In Alberta, Canada, there are specific laws and regulations that govern the debt collection process.
Knowing the dos and don’ts when dealing with debt collectors can make all the difference in resolving your debt while protecting your rights.
What are debt collection agencies?
Debt collection agencies (also known as debt repayment agencies) specialize in collecting unpaid debts on behalf of creditors.They may be specialist debt recovery companies or even a law firm with a debt collection department.
These agencies are hired to recover outstanding debts owed by debtors, and they use various methods to collect the debt, such as sending letters, making phone calls, and negotiating payment plans.
Debt collection agencies may also take legal action against debtors who fail to pay their debts to ensure they pay what they owe.
Some debt collection agencies specialize in certain types of debt, such as medical debt, payday loans, personal loans, or credit card debt, while others collect all kinds of debts.
How does the debt collection process work in Alberta?
The debt collection process in Alberta is similar to the process used throughout Canada.When a debt collection agency is hired to collect a debt in Alberta, they are required by law to send the debtor a written notice informing them of their rights and obligations.
This notice is commonly referred to as a “collection notice” and is sent by mail to the debtor’s last-known address.
Once the debt collection agency or debt collector has sent a collection notice to the debtor, a debt repayment agent will usually attempt to contact the debtor by phone within a week to follow up on the debt.
The purpose of the phone call is to confirm the debtor’s contact information, discuss the debt, and try to negotiate a payment plan.
If the debtor and the debt collection agency are unable to come to an agreement on how to repay the debt, the debt collection agency may continue to try to negotiate a payment plan with the debtor.
In some cases, the agency may be willing to accept a partial payment or a settlement offer if it means that they can recover at least some of the debt. However, if no agreement can be reached, they may consider initiating legal action.
Alberta debt collection laws
In Alberta, debt collection agencies are regulated by the Fair Trading Act, and there are specific rules that they must follow when attempting to collect a debt.Below are some of the dos and don’ts for debt collection agencies in Alberta:
What a debt collection agency can do
- Contact the debtor by phone, mail, or email to discuss the debt
- Attempt to negotiate a payment plan or settlement offer
- Contact the debtor’s employer or bank to verify their employment or bank account information
- Obtain a court order to seize assets or garnish wages if legal action is taken
- Share information about the debt with the creditor, credit reporting agencies, and other authorized parties
What a debt collection agency can’t do
- Use threatening or abusive language
- Contact the debtor outside of specific hours (before 7:00 am or after 9:00 pm)
- Call the debtor repeatedly in a short period
- Misrepresent themselves or the debt in question, or use false or misleading information
- Garnish wages or seize assets without a court order
- Continue to contact the debtor after receiving a written request to stop
- Contact the debtor’s friends, family, or employer about the debt
- Add unauthorized fees or charges to the debt
- Fail to acknowledge the receipt of cash transactions
They will investigate the complaint and take action against the debt collection agency if they find it necessary.
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How long can debt collectors pursue money owed in Alberta?
In Canada, the length of time that a debt collection agency can pursue an old debt depends on the type of debt and the length of time since the debtor last acknowledged the debt. It also depends on which province you live in.Under the Alberta Limitations Act, most types of unsecured debt have a limitation period of two years. This means that a creditor or debt collection agency only has a certain period (two years) from the date of the last payment or acknowledgment of the debt to take legal action before the debt expires.
However, there are some exceptions to the two-year limitations on debt. For example, debts related to mortgages or secured loans may have a longer limitation period. Additionally, the limitation period may be extended if the debtor has made a partial payment or acknowledged the debt in writing within the two-year period.
Furthermore, if a court judgment is issued against you before the original limitation period expires or you have a tax debt owed to the Canada Revenue Agency (CRA), the time limit can be extended by up to ten years.
How do I deal with debts owed to debt repayment agencies?
If you owe a debt to a debt repayment agency in Alberta, it’s important to take action to address the debt and avoid further financial problems.Here are some steps you can take to deal with debts owed to debt repayment agencies in Alberta:
Don’t ignore your unpaid debts
Although it can be tempting, ignoring your debts will only make the situation worse. The debt will continue to accrue interest and fees, and the debt collection agency may take legal action to recover the debt.Negotiate a debt repayment agreement
Contact the debt repayment agency and try to negotiate a repayment plan that works for you. Be honest about your financial situation and what you can realistically afford to pay.The agency may be willing to accept a partial payment or a settlement offer.
Consider a formal debt repayment program
If you have multiple debts or are struggling to make payments, you may want to consider a formal debt repayment program like a Consumer Proposal.These debt relief options are often government-backed, overseen by a Licensed Insolvency Trustee, and allow you to consolidate your debts and make a single monthly payment towards what you owe, making the repayment process more manageable for you.
What happens if I ignore a debt repayment agency?
If you ignore a debt repayment agency in Alberta, it can lead to a number of negative consequences.Below are some of the potential consequences of ignoring a debt repayment agency.
Visits by debt repayment agents
If you ignore a debt repayment agency, they may attempt to contact you through other means, such as in-person visits to your home or workplace.These visits can be disruptive and cause stress and embarrassment.
Damage to your credit history
Ignoring a debt repayment agency can also result in damage to your credit report. The agency might report your delinquent account to credit bureaus, which can negatively impact your credit score and make it difficult to obtain credit in the future.Potential legal proceedings
If you continue to ignore the debt repayment agency, they may take legal action to recover the debt. This can include filing a claim in court, obtaining a judgment against you, and garnishing your wages or bank accounts.Legal proceedings can be costly and time-consuming, and they can further damage your credit history.
Where can I get more advice on debt collection and debt repayment?
If you’re struggling with paying debt and seeking a way to move forward, A. Fisher & Associates can assist you.As Licensed Insolvency Trustees, we understand the impact that debt can have on your well-being. We can help you overcome problem debt and regain control of your finances.
Our team is experienced in developing personalized debt repayment agreements that fit your financial circumstances. We can help you explore all available options and guide you through the process from beginning to end.
Don’t wait until the debt collectors come knocking, take action now. Contact one of our friendly advisors today.
