Collection and Debt Repayment

What is a debt?

A “debt” is any monetary obligation enforceable by law including credit, loans of money, or provisions of goods and services.

Last reviewed: October 2014

What is a debtor?

Someone who owes money is called a “debtor”. For example if Fred borrows money from Steve, Fred is the debtor.

Last reviewed: October 2014

What is a creditor?

A “creditor” is a person who debt is owed to. In our example, Steve is the creditor because he loaned his money to Fred. A creditor may only have an agreement with one collection agency at a time to collect a debt. This means no more than one collection agency should be working to collect any one debt at a time.

Last reviewed: October 2014

What is a “Collection Agency”?

A “collection agency” is a person or business that tries to collect debt but is not the same person or company that the debt is originally owed to. A collection agency may work on behalf of the person the original debt is owed to or may have purchased the debt from that other person and is now attempting to collect it. For example “Big Collection Agency” might be collecting the debt owed to “Credit Card Company.”

Last reviewed: October 2014

What is a “Collector”?

A person who works for, or is authorized to work on behalf of a collection agency is called a “Collector”. The collector works to collect the debt, locate debtors in Alberta, and may act for or deal with the debtor. If the contract that creates the debt assigns any person to collect debt, they are not a collector.

Last reviewed: October 2014

What are “Debt Repayment Agencies”?

“Debt Repayment Agencies” are collection agencies that work for the debtor in arranging and negotiating with creditors. Debt Repayment Agencies collect the money from the debtor and distribute it to the creditors. This work is done for a fee or commission that is paid by the debtor. A “Debt Repayment Agent” is employed by, or authorized to work for, the debt repayment agency in dealing with the debtor.

Last reviewed: October 2014

What is considered “contact” when it comes to debt collection?

“Contact” with regard to debt collection, is defined as any communication by telephone, fax, email, automated call system, text message, in person, messages left for the debtor, or any other form of communication that is not pre-arranged. Any contact from a collector must show his or her name, and the name of their collection agency.

Last reviewed: October 2014

What is “Express Consent”?

“Express Consent” is consent is made in a form that can be verified. For example, signing a document, or making an audio recording would be express consent.

Last reviewed: October 2014

What are collection agencies and collectors prohibited from doing under the Fair Trading Act?

Misrepresentation: Collection agencies and collectors may not “misrepresent.” Any agreement is void if an agency misrepresents what its rights and powers are, misrepresents what the debtor is responsible for, or if any term of the agreement is misleading towards what its true nature or purpose is.

Licensing: Collectors and collection agencies must always have a licence to carry out their work. If they do not have a licence, they cannot advertise that they do. They must both always represent themselves with the name from their licence and in all correspondence. No collection agency or collector may be licensed as a debt repayment agency or debt repayment agent and vice versa.

Contact: No collector or Collection agency may contact the debtor more than three times in seven days on behalf of the same creditor other than by traditional mail. Collectors and collection agencies may only make personal visit or telephone call for the purpose of collecting debt after 7 am or before 10 pm. They may never contact the debtor, any member of the household, any relatives, employers, neighbours, friends or acquaintances in a manner that could be considered harassment. This could include threats, profane language, unreasonable pressure, or excessive emails or telephone calls. They must also not give any false or misleading information including references to the police, law firms, prison, credit history or court proceedings, liens or garnishment.

Last reviewed: October 2014

Can the collection agency or collector contact other people to find out information about me?

The only contact the collection agency or collector may have with the debtor’s spouse or partner, relatives, neighbours, or friends may be to try to find the debtor’s address, personal telephone number or home phone number.

Last reviewed: October 2014

Can a collection agency or a collector call my employer?

They may not contact your employer except for the purpose of confirming the debtor’s employment in preparation for legal action. If it is important to the debtor that their employer not be contacted, a debtor can request this, but must make arrangements to discuss the debt with the collection agency. If you wish to have only someone you choose to represent you contacted in regard to your debt, you can request this on the condition that there is discussion about the debt with the collector.

The collector or collection agency may not give any information about the debt to anyone other than the debtor or a chosen representative of the debtor without express consent. When a collection agency leaves a message from an automated call system, they must leave a contact number. They must also show their name on all correspondence. If a debtor makes a written request, the collection agency must provide a statement that shows all the money repaid and how much is still owed in regard to the debt. However, only one statement must be given every six months.

Last reviewed: October 2014

Do I have to pay the collection agency or collector?

Collection Agencies or collectors may not charge any fees beyond what is owed to the creditor, except for a dishonoured cheque fee that must have been pre-disclosed to the debtor. The dishonoured cheque fee must be reasonable. Collection agencies and collectors may not make arrangements with a debtor to accept less than what the debtor owes to the creditor, without the express consent from the creditor. The collection agency or collector may not enter into arranged wage assignment programs with the debtor’s employer.

After any payment agreement is made, the collection agency or collector may not cancel or alter the payment agreement if the debtor is meeting the terms of the agreement as long as there was no misrepresentation of the debtor’s financial situation.

Last reviewed: October 2014

What can Debt Repayment Agencies do and not do under the Fair Trading Act?

Contact: A debt repayment agency cannot give away any information about the debt to any person other then the debtor and the debtor’s representative. Also, it may not make any false or misleading information, including in regard to the police, a law firm, prison, or court proceedings.

Agreement and Fees: The debt repayment agency cannot collect any fee from the debtor unless it is agreed on in writing when the repayment program is created. This fee must be within the limits proscribed by the Regulation. It may not make an agreement with a debtor to accept less than what is owed to the creditor without the creditor’s express consent and it may not lend any money or provide credit to the debtor. Similar to a collection agency, a debt repayment agency may not charge any fee for a dishonoured cheque unless the fee was included in the repayment agreement.

Debt repayment agencies cannot offer to pay or give any reward for entering into an agreement with them, and cannot claim a breach of contract if the debtor cancels a debt repayment program.

Trusts: A debt repayment agency may create a trust in which the debtor will deposit money so that the debt repayment agency can disperse it among various creditors. Money from this account may only be withdrawn in order to pay the creditors, pay agency fees, if there was an error and money must be returned, or if the program is canceled by the debtor and money needs be returned to him or her. Payments made from this account must be done using numbered cheques.

Last reviewed: October 2014

Links

Fair Trading Act

Service Alberta

See Also

For more information, see these other Canadian Legal FAQs and publications.

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