When you’ve fallen behind in your debt payments the financial stress can be enormous, particularly if debt collectors call you. It’s important to know what your obligations and your options are when you receive those calls.
“There is no denying the stress when debt collectors call. But ignoring calls will extend your problem and your stress. It can seem overwhelming, but formulating a plan is the best response,” says Jeff Schwartz executive director at Consolidated Credit Counseling Services of Canada.
“There are cases in which debt collectors are trying to collect on debt that you may feel isn’t yours, which underscores the need to keep good financial records that track your spending and credit activity,” says Schwartz.
Here is what you need to do if debt collectors call:
Write down the important information
It is essential that you gather all the pertinent details when a debt collector calls. Write down the name of the person that you are talking to and their phone number. Verify both the name of the collection agency and the creditor that they are collecting on behalf of.
Find out how much you owe and other details of the debt (i.e. when the debt began and how overdue you are). Tell the collection agent that you’re going to verify all these details and that you’ll get back to them promptly.
Cross reference your paper trail
Mistakes do happen, which is why you need to be able to go back and verify your spending and your debt repayments either online or with bank statements.
If you determine that the debt is indeed yours and that the information the debt collector has provided you is accurate, it is in your best interest to determine how you will pay this debt back and to move forward with your plan as soon as possible.
If your records show a discrepancy in the debt and you feel like the debt isn’t yours, contact the debt collector and the creditor to communicate your dispute. Next, arrange to view your credit report to see if the debt appears on there.
Repaying the debt
Ideally, it is best if you can pay the debt off in its entirety right away, but if that isn’t possible, negotiate with the collection agent a payment plan with a timeline (i.e. monthly for the next three months). Get it in writing. Don’t send cash as a payment and get a receipt for any payments that you make.
To avoid confusion, deal directly with the debt collection agent that is managing your case. If you contact the original creditor, you run the risk of miscommunication.
What debt collectors are not allowed to do
Although ultimately you are responsible to pay back debt that you owe, you do have rights when it comes to debt collection. There are rules and regulations around debt collection practices that vary from province to province to protect consumers.
For example, debt collectors are only allowed to contact you during certain hours of the day. They are only allowed to contact your friends and family in order to get your address (there are exceptions to this if you have a friend or family member as a guarantor on the outstanding debt). They aren’t allowed to use abusive language or to threaten or intimidate you.