Bill Collectors – The 7 Biggest Lies Exposed

1. I am from the Legal Department and you are being sued.

In my experience, less than 2% of all debts listed with a collection agency result in formal legal proceedings, and in most cases, the collection agency must advance the legal costs necessary to initiate a lawsuit. From a business perspective, there is no point in throwing good money after bad in hopes of recovering legal costs and debt if you don’t have enough assets available to satisfy the judgment being sought. It’s just not worth it for the collection agency. Bill collectors use the threat of the “legal department” just because it’s scary and most people don’t know better. The fact is, most bill collectors sit in a tiny 3 “x 3” cubicle and pretend to be someone they aren’t really talking to on the phone.

2. I will garnish your paycheck.

To get any part of your paycheck, the bill collector needs a court judgment in your favor, but collectors will not seek a judgment unless they have reason to believe that you have enough assets to satisfy a judgment. Pursuant to Section 7 (2) of the Wages Act (Ontario), no more than 20% of your wages can be garnished. A creditor can file a motion to increase the amount of wages that can be garnished, but a debtor also has the right to file a motion to reduce the amount. I’ve heard collectors tell people that they will garnish 50% of your salary, but the truth is that even if they get a judgment, garnishments rarely exceed 15-20% of salary. Again, they only use threat because it scares people and most don’t know any better.

3. If I don’t receive payment by 4pm today, we will (Insert threat here).

Bill collectors are paid a commission for doing their job and so are managers who are breathing hard to achieve their goals. Some aggressive bill collectors can earn six figures a year if they push people hard enough. They will tell you anything if they think it will result in a higher commission check and payment for them.

4. Pay in full, monthly payments are not an option.

They want full payment from you because they make more money from you when you pay in full. Payments are always an option; In most cases, if you go directly to the creditor, you will get a monthly payment plan. It won’t fix your credit, but you can at least stop the demand for payment in full.

5. Collectors can call it all they want.

Pursuant to Section 22 (6) of RRO 1990, Regulation 74 of the Collection Agencies Act (Ontario), there are restrictions on the frequency of calls that collection agencies can make to you. Despite what you are told, a bill collector cannot harass you. If you register a letter requesting the collection agency to communicate only in writing, the calls should be stopped, otherwise you can refer your behavior to your ombudsman or provincial ministry for further action.

6. Debt collectors can call and harass your family, friends, and neighbors.

A collection agency can only contact a third party to confirm your address and phone number or your employer to confirm your employment, title and business address; that’s all (Section 22 (3) of Regulation 74 of the Collection Agencies Act). If the debt collector reveals details about the debt or tries to embarrass you, there are steps you can take to deal with and stop this behavior.

7. Bill collectors can talk to you in any way they feel like.

Bill collectors can be unpleasant and rude; many think that insulting people will pay off the debt. Collection laws prevent this type of behavior from happening again if you escalate it and solve the problem. If you feel like you’ve been abused using obscene, intimidating, or coercive language, you can certainly stop it. Activity will be denied for sure, so a tape-recorded conversation or voice message will be your best friend here.

Collection agencies and bill collectors have a bad reputation because they are a business like any other whose objective is to generate profits for its shareholders; your job is to put a lot of pressure on him to pay. There are ways to deal with debt and your behavior, but it takes time and some investment to research your rights. Try not to avoid debt, find a way to deal with it. The only way to stop collection activity is to pay the bill or go bankrupt. If you can pay the bills in full, please do so as soon as possible.

If paying your bills is not an option due to extreme financial hardship, you may want to explore bankruptcy by consulting with a trustee at your local yellow pages. Bankruptcy will surely fix the debt, but since it is detrimental to your credit rating, it should only be used as a last resort. Additionally, a trustee is a court-appointed agent for your creditors, so even if you pay them for their services, the trustee will look out for your creditors’ best interests. Your debts are erased, but most of your assets are also subject to certain limited exceptions and your credit report shows the effect for 7 to 10 years.

Debt settlement should be viewed as an alternative to bankruptcy, as it is fast becoming one of the newest and best options in Canada to pay off debt quickly and ethically. A debt settlement company will act as your agent and will negotiate a settlement with your creditors. Once the settlement is paid, the balance is written off and your credit report is updated to reflect that the debt is finalized. The term to settle a debt can be from 1 month to 36 months, depending on your capacity. This is usually the least expensive, least damaging to your credit, and the fastest path to debt freedom.

Remember that bill collectors make a living trying to scare and intimidate people so they can earn a large commission. Be mindful of the source when they call and don’t let the bill collectors pressure you, you have rights and you can defend yourself and win.