What Is a Collection Agency and How Do I Deal With It?
A collection agency is an organization that obtains or arranges for payment of money owed to a third party; this could be a person or a company.
If you've been notified in writing that an account has been turned over to a collection agency, don't panic. The agency isn't in business to make life unbearable for you — its management just wants to collect the money you owe its client.
What Should You Do If a Collection Agency Comes Calling?
- If possible, pay the money you owe. You won't have to deal with the agency once the account has been cleared.
- If it's impossible for you to pay the full amount at once, contact the agency, explaining why. Offer some alternative method of repayment, either in a lump-sum or a series of monthly payments. Follow up in writing and, if possible, enclose a good-faith payment.
- Never send cash. Always make payments in such a way that you have a receipt — either a cancelled cheque from your own bank or a receipt from the agency.
- Once the account has been officially turned over to a collection agency, you'll be dealing only with that agency when making arrangements for payment. Don't contact the original creditor — this just creates confusion — unless there's an error in the account. If that's the case, advise both the creditor and the collection agency.
It’s Important to Remember:
- Your attitude towards paying the debt has a lot to do with how co-operative the agency will be. For example, when making payments to the agency, be sure not to bounce cheques and miss payments. However, if your financial circumstances change, contact the collection agency and explain your current status and follow up in writing.
- Debts should not be treated lightly. They can result in court action, which could lead to money being taken from your paycheque (garnisheed) or seizure of your assets.
If your financial problems are getting out of hand, consider contacting a credit counselling service for help.
Assistance is offered, in many cases for a nominal fee, by member agencies of the Ontario Association of Credit Counselling Services. Credit counselling, available from more than 27 member agencies across the province, helps more than 20,000 Ontarians a year find the road to financial health.
