Collection Agencies

Sometimes a creditor (company you owe money to) may use a collection agency to collect a debt if you have fallen behind in your payments.  They might hire the collection agency to collect the debt for them, or they might sell the debt to the collection agency.

A collection agency is a business that arranges for and obtains payment of money owed to another person or organization.  For example, you might hear from a collection agency about a credit card debt, an outstanding loan or a line of credit.

Collection agencies and collectors (person employed by a collection agency) must be licensed to do collection activities in Nova Scotia.  Service Nova Scotia licenses and regulates collection agencies and collectors in Nova Scotia, under the Collection Agencies Act.

Yes, but the agency must first write to you and tell you that it has been hired to collect the debt, or has purchased the debt.  When they contact you the agency or collector must tell you the agency's name, the amount you owe, and identity themselves and how they are authorized to collect the debt.

There are other rules collection agencies must follow when they are trying to collect the debt.

A collection agency or collector must not call or talk to you until you have been notified in writing that they have been hired to collect the debt. When they contact you the agency or collector must tell you the agency's name, the amount you owe, and identify themselves and how they are authorized to collect the debt.  They must first make sure that you owe the debt before they try to collect it.  

The agency or debt collector must not:

• Make collect calls to you
• Contact you if you have written telling them to contact your lawyer (or your lawyer wrote to them saying that)
• Use documents, notices or  letters which are made to look like court forms
• Pretend  to represent the police or sheriff
• Threaten you or use abusive or intimidating language
• Harass you or your family, for example, by calling every 15 minutes
• Try to collect the debt on a Sunday or any day before 8:00 am or after 9:00 pm
• Give misleading information or try to make things difficult for you at work.

The agency or debt collector may:

• Contact your family, friends, neighbours, employer, or anyone else, but only to try to get your address
• Collect the debt, but not any additional amount
• Sue you if the creditor has assigned the debt to the collection agency in writing and you have been notified of the assignment.

Yes, but only to get an address for you.  However, they can contact anyone who is also on the debt - as a co-signer or guarantor for example.

First, see if you can complain to the supervisor or manager of the collection agency to resolve the problem.  Otherwise, you can complain to Service Nova Scotia. You may contact Service Nova Scotia toll-free at 1 800 670-4357 or 902-424-5200 in the Halifax Regional Municipality, or visit novascotia.ca.  In the most extreme cases, a collection agency's license can be suspended or cancelled.  

Contact the Financial Consumer Agency of Canada if you're dealing with

• the debt collection department of a federally regulated financial institution
• a debt collection agency hired by a federally regulated financial institution.

• Get help dealing with your debt problems, as it can be very stressful to try to manage money problems on your own.  And see 'Options you can trust to help you with your debt', from the Office of the Superintendent of Bankruptcy Canada.
• Do nothing, and see what steps the agency takes (not recommended)
• Keep a record of who is contacting you, the name of the collection agency, and their contact information
• Ask for a written statement of what you owe, including any interest or late payment charges.  Take the time to check your records to make sure you owe the debt, and that the amount owing is right
• If possible, and if you owe the money, pay the debt. Note that the agency is not allowed to collect more than the amount you owe and cannot charge you for its costs to collect the debt.   However, interest can continue to build up on an outstanding debt
• If it is impossible for you to pay the full amount right away, explain why. You may suggest some alternative method of repayment, either a lump sum at a later date or a series of monthly payments for example.  You might be able to negotiate to just pay a portion of the amount you owe
• Never send cash and always make payments in a way that you have a receipt - such as payment online, a money order,  a cancelled cheque from your bank or a receipt from the agency
• If you do make an agreement with a collection agency, make sure it is in writing.  If they will not put it in writing, send them a letter confirming the agreement, and keep a copy for yourself
• You may want to look at the Collection Agencies Act and the Consumer Creditors Conduct Act (if you are contacted by the collection department for a business)
• Contact a lawyer.  Nova Scotia Legal Aid may provide brief legal advice on credit and debt issues, or contact a lawyer you would pay - especially if you feel you do not owe the alleged debt.

Yes, a creditor may sue you.  There are time limits (limitation periods) on the length of time a creditor has to sue on a debt, so you should find out how old the debt is, and the last time you made a payment.

