Bill collectors are essentially sales people that are paid commission to convince you to pay a debt in full that you couldn’t afford to pay your creditors directly at one time. You have to be careful when addressing a bill collector, always keep in mind that their job is to scare you into paying your bill; as a result they will lead you to believe certain things that simply aren’t true.
[h2]Lie #1 – I am from the “Legal Department” and you are being sued.[/h2]
From our experience less then 1% of all debts listed to a collection agency ever result in formal legal proceedings. One of the main reasons is in most cases the legal costs required to initiate a lawsuit must be advanced by the collection agency. From a business perspective, it makes no sense to throw good money after bad hoping to recover the legal costs and the debt if you do not have enough assets available to satisfy the judgment being sought after. It’s just not worth it to the collection agency. Bill collectors use the “legal department” threat only because it is scary and most people don’t know better. The fact is that most bill collectors sit in a tiny 3’x 3’ cubicles and pretend to be someone they really aren’t on the phone.
[h2]Lie # 2 – I am going to garnish your pay cheque.[/h2]
In order to get any piece of your pay cheque, the bill collector needs a judgment from a court in their favour but the collectors will not usually 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 may be garnished. A creditor can bring a motion to increase the amount of wages that may be garnished but a debtor also has the right to bring a motion to have such amount decreased. I have personally heard Collectors tell people they will garnish 50% of their pay but the truth is that even if they get a judgment, garnishments rarely exceed 15-20% of pay. For the most part it’s just a threat because it scares people and most don’t know any better.
[h2]Lie #3 – If I don’t have payment by 4 p.m. today, we are (Insert scary threat here).[/h2]
Remember, bill collectors are paid a commission and so are the managers that are breathing down their necks in order to hit their collection targets. Some aggressive bill collectors can make six figures annually if they push people hard enough. They will tell you anything if they feel that it will result in a payment and a bigger commission cheque for them.
[h2]Lie # 4 – Pay in full, a monthly payment is not an option.[/h2]
They want full payment from you because they make more money off you when you pay in full. They are instructed to demand full payment by the policy makers of the collection agency. If you don’t have the means to pay in full, don’t worry. Payments are always an option.
[h2]Lie #5 – Collectors can call you as much as they like.[/h2]
Pursuant to Section 22(6) of R.R.O. 1990, Regulation 74 to the Collection Agencies Act (Ontario), there are restrictions on the frequency of calls that collection agencies can make to you. Despite what they may tell you a bill collector cannot harass you. If you register a letter suggesting you dispute the debt, suggest they take a legal remedy and request the collection agency to communicate with you only in writing the calls must stop otherwise you can escalate their behaviour to their ombudsman or provincial ministry to take further steps. Bill collectors can lose their jobs if they don’t follow the rules.
[h2]Lie #6 – Collectors can call and harass your family, friends and neighbours.[/h2]
A collection agency can only contact a third party to confirm your home address and telephone number or your employer to confirm your employment, title and business address; that’s it (Section 22(3) of Regulation 74 to the Collection Agencies Act). If the collector divulges details about the debt or tries to embarrass you, there are steps you can take to deal with and stop this behaviour.
Bill collectors can be obnoxious and rude; many think that insulting people will get the debt paid. Collection laws prevent this type of behaviour reoccurring if you escalate it and deal with the issue. If you feel that they have mistreated you by using profanity, intimidating or coercive language, you can certainly stop it. They will most certainly deny the activity so a tape recorded conversation or voice message will be your best friend here.
Collection agencies and bill collectors have a bad reputation for a reason, they are very tough to deal with; it’s their job to push you hard to pay. There are ways to deal with the debt and their behaviour but it takes time and a certain investment in researching your rights. Try not to avoid the debt but find a way of dealing with it.
The only way to stop the collection activity is to pay the bill off or go bankrupt. If you can pay the bills in full, do so as soon as possible.
If payment of your bills is not an option due to financial hardship, you may wish to explore debt settlement and it should be considered as an alternative to filing for bankruptcy. A debt settlement company will negotiate a settlement with your creditors for less then what you owe. Once the settlement is paid you will no longer owe that debt. The time frame to settle debt can be anywhere from 1 month to 36 months depending on your ability. This is often the least expensive and least damaging to your credit. Debt settlement is also often the fastest path to debt freedom.
Remember that bill collectors make a living off of trying to scare and intimidate people so they can earn a big commission cheque. Consider the source of the threats and lies when they call and don’t let bill collectors push you around, you have rights and can fight back and win!
If you feel it’s time to do something about your debt, and need a debt settlement consultation please visit our home page here and request a free no obligation quote.