How to stop collection agency calls in Canada
Are you getting collection calls at work and home? Don’t worry—there’s a way out and a proper way to get collection agencies to stop harassing you.
“Mr. Simpson, I’m calling to inform you that your Visa bill is 3 payments past due. You owe us $5,689.25 and your minimum payment is now $950. When can I expect payment so you may meet your obligations and avoid further PERMANENT damage to your credit rating? I don’t want to have to get our Legal Department involved!”
Good morning! Did you have a good sleep?
Is the above scenario similar to a recent experience? Perhaps you received a letter and a phone call on the same day? Do the calls come while you’re at work? Do you exit a meeting at work only to return to your desk to see a stream of calls from ‘1-866’ and ‘unknown number’ listed on your call display?
Collection calls are meant to intimidate people into action, and they work. If they didn’t creditors wouldn’t bother taking the time and investing the money into call centres and collection agencies. When you owe a creditor and haven’t paid your bill, the creditors have the right to pursue you.
It makes sense. If someone owed you money you would want the money back as well. Collectors and Collection Agencies provide, shall we say, ‘extra motivation’ for debtors to pay their bills. This extra motivation understandably results in tremendous stress and anxiety for debtors.
Your Condition
If you are receiving collection calls and/or letters, and your stress level has increased as a result, it’s important to understand why. Like most people, you suffer from a condition known as Decency. Symptoms include a general desire to do the right thing, a guilty conscience for not being able to meet your obligations, and feelings of shame that you ended up in such a difficult situation.
Decency is a normal state of being for most people who owe money, so it’s nothing to fear or regret. However, I always inform my clients that in order to alleviate the symptoms that come with this condition, they must take action. The surest way to continue to suffer the anxiety caused by the actions of collectors is to simply ignore the problem.
Halt!
Bare bones…there are only three ways to stop collection calls and letters:
- Run Away/Hide
This is the least effective course of action. Changing your phone number certainly creates a challenge for collectors who wish to call you, but letters are still a viable option. Change your address? Ok, you won’t see the letters anymore, but that doesn’t mean your creditors are no longer in hot pursuit.
There’s a pervasive myth that suggests all one has to do is avoid their debt and collectors for six years and they’ll be home free.
Don’t you believe it!
An entire post can and will be devoted to this false assumption, but for now let’s just say that logic should override any hope you place in running and hiding. If getting out of debt only required going into hiding for a while, most people would rack up millions in debt and then live like hermits for six years only to emerge totally debt free. It’s not that simple. Moreover, you really haven’t put a stop to creditor action…you’ve simply avoided it.
- Pay Your Creditors Off or Arrange a Payment Plan
Assuming you have the means, this is the most effective strategy. The problem is you’re likely experiencing collection calls and threats because you are unable to pay your bills as they come due. Help from friends and family, selling off assets, and dipping into savings is often where the amounts required to pay these bills come from. It’s not an enjoyable process but it does work. As you may imagine though, this option is not available to most.
A payment plan is an option that some are capable of managing. Splitting a large debt into manageable pieces can help with repayment. The challenge associated with this process though is that once a bill enters the collection process, the repayment options are arduous. Gone are the revolving minimum payments of $35, $80, $108. Creditors now view you as a serious risk and they want their money paid back over a short, fixed amount of time. Payments are much higher and often unmanageable.
Even worse, some collectors may offer what seems like a manageable payment, but it turns out these payments are almost entirely interest. In essence, the collectors have created a steady IV drip of cash to flow into their accounts in exchange for leaving you alone for the time being.
- Utilize and Insolvency Proceeding
A Consumer Proposal or Bankruptcy will put an end to the creditor calls. Both procedures are part of the Bankruptcy and Insolvency Act and effectively utilize the legal system and the courts to stop creditors from pursuing you. Think of these processes as a giant “Reset” button. You’re legally and honestly saying to your creditors that you are unable to pay your bills as they come due, and you need relief. By law, creditors must cease all attempts to contact you and collect on your debt, provided you comply with the conditions of your Consumer Proposal or Bankruptcy.
Finally, a Consumer Proposal often results in far more manageable payments than a payment plan created outside of the Insolvency process.
