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How to deal with credit card debt collectors

It's illegal for a bill collector to harass you — and you have the right to report them.

It’s a debt collector’s job to track down people with overdue debts and get them to pay, but that doesn’t mean they can try to get the money by any means necessary. Know your rights when dealing with collectors — and what to do if your rights are violated.

Step 1: Know when debt collectors will get involved

Collection agencies usually won’t get involved straight away. In most cases, your credit card issuer will contact you after more than 30 days have passed without a debt payment.

After 180 days (6 months), the account is considered “in default” and you will no longer have access to your credit. Your issuer can then choose whether or not to enter the debt collection process. Some issuers may continue to directly contact you after your account is in default, but others may use a debt collector to deal with the situation.

Credit card late payment and overlimit fees

Step 2: Learn your rights, don’t accept harassment

Debt collectors will contact you to discuss your credit card debt and different payment options. The way they contact you varies but can include:

  • Phone calls.
  • Letters.
  • Emails.
  • Social media.
  • In person.

Debt collectors may use one or a combination of these tactics to get in touch with you, but our government has set legal limitations on when and how often they contact you.

The Government of Canada website has a general guide to the conditions and requirements debt collectors should meet when dealing with individuals. It’s a good idea to refer to this information if you think the contact you receive is unreasonable.

Make sure you know your rights and report any violations.

Step 3: Prepare for actions debt collectors can take

If written, phone or face-to-face contact doesn’t lead to an agreement between you and the debt collector or collection agency, they have 2 other options:

  1. Legal action. If you don’t pay the debt, the collector can seek a court order to garnish your wages. Depending on the province you’re in, they could take up to 50% of your disposable income if they win.
  2. Repossession. If your debt is significant, your lender can initiate proceedings to repossess any assets used as collateral.

Dodging debt collectors — a very bad idea

Getting a call from a debt collector can be stressful, but know that they’re not your enemy. Avoiding calls from debt collectors can lead to even more unpleasant situations and, in the end, you’ll still have to pay.

Instead, be upfront. Work with the collection agency. Let them know how much you can afford to pay and be realistic about it. After all, you and the collection agency likely want things to be over as soon as reasonably possible.

Step 4: Find the solution that works best for you

When you’re having trouble making credit card payments, the sooner you deal with credit card debt issues, the better chance you have of working out payment terms that fit your circumstances. Steps you can take include:

  • Contact your credit card issuer.
    Let your issuer know about challenges or changes in your circumstances so they can work with you to arrange a repayment plan. Many credit card issuers have support and hardship officers available to help you work through these difficulties before things get even more out of hand, so it’s important to contact them as soon as you can.
  • Talk to a financial counselor.
    Financial counselors can give you specialized advice based on your situation, and may also negotiate with lenders on your behalf. You can also find tips from experts online. The National Foundation for Credit Counseling website has more information about these services if you want to get in contact with someone near you.
  • Consider debt settlement.
    Debt relief companies help you negotiate with your lenders to settle debts for less than you owe. This might be a helpful option if you can’t afford to pay the debt.
  • Seek free legal help.
    There are community legal centers and free legal aid services across Canada. The Department of Justice has a list of free legal aid services you can access in every province and territory when you need support and guidance with your debts. The Canadian Bar Association also has information on free legal aid services for qualified individuals as well as pro bono organizations that offer legal assistance for little or no cost.

Step 5: Follow through

The most important step you can take is to follow through on the plans you make. If an agreement is reached with a collection agency, abide by it. If you’re working with a financial adviser, stay on top of all communications with them.

Debt only grows more daunting as you ignore it, and collectors can exponentially increase that feeling. Make a plan and stick to it to find your way back to financial freedom.

Could a balance transfer help?

A balance transfer allows you to move your debt from one card to another, usually with better terms. Getting a balance transfer intro APR of 0.99% – 3% can help you save on interest.

However, balance transfers aren’t for everyone. They often come with fees, and you may not be able to pay off the debt within the introductory period if you can’t make large enough payments.

Evaluate your debt and do the calculations to see if a balance transfer will save you money in the long run.

