11 – Your Rights with Collection Agencies

Wayne  0:04  

Welcome to the Debt Matters podcast where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada. I’m Wayne Kay and in today’s show we’re going to be talking about what are your rights with creditors and collection agencies. How to get them to stop those emails and letters and the calls. 

And to find out all about this, I’ve got Mark Marshall with me from Allan Marshall & Associates, Licensed Insolvency Trustees in New Brunswick, the St. John office. Mark, thanks very much for being here.

Mark Marshall  0:35  

Thanks for having me.

Wayne  0:36  

It’s always interesting to learn about what people’s rights are and debts. I don’t know why, but debt is something that terrifies so many people and they don’t know what to do. And they’re spending endless nights where they’re just awake, and they’re stressed, and they’re worried. Then all of a sudden, you get the creditors calling, which adds to that stress. Am I right?

Mark Marshall  0:58  

Well, it does. Yes,it’s one of those things individuals find themselves in – a bit of a vulnerable position. And they’ll get phone calls, some of the information valid, some of the information not valid, and people when they’re stressed out often tend to believe everything that’s told to them. 

Wayne  1:17  

And is it worse now, because there’s a lot of scam calls that happen as well, to add into this mystery of what debt and collectors are all about.

Mark Marshall  1:28  

Yes, there’s that. I dealt with a gentleman today that forwarded me some text messages from a collector that was overseas that didn’t appear to be valid. And when I researched it, it was a scam. And they were looking for him to send money offshore that obviously he would never be able to get back again. And of course, he was kind of beside himself a little bit. And he was prepared to do it. But obviously I talked him off the ledge, had a little chat, and did some research on the internet. And yes, at the end of the day, he’s hopefully not sending any money offshore.

Wayne  2:06  

That’s good. Well, as soon as you send it – I mean, we deal with the police a lot in the media. Finding out that once you take that step, and you actually send money, it’s almost impossible to get that money back. So great that he actually reached out to you. Right?

Mark Marshall  2:19  

Yes, it’s one of those things. Once the money is offshore, it’s gone. And, it’s easy.  I know people, it’s one of those things, when they run into those scenarios, they find themselves – if they’ve been out some money, they find themselves to be embarrassed. It’s one of those things that oftentimes, they don’t want to fall through the channels of either reaching out to somebody to help them or call on the authorities because they don’t necessarily want to divulge information. 

And, it’s a tough, tough thing. Scammers are getting more and more sophisticated these days in terms of getting information out or collecting information that that kind of makes them appear to be valid.

Wayne  2:57  

So, now going back away from the scammers – people do get into financial trouble, and they do answer phone calls from creditors. What does that look like?

Mark Marshall  3:08  

There’s two approaches. One is that you could have debts in house and the in house collection team would be making some phone calls. You could have a bank or a chartered bank you owe some money to, you’re falling behind on the payments. And so you’re finding that the chartered bank is making those phone calls. They’ll make inquiries to say, Okay, your payments behind what are you going to do? 

And then oftentimes it’s chartered banks or other creditors will kind of shuffle or sell the burden of the collection off to a collection agency. Then you’ll get a phone call from a collection agency that you’ve maybe never heard of before. You’re saying to yourself, geez, I don’t owe these people any money. And they’re identifying themselves as X Y, Zed collection agency and you’re thinking, Okay, where did this come from? And is it legitimate?

Wayne  3:58  

Does the original debt have to disclose that they passed it on to a collection agency?

Mark Marshall  4:04  

They generally don’t. No they don’t. And so I would suggest anybody that’s receiving a call from a collection agency or identifying themselves to be a collector on behalf of a bank or another creditor –  really, you should be asking for some kind of proof in writing because they expect you to take their word for it. But again your rights would be – you send me something in writing that shows that you’re an authorized collector for this debt. So you can verify it before you start getting into a position where you’re sending anybody any money.

Wayne  4:36  

But all in all, if you do fall behind on your payments, creditors are allowed to actually call and initiate collection activity, whatever that may look like.

Mark Marshall  4:45  

Yes, they are, they are absolutely. Generally the collection action is handled province to province. And so, depending on which province you’re in – you’d have consumer affairs in essence that kind of governs what they do. And a lot of times you’ll have a provincial act that will dictate what they can and cannot do in terms of calling. There’s different rules and regulations. The issue you run into is – if they’re not allowed to threaten – they’re not allowed to use threatening behavior. There’s a list of things that they can and can’t do.

Wayne  5:16  

Can we go through a couple of those things?

Mark Marshall  5:19  

Sure. Yes, absolutely. I’ve got a list that I pulled down just from the province in New Brunswick –  in terms of things that they’re allowed to do and allowed not to do. These things would be similar across the country, province to province. 