So those are your options, but what do you do in the meantime while you’re contemplating which action to take and trying to get your affairs in order?
Won’t vs. Can’t
I find the best defence is attitude. Collectors seek to accomplish their goals by evoking feelings of Guilt and Fear in the debtors they pursue. Understanding these emotions and how they relate to your situation is key for handling collectors during the (hopefully) short time you’re figuring out which action you wish to take.
Guilt results from the feeling that you are causing harm to the creditor. My clients often feel that by missing payments they’re “ripping off” or “scheming” their creditors. This is an understandable reaction. Again, a decent person pays his/her bills and never shortchanges someone. However, the person in debt must take a closer look at their situation.
A person in debt who has fallen behind on payments needs to ask a simple question…
“Am I missing payments because I WON’T pay the bills, or am I missing payments because I CAN’T pay the bills?”
The question may sound trite, but there’s a tremendous difference between Won’t and Can’t. Someone who “Won’t” pay the bills has simply chosen not to pay. The “Won’t” options implies that the person in debt has the means to pay, but has decided that paying their bill is not important. This motive is certainly unpalatable to decent people. After all, a decent person doesn’t just not pay!
Conversely, “Can’t” is the result of a different motivation. We all prioritize, and given the choice between paying rent or paying the Visa bill, most people – even extraordinarily honest individuals – will pay rent first. Same goes for groceries, gasoline, insurance, and children’s needs. While these people may still Want to pay their Visa bill, the reality is they Can’t as their ordinary living expenses have used up all their disposable income.
When it comes to Decency, Can’t is preferable to Want. Understanding this key difference won’t stop calls, but it will help an individual understand their own actions, and reduce feelings of guilt. You should never feel guilty about taking steps to ensure your own survival.
Debtor’s Prison
There was a time when Debtor’s Prisons existed. Someone who owed money could be forced to work off their debt, and depending on the size of the debt the terms of this servitude could last several years.
I’m pleased to report that no such prisons exist for ordinary unsecured debts these days (court fines, Alimony, and Child Support are another matter!).
You’d be amazed how many people I meet – often people not born in Canada, and thus not as familiar with the laws of the land – fear that not paying their bills will result in some kind of criminal proceeding. I’ve had many people ask me if they’re going to go to jail!
I’ve never seen a collection letter or heard of a collection call that threatened jail time, but collectors still evoke fear by
- Threatening harm to one’s credit
- Promising to continue or increase the frequency of collection calls
- Use of harsh language and unwillingness to listen to one’s situation or negotiate
- References to “Engaging our Legal Department” or involving Lawyers in the process
All the above actions induce fear and they should. Left long enough, there are actions creditors may take that can cause problems for a debtor. The most common actions are judgments which result in a garnishment (where one’s debt payments are automatically deducted from their pay cheque or commission), or a lien on their property.
That’s the bad news. Here’s the good news. The aforementioned actions don’t occur immediately. Collection calls and letters are the normal course of action for usually the first 1 to 10 months. Each creditor is different with their level of aggressiveness, but the reality is garnishments and liens take a long time to come into play. Therefore, it’s important that someone entering the collection process understands that the creditors cannot actually hurt them.
Sticks and stones may break your bones, but names and threats from Collectors are just that…names and threats. No physical harm will come to you, no one will knock on your door, a boot will not be placed on your car (unless you have parking/speeding tickets), and your first born will not be seized and held as collateral.
Moreover, the “Legal Department”, while usually the final action before a judgment is sought, is nothing more than a scare tactic. For some strange reason, people fear lawyers…I’ll leave it up to you to determine why.
Understanding that early stage collection calls and letters are predominantly empty words will help alleviate some of the stress.
Next Steps
Sooner or later, a person experiencing the frustration of collection calls must take action. 4 Pillars offices are experts at arranging settlements and proposals that are manageable and help put a stop to the stress and anxiety that comes from owing money and having collectors call night and day.
About the Author:
Zach Brull operates the 4 Pillars Markham, On and Scarborough, On Debt Restructuring office. To contact him directly visit his website or call him directly at : 289-466-1029