Compare balance transfer credit cards

Name Product Balance Transfer Rate Balance Transfer Fee Purchase Interest Rate Annual Fee Min. Credit Score Description
Tangerine World Mastercard
1.95% for the first 6 months (then 19.95%)
3%
19.95%
$0
Min. recommended credit score: 680
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
BMO CashBack Mastercard
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 660
Get 5% cash back on all eligible purchases in the first three months of card membership (up to max. spend of $2,000). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
BMO Preferred Rate Mastercard
3.99% for the first 9 months (then 12.99%)
1%
12.99%
$20
Min. recommended credit score: 660
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
Scotiabank Value Visa Card
0.99% for the first 6 months (then 12.99%)
N/A
12.99%
$29
Min. recommended credit score: 650
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by July 1, 2021.
Tangerine Money-Back Credit Card
1.95% for the first 6 months (then 19.95%)
3%
19.95%
$0
Min. recommended credit score: 680
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
BMO Rewards Mastercard
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 725
Get a bonus of 10,000 BMO Rewards points when you spend $1,000 in the first 3 months. Apply by October 31, 2021 . Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO AIR MILES Mastercard
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 660
Get 800 AIR MILES Bonus Miles (enough for $80 towards purchases with AIR MILES Cash). Get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO AIR MILES Mastercard For Students
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 660
Get 800 AIR MILES Bonus Miles (enough for $80 towards purchases with AIR MILES Cash). Get a 1.99% introductory interest rate on balance transfers for 9 months. A 1% fee applies to balance amounts transferred.
BMO CashBack Mastercard For Students
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 660
Get up to 5% cash back in the first three months (up to max. spend of $2,000). Plus, get a rate of 1.99% on balance transfers for 9 months (with a 1% transfer fee).
Scotia Momentum Visa Card
2.99% for the first 6 months (then 22.99%)
N/A
19.99%
$39
Min. recommended credit score: 650
Earn 7.5% cash back on all purchases for the first 3 months (up to $2,000 in total purchases). Plus, get a 2.99% introductory rate on balance transfers and a 0% balance transfer fee for the first 6 months. Apply by August 31, 2021.
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Compare up to 4 providers

Your rights when dealing with debt collectors

Confrontation by a debt collector can be intimidating, so it’s important to know exactly what your rights are if they contact you. While collection agencies are under provincial regulation, banks as well as many trust and loan companies are considered federally-regulated financial institutions (FRFI) and must adhere to a number of rules. Some of the key things to keep in mind include:

  • Respectful and polite behaviour.

    Collectors cannot apply excessive or unreasonable pressure on you to repay your debt, nor are they allowed to use threatening, intimidating or abusive language. They also can’t suggest to your friends, family, neighbours or employer that they should repay what you owe unless those people are guarantors or cosigners of your debt.

  • Privacy.

    Collectors may not call you on your cell phone unless you’ve provided this number as a way to contact you. Again, they may not reach out to your friends, family, neighbours or employer to get any information other than your phone number and address unless:

    • You’ve consented to this
    • These people are cosigners/guarantors of your debt
    • Your employer is being contacted to confirm your employment.
  • Reasonable communication.

    Collectors may not contact you on holidays or outside the following hours:

    • Monday through Saturday, 7am-9pm
    • Sunday, 1-5pm
  • Disputing the debt.

    If you don’t believe the debt is yours, or if you disagree with the amount that is owed, you have a right to legally dispute it. Exact legal procedures vary across provinces and territories, but a good first step is to contact the collection agency to correct the mistake and explain that you don’t owe anything. It may also be necessary to contact your creditor to correct any mistakes they may have on file. If the issue remains unresolved, you may want to speak to a lawyer about next steps.

  • Advice.

    You have a right, at any time, to seek legal advice to deal with debt. In some cases, you may want to inform the debt collector that you plan to seek legal advice and suggest a time for them to contact you or a representative who will speak to them on your behalf.

Debt collectors have no right to mistreat you. Don’t hesitate to make a formal written complaint to the debt collection agency about any unreasonable behavior.

Contact the Financial Consumer Agency of Canada to report FRFI violations of these rules. Alternatively, contact your provincial office of consumer affairs to report violations committed by provincially-regulated institutions.

What to watch out for

There are several things to be wary of when it comes to debt collectors.

  • Forceful tactics.
    Don’t let the debt collector pressure you into paying before you’re certain the debt is legitimate. Request validation of the debt in writing the first time you’re contacted — they’re legally obligated to comply.
  • Mistaken information.
    Verify the debt amount and any information associated with it against your own records. If they don’t match up and you don’t think you owe the debt, dispute the debt in writing.
  • Misleading information.
    If a debt collector tries to convince you they’ll garnish your wages, take money from your bank account or send you to jail if you don’t pay, know your rights and report them if necessary.

Bottom line

Debt collectors can be intimidating, but knowing your rights and having all your financial ducks in a row can help ease your anxieties. You may not be able to steer clear of the entire process, but you can fully own what’s in your control.

Want to learn more about reducing your credit card debt and getting back on track with your payments? Check out our guide on debt consolidation loans vs. balance transfer credit cards to find out about debt reduction strategies that may work for you.

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