Credit Card Debt and Collection Agencies in Ontario
Unpaid credit card debt is often passed to a collection agency. The calls can be stressful, but they are regulated. Knowing the rules, and your options, helps you respond calmly and avoid mistakes that can make the debt worse.
- Collection agencies in Ontario must be registered and must follow the Collection and Debt Settlement Services Act.
- After an agency has reached you, it is limited in how often it may contact you about the same debt, and there are limits on the days and times.
- A lawsuit over a debt generally has to be started within two years, but a payment or written acknowledgement can restart the clock.
- Only a court judgment can lead to garnishment. A collector cannot threaten that without the right to do it.
What a collector must do
- Be registered in Ontario, and give you the information the rules require.
- Send a written notice that identifies the creditor, the amount and the agency, before it begins phoning to demand payment.
- Limit contact: after reaching you, no more than three attempts in seven days about the same debt, unless you agree to more.
- Call only at permitted times, which are restricted on Sundays and holidays.
- Avoid threats, harassment, misleading statements and contact with your employer or family about the debt in improper ways.
What you can do
- Ask the collector, in writing, to prove the debt: who the creditor is, the amount and how it was calculated.
- Check their registration and keep notes of every contact, with dates and names.
- Do not give bank account access or agree to payments until you have verified the debt.
- If they break the rules, you can complain to the consumer protection regulator.
- If you want them to stop calling, you can ask for contact in writing only.
Time limits
Under the Limitations Act, a creditor generally has two years to sue for a debt from the day the claim arose. After that, the debt is not enforceable in court, although it may still show on your credit report. Be careful: making a payment or acknowledging the debt in writing can restart the two years, so do not do either before you understand the effect.
Ways to deal with the debt
- Negotiate: a lump sum or a payment plan, confirmed in writing before you pay.
- Credit counselling from a non-profit agency for a structured plan.
- A consumer proposal or bankruptcy through a Licensed Insolvency Trustee if the debt is unmanageable.
- Dispute it if the amount is wrong or the debt is not yours.
If you are sued
If you receive a claim, do not ignore it. Missing the deadline to respond can lead to a default judgment. Read the claim, check the limitation period, and file a defence in time if you dispute it. A court judgment can lead to garnishment of wages or bank accounts, but only after the legal steps are followed.
Common questions
Can a collector call my work?
There are tight limits on contacting others about your debt. Tell the agency in writing not to call your workplace, and keep a record if they do.
Can they have me arrested?
No. Not paying a debt is not a crime. Threats of arrest are a red flag and may be a breach of the rules.
This guide is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.
Not sure where you stand? A licensed paralegal can look at your documents and tell you your options.
Book a Free Consultation
PIPEDA-compliant