When you legitimately owe money and the caller has ‘got the right person’ you need the right strategies to help you handle collection calls and solutions to help you deal with the underlying debt. Calls seeking payment of an outstanding account can come from your creditor, or its authorized collection agent—a collection agency, a law firm, or a paralegal. The strategies provided apply no matter who is calling you.
Phone your Creditor Directly
Your objective is to obtain key details regarding your outstanding account
It is possible for you to obtain some relevant information about an unpaid account from looking at the most recent piece of correspondence that you have received from your creditor or its authorized collection agent. However it’s also possible you may not have kept this correspondence, or you may not have the most recent information.
I recommend that you go on the internet, identify the website for your creditor, find the creditor’s phone number, and phone that number to speak to a Customer Service representative. This person should be in a position to provide you with some key information and it is not their job to attempt to collect the outstanding account from you. Please note that in a few cases if a Customer Service representative learns that your account is overdue then they may transfer your call to a collector who works for the in-house collection department at your creditor or at a collection agency. However it doesn’t hurt to start with the customer service area to seek additional information since this may be a less stressful conversation for you than immediately talking to the collection agent.
When you speak to the Customer Service representative at your creditor you will want to obtain the following information:
- The outstanding balance
- Confirm the date of last payment
- Obtain as many details as you can regarding the last payment including the method of payment and the name of the person making the last payment
- Confirm that you only have one outstanding account with that creditor, and if not, obtain details regarding your other outstanding account(s) with that creditor
- Who currently has the responsibility for attempting to collect your unpaid account
Confirm that this information is consistent with your own understanding. If you think you made a subsequent payment, or there is a factual error, look through your records for proof. You will need this before going further.
Once you know your starting position, move on to the next step.
Identify the date of your last payment
A provincial statute of limitations may apply
If you owe monies to a creditor arising from a consumer transaction—and your indebtedness is unsecured—then it might be critical for you to know the date of your last payment. If your debt is an unsecured consumer debt and you have not made a payment on it for 18 months or more then you might find yourself in a position—now, or in the future– where you might not have to pay the outstanding account or you can eliminate the debt for substantially less than the current outstanding balance.
Every province and territory in Canada has a provincial statute of limitations which apply to unsecured consumer debt. After the expiry of a provincial limitation period it can be difficult for a creditor to recover monies from you. The statute of limitations is 2 years in British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick, 3 years in Quebec, and 6 years in the rest of Canada.
A Canadian cannot take advantage of the expiry of a limitation period for certain categories of debts including monies owing to the government, and debts which are not discharged in a consumer proposal or a bankruptcy. These would include child support and spousal support obligations, government fines, and civil judgments involving fraud.
The relevant limitation period is the one for the province where you currently live. If the limitation period in your province has expired in connection with one of your debts then you will be in a position where you can choose not to pay this account or you might be able to negotiate a very favourable one-time lump sum settlement for significantly less than 100 percent of the outstanding balance.
If the relevant limitation period will expire in the next 30 to 180 days you might want to consider waiting to see if it will expire without your creditor suing you. Most Canadians believe, mistakenly, that creditors will sue them if they don’t pay an unpaid account. It is true, however, that if you own real property and your name is on title on the property then many, but not all, creditors will sue you for unpaid accounts for as little as $1,500.
If you own more than $10,000 in equity in your home and you are sued then it would be prudent for you to take immediate action to speak to a bankruptcy trustee in order to discuss how you can protect the equity in your home from creditors.
The relevant “last payment” must be one made by you
In ninety-nine percent of cases the date of John Smith’s last payment on his unpaid account will be the date that John Smith last made a payment on his account. In some instances, however, someone other than the account holder will make the “last payment” on an account. A parent, for example, might make one or more payments on the VISA credit card for their child attending university. If a parent made a payment on their child’s VISA credit card on January 15, 2014, then this might not count as a “last payment” because the child did not make the payment.
This means that it is important for you to obtain as much detail as you can concerning the last payment the creditor has on file with respect to a particular outstanding account. It is important to learn not only the date of last payment but also the name of the person making that last payment. It might also be helpful to know what the method of payment was for this “last payment”.
Strategies to deal with collection calls
Now that you have all the relevant information, it’s time to decide what to do about the calls.
If you are at wits end because of collection calls there are things that you can do to avoid or, in some cases to stop collection calls. If you were to see a bankruptcy trustee and make a consumer proposal or file for personal bankruptcy then all collection calls would cease virtually immediately.
If, at the present time you simply want to avoid collection calls (perhaps until you return to work) there are a number of things that you can do.
- Get an unlisted phone number
- Do not have your name appear on your voicemail greeting
- Use call display feature on your phone to screen your calls
- Use your voicemail feature on your phone to screen your calls
- Have someone else screen your phone calls
- Screen your calls by refusing to give your name when you answer your phone
- Simply hang up at any time if a bill collector gets you on the phone and you don’t wish to continue the conversation
Depending upon your particular circumstances you might be in a position where you can successfully send a cease and desist letter to a creditor or their authorized collection agent, after which it is illegal for them to call you.
These strategies may work in the short term however if you do legitimately owe money (and perhaps other debts) then you need a longer term solution.
Options to employ for dealing with current debt
It’s important to find a long term solution to your debt problems so the collection calls stop for good.
If you are receiving collection calls and you owe monies to your creditors then you will want to give some consideration as to which debt resolution option might be best suited for your particular circumstances.
Here is a list of debt resolution options which might be available to you.
- Borrow money to pay off your outstanding account. Cost varies based on lender and credit rating and this presumes you can be approved for more credit.
- Cash in money from your RRSPs to pay unpaid account. Expensive because monies withdrawn from an RRSP is treated as income and you jeopardize retirement savings. There are other options than preserve RRSP savings.
- Do nothing and hope your creditor does not sue you. Results will vary
- Enrol in credit counselling. Costs about $1.15 to eliminate $1.00 of your debt. Typically you arrange a repayment plan to repay 100% of your debt, often but not always, at no interest.
- Make a consumer proposal. Costs about $0.35 to eliminate $1.00 of your debt depending on the proposal or deal you can make with your creditors (which is based on your assets and income not your debt).
- Provide your creditor with a series of post-dated cheques. Results will vary depending upon interest, if any, on unpaid balance.
- Attempt to negotiate a lump sum settlement for less than 100 percent of outstanding balance (provided account at least 6 months overdue). Results will vary if you try this through an informal settlement however a lump sum arrangement can also be made through a consumer proposal
- File for personal bankruptcy. Typically a last resort but an option that may need to be reviewed. Costs vary based on assets and earnings.
For help determining which debt relief option might best suit your circumstances, talk to an expert about your options today.