order to ask for the money owed. When speaking to you over the phone, debt collector may seem aggressive and demanding. If you owe money on your credit card because of poor decision making – a debt collector may seem very pushy and rude. However, once when you hear the other side of the story, it could be that they are just trying to make sure that their company gets paid back all of their hard-earned money they loaned to you (in good faith) when they gave you a credit card.