They can’t threaten or start any legal or court action or collect the debt without first notifying you that they’ve received creditor approval to do so. So again, that’s the falling back to making a request to ask them for proof that they’re verified as a collector for the debt. 

They can’t collect more money than what’s owed. You can’t have a collection agency say you owe this bank $1,000 bucks, but you give me $1,200, and we’ll consider it square – they can’t do that. 

They can’t call you in a way that costs you money. So they can’t make collect calls here. They can’t call your cell phone, try and charge things back to you at all. They’re not allowed to call you work. Now, what happens a lot of times is people will, when they’re filling out a credit application, they’ll ask you for all your details, right? So they’ll say, Okay, what’s your cell number? What’s your home number,  what’s your place of employment, that contact information. That ends up in their hands, and they’ll make those calls. 

Now, the thing is, if you get a call at work,  basically you just say to them – Look, please don’t call me at work, please call me after hours. You do have to talk to them. So you just set the boundaries and ask them to touch base with you at home on your own time. 

They’re not allowed to discuss that with anyone else other than you, unless you’ve given them permission to discuss that matter with someone else like your father, your mother, your brother, your lawyer, or something along those lines. 

They can’t threaten or use intimidating or abusive language. They can’t contact your family and threaten to harass you. And then there’s a guideline in terms of timeframes and when they’re allowed to call you. 

They can’t call you before 7am In the morning, or after 9pm. And that would be from Monday through to Saturday, and they can’t call you before 1pm or after 5pm on a Sunday. They can’t call you on a holiday. And so yes,  these things happen. We know they do, because now I hear from debtors everyday that this stuff happens. 

And the issue you get into is that they’ll say they’re not doing it, right? And so in theory, if you had a guy call you and it was harassing or bugging or calling your place of employment –  my suggestion is that you report it – report to your provincial body or Consumer Affairs. They are then supposed to investigate it and follow up and make sure that the agency is not doing those things, because, in theory, the Commissioner, or the Consumer Affairs of the provincial branch issues the license to that collection agency to be able to collect in that province. So they have to follow the rules.

Wayne  8:07  

What is the best way then for you to go about dealing with – maybe stopping these collection agents or dealing with them?

Mark Marshall  8:15  

Well, one thing you can do, you could ask them, to kind of deal with you in writing. So that is an option. And so what you do is – you ask them, only to contact you in writing either personally or through your lawyer. And in making that request, you just say look, anytime you send me a letter, any kind of communication – I’ll also respond to you in writing as well. And that way you can kind of come to a conclusion. 

Now, you’ll find obviously, a lot of these collectors are aggressive. They’re not necessarily too interested in writing a letter, they’re just trying to collect some money. So they’re supposed to follow rules and comply, but whether they do or not, kind of remains to be seen. Some will take the time – they’ll write the letter, and they’ll correspond with you in writing or through your lawyer. 

But really, to get things to stop you have to do one or two things. You have got to work on some kind of a payment arrangement with him directly – either to settle the account in full or by way of a monthly payment. And if you can’t afford to do that then you have got to seek out professional help.

Wayne  9:24  

Okay, so that’s great advice. Now how do you go about reaching out to an Insolvency Trustee? What does that look like?

Mark Marshall  9:32  

What you’re doing is you’re going to look up obviously an Insolvency Trustee in your area and you’re going to want to touch base with them. Just consult with them about your  rights in terms of any debt. Options you have when it comes to stopping collectors. 

You could look at the worst case scenario – making an assignment in Bankruptcy. That’s extreme and it depends on the circumstances, the individual, but that’s an option. The other option, you could look at filing a Consumer Proposal. The other option you can talk to the Trustee about, the chances of filing an informal proposal. 

We, at our office, have helped people in the past. They’ve had maybe one or two debts in collections that –  doing something formal by way of a Consumer Proposal or a Bankruptcy wouldn’t make sense. What we’ll do is guide them in terms of writing a letter or providing some kind of form of a letter of settlement to try and get things sorted out, especially if they have the means. 

A lot of times if you have a family that’s willing to help you, family –  brothers, sisters, mothers, fathers, people that understand – look I’m willing to help you. A lot of times, you can kind of get collection agencies to deal with you pretty quickly, right? And so, sometimes you might even be able to get them to settle for, less than 100 cents on the dollar. And so we’ve helped people do that in the past as well.

Wayne  10:53  

So what’s interesting is, by doing this podcast, one of the things that I’ve learned, and I’m gonna assume many of our listeners have learned as well, is that the faster you admit that you might need a little bit of help, the faster things can get resolved, and you lose those sleepless nights.

