Debt Collection Agency: Know Your Rights!

I came across this very sad Toronto Sun story about an abusive collection agency that took harassment to a new level, phoning a debtors 81-year-old dad and a neighbour, telling them he owed money and he better pay up.

When the man’s 14-year-old daughter got a harassing call and was so overcome with fear she decided to offer $400 in babysitting money to help her cash-strapped dad get out of financial hot water, he cried. And called the Toronto Sun.

“I know I owe money and I’m not running away from it. But they’re harassing me, making me feel worthless. I’m not a deadbeat. I’m a hard-working family man who may lose my job,” says a sobbing 47-year-old Robert, who has worked on the line at General Motors for the past 27 years.

Robert is among a growing number of Canadians struggling to keep up with the bills, while a layoff looms.

Last week GM announced it would shut its truck assembly operation in Oshawa, putting 2,600 out of work. Robert is one of them.

With total household debt in Canada at a record $1.1 trillion and consumers owing 124% of real disposable income, many aren’t keeping their heads above water. Personal bankruptcies hit their highest level in more than four years in April.

In total, 8,035 consumers declared bankruptcy, as did 592 businesses. Some of the biggest increases were in Ontario, where the economy has been hit hard by a U.S. economic meltdown.

Up until a year ago, staying ahead of the bills wasn’t a problem for Robert, who earns a decent wage of $33 an hour. His 45-year-old wife earns $17 an hour working as a nurse in Whitby.

But this past winter Robert was laid off for 31/2 months and his wife was forced to take time off work to deal with skin cancer. After that, she had a scare with breast cancer.

Luckily Robert is not one of the cash-strapped Canadians who’ve borrowed against their home equity or opted to play the game of 0%-down mortgages or 40-year amortizations.

His $180,000 mortgage on a three-bedroom Oshawa home valued at $285,000 is in good standing. But with rising property taxes, it’s a struggle to fork out $1,700 a month on home ownership costs.

Then, there’s skyrocketing hydro bills (their home is heated by electricity), plus the rising cost of food, gas and insurance. One car now sits in the driveway of this two-vehicle family.

CREDIT CARD WOES

 

What got Robert in hot water was his Visa credit card. When he was out of work, he racked up debt of $4,600, and with interest and late payment penalties, the total now sits at $5,620. At first, he was able to make minimum payments, then all he could afford was partial payments. It wasn’t long before a letter arrived warning that he was in collections, and then the phone calls began.

“I tried to explain my predicament, but they were very rude. On the third call, they told me obviously I didn’t want to settle the matter and they would take other action,” he recalled.

Robert did the smart thing and visited a credit counseling agency for help. A consumer proposal was drawn up that sets out a repayment plan he can handle, while waiving interest, fees and late-payment penalties.

What he wanted to know from me was what were his rights when dealing with a harassing collection agency.

Laurie Campbell, executive director of Credit Canada, explains collection agencies have to abide by rules set out in Ontario’s Collection Agencies Act.

With the latest bankruptcy numbers indicating more and more loan defaults are on the way, she advises that consumers understand what an agency can and cannot do.

Campbell also points out it’s high-cost credit card debt that sinks families, a burden made worse by gouging interest rates that average more than 19% on standard cards, and head even higher when a payment is missed.

“It can be very stressful to manage your financial life when collection agencies start calling,” she said.

A review of Ontario’s Act reveals the collection agency dealing with Robert broke a few rules.

For starters, the Act is clear. An agency cannot contact a spouse, family or household member, relative, neighbour or acquaintance unless the person contacted guaranteed the debt. The only time they’re allowed to contact these people is to ask for an address or telephone number.

Robert is adamant. Not only did this collector call his father and a neighbour but spilled the beans that he owed money. “My father called me and said, ‘Bobby, what kind of trouble are you in?’ ” Robert recalls.

Another rule this agency broke was calling Robert at 6 p.m. on a Sunday. On Sundays or holidays, calls can only be made between 1 and 5 p.m.

And collectors can’t use “threatening, profane, intimidating or coercive language,” the act states, “or use undue, excessive or unreasonable pressure.”

According to Robert, not only was this collector intimidating but was urging him to sell his house.

Other rules include:

- A collector is only allowed to contact you six days after sending a written notice stating the name of the creditor, the balance owing, the name of the agency and its authority to demand payment.

- A collector can’t contact you if a registered letter is sent to the agency saying you dispute the debt and suggest the matter be taken to court.

- A collector can’t contact you if you sent a registered letter stating to deal solely with your lawyer.

- A collector may not contact you other than by ordinary mail more than three times in a seven-day period without your consent, once the agency has actually spoken with you.

- A collector can’t continue to contact you if you have told him you’re not the person he’s looking for, unless he takes reasonable precaution to ensure you’re that person.

- They can’t give false or misleading information.

- They can’t recommend to a creditor that a legal action be started against you without first sending you notice.

- They can’t contact your employer except on one occasion to obtain your employment information, if your employer has guaranteed the debt, if the call is in respect to a court order or wage assignment, or if you’ve provided written authorization to contact your employer.

If any of these rules have been broken, you can file a complaint with the consumer protection branch of Ontario’s government and consumer services ministry.

Meanwhile, for Robert money’s so tight, he’s considering signing up to test drugs for a pharmaceutical firm that will pay $3,600. Also, his 20th wedding anniversary is this Tuesday. Robert can’t afford much, so he asked that I print this message for his wife:

“Happy anniversary, honey. You have given me the best 20 years and the meaning of love.”

Debt Collection Toronto