If you don’t pay back a debt on time, you’ll likely be pursued for the money through a debt collection agency.
Debt collection laws differ depending on where you live in Canada, but you have rights that collection agencies must adhere to.
Many Albertans experience abusive debt collection practices and are often not treated fairly. Sometimes, debt collection agencies use threats and lies to get people to repay their debts.
Fortunately, we’ve put together this handy guide so you know what to expect from debt collectors. Learn how Alberta debt collection laws work, debt collection agency rules, and some typical collection and debt repayment practices.
Debt collection agency meaning
Before we begin, here’s a quick word on what a debt collection agency does.
A debt collection agency is hired by a creditor when you don’t pay back your debt on time. It’s their job to get the money owed to the creditor, and they get paid for doing so.
Debt collection agencies will use a variety of methods to recover the money owed, such as phone calls and voicemails, letters requesting payment and emails.
Initially, you will receive a letter stating that your account is in collections. You’ll likely receive multiple phone calls and emails to request repayment.
If you ignore these requests, a debt collection agency will notify you in writing that legal action will be taken against you. If a collection agency manages to obtain a court order, this can lead to your wages being garnished, assets being seized, or a lien on your property.
Alberta debt collection laws
Debt collection agencies must follow some rules when pursuing Albertans for debt.
Firstly, they must be licensed in Alberta and use the name on their license when speaking to you or sending you any correspondence.
If a debt collector contacts you, they must provide information about the creditor they represent, the debt in question, when the account was sent to collections, and the amount due.
You are not obliged to reply immediately. It’s a good idea not to acknowledge that you owe the debt, answer questions or provide any personal information until you know the facts.
When it comes to a debt repayment agreement, a debt collector must disclose in writing how much they will charge for a non-sufficient funds (NSF) cheque before submitting it.
And if you make a payment in person (or request a receipt), collection agencies must give you a receipt. This applies to all cash transactions and payments.
If you request an account of the debt, they must provide this, but they only have to do this once every six months. However, if they cannot provide it within 30 days of your request, they must cease collection activity until they can.
Next, we’ll look at Alberta’s contact rules for debt collection.
When can debt collection agencies in Alberta contact me?
Debt collection agencies in Alberta can contact you at home between 7:00 am and 10:00 pm local time on weekdays and Saturdays. On Sundays, they can contact you between 1:00 pm and 5:00 pm local time.
How many times can a collection agency call you in Alberta?
Collection agencies cannot contact you more than three times every seven days. This excludes third-party contact, mistaken contact or contact by traditional mail.
Can a debt collector in Alberta contact my friends or family?
A debt collection agency can contact your spouse, partner, relative, neighbour, friend or acquaintance to request your residential address and personal (or employment) phone number.
Can a debt collector in Alberta contact me while at work?
Collection agencies can contact you at work to discuss your debt unless you ask them not to. However, if you don’t want to be contacted at work, you must make other plans to discuss the debt.
Can a debt collector in Alberta contact my employer?
Debt collection agencies can contact your employer once to confirm your employment status, business title, and business address. They are permitted to do so to prepare for legal proceedings (if required).
Debt collection agency rules in Alberta
Alberta debt collection agencies must follow several rules under Alberta law when they attempt to collect payment for a debt.
Debt collection agencies cannot:
- Harass you, others or your employer with constant phone calls.
- Threaten, intimidate, or put unreasonable pressure on you to repay the debt.
- Mislead you by giving false or misleading information such as references to the police, a law firm, credit history, court proceedings, lien or garnishment.
- Imply that the collection agency is part of a law firm or legal department.
- Threaten legal action if they do not have the legal authority and consent of the creditor to do so.
- Discuss your debt with other people unless you permit them to do so. They are allowed to discuss the debt if the person is a guarantor.
- Discuss your debt with a minor child.
- Contact you if you inform them in writing or any other verifiable means that the debt is in dispute and that you wish the creditor to take you to court.
- Continue to contact you if you tell the collector that you are not the debtor unless, after investigation, the agency is convinced you are the debtor.
- Cancel or alter a repayment arrangement if you have complied with the terms of the arrangement and have not misrepresented your financial circumstances or they have not materially changed.
- Contact you more than three times every seven days. This excludes third-party contact, mistaken contact or contact by traditional mail.
- Pursue a non-judgment debt if the last payment or written acknowledgement is more than six years old.
- Suggest that a friend, spouse or family member is responsible for your debt or ask them to pay unless she is jointly liable.
- Threaten to physically harm you, your family or your property. If this happens, call the police and inform Service Alberta.
- Seize property if you do not pay your bill. If the agency sues you and obtains a judgment, they may hire a civil enforcement agency to seize your property. Only a bailiff who works for a civil enforcement agency can take property.
- Involve the police or send you to jail.
Source: Alberta government services and information
Statute of limitations for Alberta debt and your rights under Alberta law
A debt collection firm in Alberta can only initiate legal action against you for two years, beginning from the day you defaulted on the debt, acknowledged the debt, or last made a payment. The creditor or collection agency cannot use legal action to force you to pay if it has been more than two years.
This is a statute of limitations outlined in Alberta’s Limitations Act. Once this period has passed, a collection agency cannot take further legal action.
Some debts are exempt from this limitation period, such as:
- Government debts such as CRA and student loans.
- Arrears for alimony or child support.
- An award by a civil court for damages.
However, suppose you make a payment towards the debt or recognize that you owe the debt (in writing or by email) before the original statute of limitations runs out. In that case, the time limit is restarted, and it starts all over again.
How long can debt collectors try to collect in Alberta?
As soon as the two-year statute of limitations period has passed, collection agencies can no longer take you to court. However, they can keep contacting you indefinitely to collect what is owed.
It’s worth remembering that an unpaid debt will severely damage your credit score, and this information typically appears on your credit report for six to seven years.
As long as the two-year period is still active, you can still be taken to court by the collection agency, and they can get a court judgment, which could lead to wage garnishments or a seizure of assets.
If there is a court judgment before the original statute of limitations expires, this period can be extended to 10 years.
How to resolve debts in collections in Alberta
There are several ways to deal with a debt collection agency. Firstly, check that the collection agency is legitimate and you owe the money.
Always get the following information from the collection agency:
- Agent’s name
- Collection agency’s name and contact details
- The creditor they represent
- Balance owed
- Date the debt was passed to collections.
Tell the collection agency that you’ll get back to them after you’ve established that you owe the money. If you aren’t sure you owe the collection agency or original creditor any money, dispute the debt.
When you know the debt is yours, you can arrange a repayment program to stop the debt collection process. Set up a monthly payment plan you can afford, and don’t be pressured into entering into an agreement you can’t keep.
Here’s a tip: get a receipt when you pay and pay the collection agency directly rather than the creditor.
Sometimes, you can negotiate a lower amount to settle the entire balance by paying a lump sum upfront, allowing you to save a substantial amount of money.
It is also possible to file a consumer proposal or declare bankruptcy to stop all collection action immediately.
How to complain about a collection agency in Alberta
If you feel that a collection agency has acted unlawfully, consider making a complaint to the consumer affairs office in Alberta.
Contact the Financial Consumer Agency of Canada if you want to complain about a debt collection department or agency for a federally regulated financial institution.
Alberta debt collection laws exist to protect your rights if a collection agency comes calling. Speak to a Licensed Insolvency Trustee if you have debts in collections and are unsure of what to do next.
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