Mark Marshall  11:11  

Yes, I would agree with that 100% –  because it’s one of those things, that is before things get out of control, or before you have multiple debts that get handed off to various collectors –  because I’ve seen that too. You’ll have one individual come in, and they’ve got one – one account, one debt that they’ve neglected for so long that it’s in the hands of four or five different collection agencies. And so I think at that point, time is just a race to see who can get the money. And so the calls, the mail –  it doesn’t stop. 

So if you can assess things and say,- look, I need to deal with this. Now I’m going to deal with it –  I’m going to either settle it on my own, I’m going to ask for help, or I’m going to seek the advice of a Licensed Insolvency Trustee and see what options are available. Because a lot of times, establishing some kind of a formal plan makes the most sense for people. And as much as they’re afraid to do that – and they’re thinking, no, no, that’s the last thing I want to do. 

It never hurts to ask, never hurts to ask any questions, because you’re not committed when you talk to a Trustee. The role of the Trustee is to do an assessment with you and provide you with some guidance. And in doing that, they’re supposed to give you the best advice and allow you to take that advice, assess that advice, and make a decision, an informed decision on what you want to try and do.

Wayne  12:26  

And sometimes that initial consultation is enough to really help somebody, guide them on what they’re supposed to do.

Mark Marshall  12:34  

Yes, it can provide you with a path or a plan, or at the end of the day provide you with a little bit more information you had before you came in the door – before you made that phone call. And then you take that information, and then again, it’s building blocks –  you can build on it, you can either formally do something, or you can try and handle something on your own knowing your rights a little bit more.

Wayne  12:53  

There’s something that you mentioned – you said that sometimes there can be three or four different collection agencies trying to collect on the same debt. How does that happen? Do they get – whoever gets it gets paid gets extra? How does that work?

Mark Marshall  13:07  

Yes, my understanding is that is how it works. I don’t think they get paid extra. I think what it comes down to is that it becomes kind of an unclaimed mobile account. So you’ll have, XYZ company –  they can’t or have not been able to collect it on behalf of the chartered bank. And they’ll either flip it back to them, or then all of a sudden LMNOPQ collection agency says, You know what, I’ll be able to get my hands on the money. So then they take it and then they start making some phone calls. So then again, it creates confusion, because you have, the debtor saying, Well, I’ve got XYZ – now I’ve LMNOP come after me. So who do I owe? Who do I owe? 

And they’ll both tell you – because if you pick up the phone and call XYZ, even though that may be a dormant account for them, they’ll make an inactive account if they can collect the money. Again, whether they’re entitled to do it or not. I mean, that’s a question that remains to be seen. But I think that in the business that they’re in, they’ll do everything they can to try and get the debt and just kind of notify the original creditor that they’ve been able to satisfy.

Wayne  14:05  

But they don’t, they won’t negotiate. So if the debt is $5,000 bucks, they’re not going to give it to you for $2,500.

Mark Marshall  14:12  

They generally won’t know unless it’s done through a formalized plan now. What we’ve seen in the past is that sometimes they will settle the debt partially if the money is going to be available immediately. Now, my suggestion and the little trick of doing this is – that if you are going to settle any debt, if you’re going to settle with a collection agency or settle any debt informally, then what you have got to ask is one of the terms is –  that you’re asking them to report on the credit report. Has the debt been satisfied in full? Because if it’s reported as being satisfied personally, it doesn’t help you. It doesn’t help your overall credit at all.

Wayne  14:54  

Perfect. Well, this is great. This is really eye opening for a lot of people I hope and I think we should mention that there’s a free consultation that you guys do for free first time, right?

Mark Marshall  15:07  

Yes, there is absolutely and it’s not even necessarily limited to a first time. If someone has multiple questions, we’ll sit down with someone to do an assessment, give them some advice. They can then make a decision in terms of what they want to do and sometimes you’ll chat with somebody and that will lead to further questions and those further questions might be a day or two later which is fun, right? And we never have any problems chatting with people and making sure they’re informed of what they’re going to do or what they should be doing.

Wayne  15:32  

Yes, perfect. Mark any final words you need to share with us about this topic?

Mark Marshall  15:37  

No, not off the top of my head no, it’s one of those things if you’re getting phone calls from collectors, do your best to try and deal with it. Do your best to keep them from trying to call your family and friends by just suggesting to them that you will deal with it. You’re not going to hide from them and have them call you at the time that you want them to call. And then when they do call make sure you answer the phone or you know ask them to deal with you.

Wayne  16:00  

Terrific Mark. Thanks very much for all the great information. My guest today, Mark Marshall and if you want to schedule that free consultation or learn more from Allan Marshall & Associates, you can check out wecanhelp.ca. And that is it for today’s Debt Matters podcast. Make sure you subscribe wherever you get your favorite podcast from. And of course for more information, you can always check out our debtmatters.ca website. Thanks very much for listening.