Dealing with Debt Collectors: Know Your Rights as a Newcomer in Canada

Receiving calls from a debt collection agency can be an intimidating experience, especially if you are a newcomer to Canada and unfamiliar with your rights. Whether the debt is legitimate or you believe there has been a mistake, it is crucial to know what collection agencies can and cannot legally do. Canadian law provides significant protections for consumers against abusive, unfair, and deceptive collection practices. This guide explains your rights and gives you practical steps for handling debt collection situations.

Debt collection in Canada is regulated at the provincial level, meaning the specific rules vary depending on where you live. However, all provinces share common protections against harassment and unfair treatment. Understanding these protections will help you deal with the situation calmly and effectively.

What Debt Collectors Cannot Do

Across Canada, debt collection agencies are prohibited from engaging in the following practices:

• Harassing, threatening, or intimidating you — They cannot use threatening language, excessive phone calls, or aggressive tactics
• Calling at unreasonable hours — In most provinces, collection agencies can only call between 7:00 AM and 9:00 PM on weekdays and between 1:00 PM and 5:00 PM on Sundays (with Saturdays typically following weekday rules). No calls on statutory holidays.
• Contacting your employer — Collectors generally cannot contact your employer except to confirm your employment, verify your address, or enforce a court judgment (such as wage garnishment)
• Threatening legal action they cannot take — A collector cannot threaten to sue you unless the creditor actually intends to pursue legal action
• Misrepresenting the debt — They cannot inflate the amount owed, add unauthorized charges, or claim to be a lawyer or government official
• Contacting you directly if you have a lawyer — Once you inform the collection agency that you have retained a lawyer and provide the lawyer's contact information, they must communicate with your lawyer instead
• Threatening to report you to immigration — Your debt situation has no bearing on your immigration status, and any such threat is both false and potentially illegal
• Using abusive or profane language
• Publishing or threatening to publish a list of debtors

What Debt Collectors Can Do

While collectors are restricted in their methods, they do have legitimate rights:

• Contact you during permitted hours to discuss the debt
• Send you written notices about the debt
• Report the debt to credit bureaus (Equifax and TransUnion)
• Take legal action to recover the debt (filing a court claim)
• If they obtain a court judgment, enforce it through wage garnishment or seizure of certain assets

Your Rights When Contacted by a Collector

Right to Verification

When a collection agency first contacts you, they must provide specific information including the name of the creditor who hired them, the amount of the debt, and the authority under which they are collecting. You have the right to request written verification of the debt. In Ontario, under the Collection and Debt Settlement Services Act, the collector must provide this information. Do not make any payments until you have verified the debt is legitimate and the amount is correct.

Right to Dispute the Debt

If you believe the debt is not yours, the amount is wrong, or the debt has been paid, you have the right to dispute it. Send a written dispute to the collection agency (by registered mail or email with delivery confirmation) explaining why you disagree. Include any supporting documentation. The collector should investigate your dispute.

Right to Complain

If a collection agency violates the rules, you can file a complaint with your provincial consumer protection authority:

• Ontario — Ministry of Public and Business Service Delivery: 1-800-889-9768 or visit ontario.ca/page/collection-agency-complaints
• British Columbia — Consumer Protection BC: 1-888-564-9963
• Alberta — Service Alberta: 1-877-427-4088
• Quebec — Office de la protection du consommateur: 1-888-672-2556

Limitation Periods: When Debts Become Unenforceable

In Canada, each province has a limitation period — a deadline after which a creditor can no longer sue you to collect a debt. After the limitation period expires, the debt still exists (and may still appear on your credit report), but it is no longer legally enforceable through the courts.

• Ontario — 2 years from the date of last acknowledgment or payment
• British Columbia — 2 years
• Alberta — 2 years (10 years for a judgment)
• Quebec — 3 years
• Saskatchewan — 2 years
• Manitoba — 6 years
• Atlantic provinces — generally 6 years (varies by province)

Important warning: Making a payment or acknowledging the debt in writing can restart the limitation period. If you suspect a debt is past the limitation period, consult a legal professional before making any payment or written acknowledgment.

Options for Dealing with Debt

If the debt is legitimate and you owe the money, you have several options:

Negotiate a Payment Plan

You can negotiate a payment plan with the collection agency. Get any agreement in writing before making payments. Many collectors will accept monthly payments that fit your budget.

Negotiate a Settlement

Collection agencies often buy debts for a fraction of their face value. You may be able to negotiate a lump-sum settlement for less than the full amount owed. For example, a $5,000 debt might be settled for $2,500 to $3,500. Get the settlement agreement in writing, including confirmation that the debt will be considered paid in full.

Credit Counselling

Non-profit credit counselling agencies can help you create a budget, negotiate with creditors, and set up a Debt Management Program (DMP). In Canada, look for agencies accredited by Credit Counselling Canada (call 1-866-398-5999). These services are free or low-cost. Visit the Financial Consumer Agency of Canada for information about managing debt.

Consumer Proposal

A consumer proposal is a legal process under the Bankruptcy and Insolvency Act where a Licensed Insolvency Trustee (LIT) negotiates with your creditors to reduce the amount you owe or extend the time to pay. It is less severe than bankruptcy and stops all collection action.

Bankruptcy

Bankruptcy is a last resort that provides a fresh start for people who cannot pay their debts. It must be filed through a Licensed Insolvency Trustee. Bankruptcy has serious consequences for your credit rating (it stays on your credit report for 6-7 years for a first-time bankruptcy) and may affect certain professional licences.

Impact on Your Credit Score

Debts in collection will negatively affect your credit score. In Canada, collection accounts can remain on your credit report for 6 to 7 years from the date of last activity. Even after paying a collection debt, the record will remain on your credit report (though it will be marked as "paid"). Building good credit as a newcomer is important, so addressing debts promptly is in your best interest.

See also: Building Credit Score in Canada

Tips for Newcomers

• Do not panic — Receiving a collection call does not mean you will be deported, arrested, or jailed. Debt is a civil matter, not a criminal one.
• Verify everything — Scammers sometimes pose as debt collectors. Always verify the debt and the agency's licence with your provincial regulator.
• Keep records — Document every call (date, time, what was said), and keep all letters and emails
• Know your rights — Review the specific collection rules for your province
• Seek help — Free credit counselling and legal aid are available across Canada

For related guidance, read our guide on filing a small claims court case if you believe a collector has wrongfully pursued a debt. You can also use our chat tool to ask questions about your specific situation.