More information is available in the Bill Collection and Debt Repayment tipsheet. A debt repayment agency is a business that charges a fee to act for you in negotiating or making arrangements with creditors for you to pay what you owe.
This is a voluntary agreement between the debt repayment agency acting for you and your creditors. A creditor does not have to accept your payment proposal. Even if a creditor accepts your payment proposal, it can be cancelled if you do not abide by all the terms of the agreement. The creditor can then resume collection activity on your debt. The agency must tell you within 30 days of being informed by a creditor that the creditor has decided not to participate in or has withdrawn from a debt repayment program.
For more information about how debt repayment agencies work, see the Bill Collection and Debt Repayment tipsheet. Make sure you are able to verify any payment you made to an agency or creditor. This can be done by receipts, cancelled cheques and any other proof that a payment was made. Your submissions are monitored by our web team and are used to help improve the experience on Alberta. If you require a response, please go to our Contact page.
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Table of contents. Overview Alberta requires all collection agencies, collectors, debt repayment agencies and debt repayment agents to be licensed under the Consumer Protection Act and the Collection and Debt Repayment Practices Regulation. The following agencies and agents are involved in consumer credit and debt repayment: Creditors give credit, loans or other agreements to consumers, allowing consumers to purchase products or services. Collection agencies work on behalf of creditors to collect unpaid debts or locates debtors for others.
Debt repayment agencies can help you negotiate with creditors to help you pay what you owe. Collectors are employed or authorized by a collection agency to: collect or attempt to collect a debt from a debtor locate debtors in Alberta act for or deal with a debtor Debt repayment agents help to make arrangements or negotiate with your creditors, including receiving money from you to distribute to your creditor for a fee.
The agencies are responsible for the behaviour of the collectors or agents they employ. What creditors do When you use credit to make purchases or pay for services and fail to make payments your creditors may take legal actions to recover the money owed. Common types of credit are: credit cards bank loans student loans payday loans bank account overdrafts lines of credit finance agreements A creditor can hire a collection agency to collect unpaid debts.
Secured credit contracts Some creditors ask you to provide some type of security when you sign a credit contract. Common types of security include: savings bonds term deposits property such as vehicles, furniture or a house If someone has co-signed a loan for you, their money or belongings may be the security for your debt.
Seizure under a secured contract A creditor must use a civil enforcement agency to seize the security. Conditional sales contracts A conditional sales contract is a special type of secured contract. Unsecured credit contracts With an unsecured credit agreement, you get credit without promising security to the creditor. Seizing property Creditors may take action to seize your property through a civil enforcement agency without the need for a judgment if: you have bought items through a time sales agreement and you are behind or have not made any payments the creditor is secured by a chattel mortgage and you have payment arrears the debt is rent owed to a landlord Stopping a seizure of property Talk to your creditor immediately.
Although most collection agencies work within the professional and ethical bounds of their industry, there have been numerous cases when deceitful, harassing and otherwise threatening or unsavoury practices have violated consumer rights and stirred the need for stricter regulation.
Canadians who are receiving collection calls are not only overwhelmed but also they are often confused. The answer to this question can often be straightforward.
In some instances, however, the answer can be quite complex. Your unpaid account may be owned by either your original creditor or it may be owned by a debt buyer.
Your original creditor is the company that provided you with goods, services, or credit. Some original creditors will sell their portfolio of unpaid accounts to another firm. These purchasers of unpaid accounts are known as debt buyers. To make matters more complicated, there are two distinct categories of debt buyers.
Traditional collection agencies will purchase debt. As far as traditional collection agencies are concerned, their primary revenue source is collecting debts owed to others on a commission basis, and collecting accounts it owns is a secondary source of revenue. The second category of debt buyer is the pure debt buyer. The pure debt buyer does not collect accounts owed to others on a commission basis.
Some original creditors never sell their unpaid accounts to debt buyers. There are a handful of Canadian firms that sell their unpaid accounts when they have been unpaid for as little as six months.
It is more common, however, for Canadian firms to sell their portfolio of bad debts when the date of last payment is at least two to six years in the past. Original creditors and debt buyers employ their own collectors. Regardless of whether your unpaid account is owned by your original creditor or a debt buyer for the first six months your account remains unpaid the odds are very high that you are receiving collection calls from collectors employed by your creditor.
As a general rule, provincial governments do not regulate the conduct of creditors who are collecting their own debts. This means that if you are receiving abusive phone calls from a collector employed by your creditor you will be wasting your time filing a complaint with the government body regulating collection agencies in your province.
The federal government has enacted some legislation that provides some protection to consumers who are receiving collection calls where the debt is owed to a federally regulated financial institution. This means that if you are receiving collection calls in connection with monies owing to a bank or a credit card company—regardless of the employer of the collector—then you can file a complaint with a federal regulator.
Your creditor—regardless of whether your debt is owned by your original creditor or a debt buyer—may decide to hire a collection agent to collect your unpaid account.
A collection agent is a firm authorized by a creditor to collect monies owing to the creditor. If this happens, contact the credit bureau and use the error dispute mechanism to remove the item. You can also report the collection agency for unfair or illegal practices. After many years, they may also decide to sell your account outright to a debt buyer for pennies on the dollar. When they send or sell an account to a collection agency, your creditor might decide to write-off or erase the debt from their books as non-collectible.
Creditors often do this for tax reasons. However, the debt does not go away just because the creditor wrote-off your debt in their records. A debt collector can still collect on a charged off debt. At this point, calling and sending collection letters that demand payment before further action is taken are mostly just threats. If a debt collector does try to sue you after the limitation period, you can defend the action by notifying the court that the limitation period has expired.
Failure to show up in court and plead this defense can result in a judgment favouring the collection agency. Whether you choose to pay an old debt is up to you. It will fall off your credit after seven years, but collection agencies can still call. If you want to stop the calls, you can offer to settle. Only make this offer if that is what you intend to do. Otherwise, ignore the calls. Whether the limitation period has passed or not, you have rights when dealing with a debt collector.
If a debt collector has not respected your rights, you can file a complaint with the Financial Consumer Agency of Canada or provincial consumer affairs office. A collections account will remain on your credit report for seven years, whether paid or not.
Depending on the credit bureau, the debt will remain on record either from the date of your last payment or from the date you missed your payment due date.
Having accounts in collection will lower your credit score and affect your ability to get a loan. So what do you do if the debt is too old under limitations law but is still on your credit report? You need to decide how this will impact your finances. Collection accounts will hurt your credit score and may limit access to a loan at reasonable rates.
If you are not planning on borrowing any time soon, this may not matter. You can wait out the seven years for the debt to be removed from your credit report.
If you agree on a settlement, you can ask the collection agency to make a goodwill deletion.
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