1. I am from the Legal Department and you are being sued.
In my experience, less than 2% of all debts listed with a collection agency ever result in formal legal proceedings, and in most cases, the legal costs necessary to initiate a lawsuit must be upfront by the collection agency. . From a business perspective, it doesn’t make sense to throw good money after bad in the hope of recouping legal costs and debt if you don’t have enough assets available to meet the judgment being sought. It’s just not worth it to the collection agency. Bill collectors use the “legal department” threat just because it’s scary and most people don’t know better. The fact is that most collectors sit in a tiny 3″x3″ cubicle and pretend to be someone they are not on the phone.
2. I’m going to garnish your paycheck.
To get any part of your paycheck, the collector needs a court judgment in your favor, but collectors won’t seek a judgment unless they have reason to believe you have enough assets to satisfy a judgment. Pursuant to Section 7(2) of the Wages Act (Ontario), no more than 20% of your wages can be garnished. A creditor can file a motion to increase the amount of wages that can be garnished, but a debtor also has the right to file a motion to have that amount reduced. I have heard collectors tell people they will garnish 50% of their wages, but the truth is that even if they do get a judgment, garnishments are rarely more than 15-20% of wages. Again, they only use the threat because it scares people and most don’t know any better.
3. If I don’t have payment by 4 pm today, we’re (Insert threat here).
Invoice collectors get paid a commission for doing their jobs, as are managers who put pressure on their necks to achieve their goals. Some aggressive bill collectors can earn six figures a year if they push people hard enough. They will tell you anything if they feel it will result in a bigger payout and commission check for them.
4. Pay in full, monthly payments are not an option.
They want payment in full from you because they make more money when you pay in full. Payments are always an option; In most cases, going directly to the creditor will allow you to obtain a monthly payment plan. It won’t fix your credit, but at least you can stop the demand for full payment.
5. Collectors can call you as much as they want.
Pursuant to Section 22(6) of RRO 1990, Regulation 74 of the Collection Agencies Act (Ontario), there are restrictions on the frequency of calls that collection agencies can make to you. Despite what you may be told, a debt collector cannot harass you. If you file a letter asking the collection agency to communicate only in writing, the calls should stop; otherwise, you can escalate their behavior to your ombudsman or provincial ministry for further action.
6. Collectors may call and harass your family, friends and neighbors.
A collection agency may only contact a third party to confirm your address and phone number or your employer to confirm your employment, title, and business address; that’s all (Section 22(3) of Regulation 74 of the Collection Agencies Act). If the collector divulges details about the debt or tries to shame you, there are steps the collector can take to address and stop this behavior.
7. Bill collectors can talk to you in any way they feel like.
Bill collectors can be unpleasant and rude; many think that insulting people will get the debt paid. Collection laws prevent this type of behavior from happening again if you escalate and fix the problem. If you feel you have been mistreated by using obscene, intimidating or coercive language, you can certainly stop it. They’re bound to deny activity, so a taped conversation or voicemail will be your best friend here.
Collection agencies and collectors have a bad reputation because they are a business like any other whose objective is to generate profits for its shareholders; it’s your job to pressure him to pay. There are ways to deal with debt and its behavior, but it takes time and some investment to research your rights. Try not to avoid debt but to find a way to deal with it. The only way to stop collection activity is to pay the bill or file bankruptcy. If you can pay the bills in full, do so as soon as possible.
If paying your bills is not an option due to extreme financial hardship, you may want to explore bankruptcy by consulting with a Trustee in your local yellow pages. Bankruptcy will surely fix the debt, but since it is bad for your credit rating, it should only be used as a last resort. In addition, a Receiver is a court-appointed agent for your creditors, so even though you pay them for their services, the Receiver is looking out for your creditors’ best interests. Your debts are eliminated, but also most of your assets are subject to certain limited exceptions, and your credit report shows the effect for 7 to 10 years.
Debt settlement should be considered as an alternative to bankruptcy, as it is quickly becoming one of the newest and best options in Canada to quickly and ethically pay off debt. A debt settlement company will act as your agent and negotiate an agreement with your creditors. Once the settlement is paid, the balance is paid off and your credit report is updated to reflect that the debt is settled. The time frame to pay off the debt can be anywhere from 1 month to 36 months depending on your capacity. This is often the least expensive, least damaging to your credit, and the fastest path to getting out of debt.
Remember collectors make a living trying to scare and intimidate people so they can earn a big commission check. Consider the source when calling and don’t let collectors pressure you, you have rights and can fight back and win!