In a letter addressing 176 collection agencies in Ontario the Registrar of Collection Agencies appears to be making a change in the way Collection Agencies in Ontario can do business.

In the past collection agencies in Ontario and their lawyers have been successful at collecting money from debtors with “draft” statement of claims. This tactic was effective because it is inexpensive and scary to most people that don’t know any better.

A statement of claim is a court document you must complete and register with the court to start a legal proceeding against someone.

Usually the drafted claim is accompanied by a letter typed on a lawyer’s letterhead and signed by the lawyer. The covering letter will often suggest that the debtor has 10 days to pay their debt by certified funds otherwise a Sheriff may serve the claim upon them. The consequences of a judgement are usually spelled out and it often includes wages being garnished, bank accounts seized and your other property being seized or sold. A professional will help you in case your property is seized, protecting privacy during process serving.

“Draft” statement of claims are frightening to people in debt because they look like an official court document suggesting the debtor is about to be sued; but in reality they aren’t worth the paper they are written on because they aren’t registered with the court and in draft form only. It’s basically an empty threat.

At Total Debt Freedom we negotiate a reduction in our client’s debt by 40-60% so we often deal with collection agencies and their attorneys when settling a debt. Draft statement of claims have been a huge concern for many years and we have seen every possible version used. In our experience, only a very small portion of statement of claims sent to debtors are ever actually registered with a court, the majority are in draft form only.

Brian Pitkin, the registrar of the Collection Agencies Act in Ontario states “the practice trades on the expectation that debtors will be unknowledgeable about court processes, and interpret the “draft” statement of claim as a greater commitment to pursuing the matter in court then actually exists; it relies on the debtors not recognizing that the document enclosed with the demand letter is little more than a boiler plate with little investment in time and thought”.

Pitkin finds this collection tactic objectionable and stated that “the practice of enclosing a draft statement of claim is both deceitful and misleading”

This issue is clearly on his radar screen and he warns that further complaints on the matter could result in an order to the collection agency to stop under subsection 2 of section 21 of the Collection Agencies Act by the Registrar himself.

Will the practice of draft statement of claims stop? Maybe; collection agencies are crafty and may find a way to continue using a modified version of these effective collection tactics.

Dealing with collection agencies can be quite stressful if you are unfamiliar with their collection tactics. If you are using a debt help company be sure they are competent enough to differentiate misleading and deceptive collection tactics from the real threats.

If you feel it’s time to do something about your debt, and want a free debt settlement consultation then please visit our home page and request a no obligation quote.