If you get a court paper like a Notice of Claim (Nova Scotia Small Claims Court) or a Notice of Action on a Debt (Supreme Court of Nova Scotia)  or any other official court paper, it is a good idea to talk with a lawyer.

A creditor can only seize property if it has a court order, meaning the creditor would have to sue you in court and win.

However, if the government is a creditor, for example, a student loan, tax debt, overpayment of a social benefit, the government may seize GST rebates and tax refunds to recover the debt.

What assets can be seized with a court order depends on your individual circumstances. Two Nova Scotia laws, the Judicature Act and the Personal Property Security Act, outline a few basic rules about what property can or cannot be seized.

In Nova Scotia the following property cannot be seized (taken), even with a court order:

• Clothing, furniture or appliances that are not worth more than $5,000. In most instances, collection agencies are not interested in seizing these items anyway.
• A vehicle that is not worth more than $6,500. However, if a financial institution lent you money specifically to buy the car and you fail to make payments on the loan, the car may be seized whatever its value and whether or not you need it for work or to get to work, as in that case the financial institution is what is called a 'secured creditor' with special rights,  and the vehicle is collateral for the loan
• Tools or items that you use for your work to a value of $7,500
• Medical or health aids reasonably necessary for the debtor and their family
• Family's fuel and food.

A creditor must first sue you in court and get a court order before it can seize any of your goods or money. The creditor must notify you if they decide to sue you.

If you get a court paper like a Notice of Claim (Small Claims Court) or a Notice of Action on a Debt (Supreme Court of Nova Scotia) , or any other official court paper, it is a good idea to talk with a lawyer to get legal advice if you can.

A collection agency can only seize (take) or garnish income or wages if it has a court order, meaning they creditor would need to have sued you in court and won.

However, if the government is a creditor, for example, a student loan, tax debt, or overpayment of a social benefit like income assistance:

• the government may seize GST rebates and tax refunds to recover the debt, without a court order; and
• debts owing to government benefit programs like CPP, OAS & GIS, Income Assistance, EI can be deducted from benefits payable by those programs, without a court order.

Certain income sources are protected and cannot be seized by a private creditor, even with a court order, including:

• Canada Pension Plan (CPP) benefits
• Old Age Security (OAS) and Guaranteed Income Supplement (GIS)
• Income Assistance
• Employment Insurance (EI)

If you are working and there is a court order against you saying you owe a debt, the judgement creditor (who you owe the debt to) may have the Sheriff seize up to 15% of your gross wages (before tax and lawful deductions) to pay the debt. 

However, your wages cannot be seized if you would be left with less than:

• $330 a week, net pay (after tax and lawful deductions from your pay), or
• $450 a week, net pay, if you support a dependant.

A creditor must first sue you in court and get a court order before it can seize any of your goods or money. The creditor must notify you if they decide to sue you.

If you get a court paper like a Notice of Claim (Small Claims Court) or a Notice of Action on a Debt (Supreme Court of Nova Scotia) , or any other official court paper, it is a good idea to talk with a lawyer to get legal advice if you can.

For help and information:

• A Licensed Insolvency Trustee can provide professional advice about your options for dealing with debt, including about a bankruptcy or consumer proposal.  Trustees are listed in the Yellow Pages  under 'Bankruptcies', or search for 'trustee in bankruptcy' online.  You can also get a listing of local trustees from the Office of the Superintendent of Bankruptcy at 1 877 376-9902 (toll free) or osb.ic.gc.ca
  
  
• Office of the Superintendent of Bankruptcy - regulates bankruptcies, oversees licensed insolvency trustees, and has helpful general information for debtors and creditors
  Website  www.osb.ic.gc.ca
  Industry Canada
  Phone: 1 877 376-9902 (toll free)

• A credit counselling agency.  Credit counsellors cannot administer bankruptcies or consumer proposals, but can help you in a number of ways, such as a debt management plan, budgeting, wise credit use, and general money management.  Make sure you find a credit counsellor you trust.  The Financial Consumer Agency of Canada  - has a fact sheet about how to find a reputable Credit Counselling service: www.fcac-acfc.gc.ca.
  
• Nova Scotia Legal Aid legal information about bankruptcy, and Debts

• Financial Consumer Agency of Canada, or call 1 866 461-3222.  Lots of consumer information on many money related topics, including Collection Agencies
  
• A lawyer in private practice, or Nova Scotia Legal Aid if you cannot pay a lawyer.