How to Deal with Collection Agents

Collation AgentsHow to Deal with Collection Agents

Peter Shawn Taylor


When jobs are lost or emergencies strike, even diligent bill-payers can find themselves dealing with collections agents. If it happens to you, don’t panic. Simple follow these steps, and you ways be able to negotiate your way to big saving while avoiding an unpleasant bankruptcy


“Not all debt is created equal” says Mark Silverthorn, a lawyer and author of The Wolf at the Door: What to do When Collection Agencies Come Calling. For taxes or Canada student loans, the government doesn’t cut deals and rarely gives up. Secure debt, such as mortgages or home equity lines of credit card and other unsecured debt is open to negotiation.


Most creditors try to collect their debts in house for the first six months or so. After that, they generally farm the work out to collection agencies. After a year or two the creditor may sell the debt to debt repurchaser for as little as half a cent on the dollar. Keep in mind who you’re dealing with: creditors want full repayment, but collection agencies receive a commission and want the most they can get as quickly as possible. Debt collectors are often content with smaller payments.


Collection agencies routinely threaten to sue, but this often a bluff. Only the original creditor is likely to go to the effort. Silverthorn says the slim commissions earned by collection agencies mean fewer than one in 10,000 consumer accounts end up in court. If you haven’t been served papers within six months of missing a payment, odds are you never will be.


Creditors have the right to remind you that you owe them money. But only to a point. In B.C., Alberta, Ontario, Quebec and Nova Scotia, you can legally request that collection agencies stop calling you at home. Some provinces also have rules on calls to your workplace. Plus, you can screen your calls, hang up or get an unlisted number. “You should speak to collection agencies when it suites your schedule,” says Silverthorn.


If your debt is more than a year old and you’ve avoided a lawsuit, it’s time to bargain. Silverthorn cautions against making token “good faith” payments on bills, as this restarts the debt clock. And credit counselling usually requires that you eventually repay all your debts in full. Instead, try to get your creditors to accept 30 ¢ to 60 ¢   on the dollar, less if it’s been more than two years. But first get it in writing.


Unpaid debts show up as R9 on your credit report: the worst possible rating. This will stay six or seven years, depending on your province, and have a significant impact on your ability to borrow in the future. But any debt settlement – even for pennies on the dollar – will eliminate that debt and instantly boost your credit score. That’s why negotiating a settlement is generally a better option than declaring bankruptcy.

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.  

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