You may be getting phone calls demanding payment on your overdue account. Bill collectors might be calling you on your cellphone. They might also be calling your landline at home. In some cases, they might even be calling you at your workplace.
Collection calls can be very upsetting. Most people dread receiving these collection calls. Bill collectors are often very aggressive and they typically demand a payment of a certain amount of money before a particular day. In some instances, collection calls at a person’s workplace can become a real problem. They may become a source of embarrassment and in some cases, it might contribute to the loss of employment.
Understanding who the person is on the other end of the phone, who they may represent and what they may tell you is often the first step in putting you in charge of dealing with collection calls.
Insights From A Former Collection Industry Insider
I am very familiar with collection calls. For twelve years I worked as a collection lawyer for four of the ten largest collection agencies operating in Canada. My office was located on the collection floor at these collection agencies. I would open the door to my office and there would be hundreds of collectors hard at work. I would later work four years as a consumer lawyer representing consumers struggling to pay their bills. I have listened to hundreds of Canadians on the phone share a traumatic experience about dealing with a bill collector who has demanded payment of an outstanding account. Based on this experience, I’m going to give you an overview of how debt collectors work.
Collection Calls In The First Six Months Are Usually From Your Creditor
If you have an account that you have not paid for less than six months, it’s likely that the bill collector calling you is from the in-house collection department at your creditor’s office. If your account is 30 to 90 days overdue, the bill collector calling you might be relatively civil towards you. If, however, your account is closer to five or six months overdue, then then the bill collector’s tone will likely be much more aggressive.
Your job is to stay calm and negotiate the terms that you need. If you need time to catch up, ask for time and negotiate a repayment plan that you can afford. Since at this early stage it is your creditor calling, they will likely be open to discussion, but will still be looking for full payment.
Collection Calls After Your Account Is More Than Six Months Overdue
If you have an account on which you have not made a payment in more than six months, then your creditor has a number of options. They can:
- Forward your account to a collection agency or a law firm;
- Continue to have their in-house collection department make collection calls;
- Sell your debt; or
- Arrange to sue your outstanding account.
Collection Calls From A Collection Agency
In the majority of instances where an account becomes six months overdue, the account is forwarded to a collection agency. The collection agency is working on a commission or a contingency basis. Therefore, a collection agency does not receive a penny from its creditor-client unless it obtains a payment from you. This explains why the collector from a collection agency calling you is very assertive about receiving a payment from you.
Under Ontario law, a creditor is only permitted to place your account for collections with one collection agency at a time. Creditors do, however, place unpaid accounts with a particular collection agency for a period of time, then recall the account, after which they place the account with a different collection agency.
Once they receive an account, collection agencies engage in three primary activities:
- Locating current contact information for a consumer on an unpaid account;
- Demanding payment from a consumer using written notices; and
- Demanding payment from a consumer using collection calls.
Suing consumers is not a core function of collection agencies.
If you are concerned about being sued, then you might actually take some comfort in the fact that you are receiving collection calls. If a creditor wanted to sue you, they would typically forward your account to a law firm or a paralegal and you likely would not be receiving any collection calls.
Collection Calls From A Law Firm
Today, there is a trend towards law firms doing some of the same work we would normally associate with that of a collection agency. This means that you might be getting a collection call from someone who informs you that they are calling you from a law firm. The job description of the person calling you might be virtually identical to a collector at a collection agency; the only difference is that this individual’s employer is a law firm and not a collection agency. It’s important to know that just because they are a law firm, that doesn’t mean they have any more rights when collecting on an account than any other collection agency.
Collection Calls After Your Debt Has Been Sold By Your Original Creditor
Sometimes, a creditor might decide to sell your unpaid account – together with thousands, tens of thousands, or possibly hundreds of thousands of other unpaid accounts – to a debt buyer. The company buying your unpaid account steps into the shoes of your original creditor. Some unpaid accounts might even be sold more than once.
There are two different categories of debt buyers:
Collection Agencies: The primary business of collection agencies is collecting monies owed to others. A collection agency might also choose to purchase debts as a secondary line of business.
Dedicated Debt Buyers: A dedicated debt buyer does not collect debts on behalf of others. A dedicated debt buyer is in the business of purchasing debts.
Dedicated debt buyers have several options when it comes to collecting their purchased debt. It is common for dedicated debt buyers to employ their own collectors and operate an in-house collection department. Dedicated debt buyers might also choose to forward an unpaid account to a collection agency on a commission basis.
I recently spoke to a Kitchener resident who last made a payment on her BMO Mastercard about four years ago. Originally, she was receiving phone calls from the in-house collection department at the bank. Recently, she received a collection letter from a collection agency by the name of CCL Financial Inc. In this collection notice from CCL Financial Inc., she was informed that her unpaid BMO Mastercard account had been sold to a firm by the name of Preferred Credit Resources Limited.
If you receive a collection call about a debt that has been sold, you should ask the bill collector to send you a collection letter confirming that the debt has been purchased.
Who is the person on the phone demanding a payment from me?
I describe the position of collector as a commission sales position. Their job is to convince you to pay your outstanding account. It is very common for bill collectors to be paid a base salary with an opportunity to earn more depending upon their success collecting monies in a particular month. Collectors who do not meet their monthly quota are typically shown the door.
In Ontario, collectors employed by a collection agency must be at least 18 years of age. I know collectors who have criminal records. I also know collectors who have declared personal bankruptcy. There are no educational requirements whatsoever for being a collector. A person does not have to pass any examination to become a collector.
When I did collection work, I would often contact a collection agency and offer to collect 200 accounts, which they had not been able to collect, to prove my abilities at collecting monies. I can recall one instance where a collection agency near Burlington gave me 200 unpaid accounts to collect. You can imagine their embarrassment when I advised them that one of the 200 unpaid accounts was one of their own collectors.
No one should feel intimidated by a bill collector.