How To Deal With A Debt Collector You Can’t Pay

debt collections Canada


The debt collector is also known as the bill collector who will stop at nothing to get the money that you owe to pay off your debt.

In Canada, there are laws that must be followed when a debt collector contacts you and it’s important for all consumers to be aware.

Even if you don’t have debt or think that you will be contacted by debt collectors, think again.

They can contact you on behalf of someone else who owes a debt looking for personal information such as their phone number or address.

You will want to know how to handle a debt collector situation because it may happen and what you do is important.

I Can’t Pay The Debt Collector

Dear Mr.CBB,

My husband lost his job last year and we have debt that we can’t pay back as my small income pays for us to put a roof over our heads.

It’s unfortunate since we always paid our bills on time but we weren’t prepared for job loss with any extra money set aside.

Over the last few weeks we’ve been getting a phone call at least once every couple of days from a debt collection agency who claims they are after us to pay back a debt.

They want us to pay the money now but we don’t have the money. I’m not sure what to do or what they can do to us if we can’t pay them back the debt we owe.

The amount we owe is $1400 which isn’t lots of money but right now we can’t pay it in full.

Thanks for any advice.


Evaluate Your Financial Situation

Thanks for your question, Marilyn.

I will do my best to address your situation and perhaps if you need help with your budget you can contact me. 

The first thing I tell everyone when it comes to debt repayment is to see where they can make changes in their budget.

If you are able to free up the money somehow or earn extra money that may help with debt repayment.

What If I Can’t Pay Back A Debt Collector?

If a debt collector calls you perhaps you can try to negotiate with them but often it’s too late once they own the debt.

Court-ordered debt collections may happen if the debt collector sues you and they can for just about every debt.

Once you are unable to pay back a debt the creditor can obtain a court order to garnish your gross wages up to 50%.

This is called a wage garnishment in Canada which forces your employer to send your wages to pay off your debt.

Related: 5 Facts about Wage Garnishment

When you have debt you can’t pay back you’re better off contacting who you owe money to and explain the situation.

You may find they would rather get some money from you then all of the money from you or put you on a payment plan that works for your budget.

Other options:

If they sent your debt to a collection agency they risk getting nothing out of it at all and having to pay the debt collector.

It sounds to me that you have the debt collector coming for you and since you can’t pay the debt back all you can do is tell them so.

Below is everything I know about being in debt with a debt collector so I hope it offers you a bit of relief understanding your rights as a consumer.


What is a Debt Collector?

A debt collector is a company or third party collection agency who works to retrieve a debt that is unpaid on a loan, credit card or line of credit.

A creditor may sell your debt to a debt collection agency who will then try to get the money back or work on the creditor’s behalf for a fee.

How To Handle A Debt Collectors Phone Call

If you answer your telephone and the person on the other end claims to be a debt collector the first thing you need is a pen and paper.

Don’t even begin talking to them without something to document the conversation because you’ll need the info to fall back on.

Trust me when you are in a stressful position where you are struggling to pay back the debt you don’t want to try and remember what was said to you.

Before the debt collector tries to get information out of you beat them to it with questions such as;

  1. What debt Collector Company do you work for?
  2. What is the debt collectors’ name?
  3. Who are they collecting the debt for? (Name of Company or Person)
  4. What is the contact information for the debt collector? (just in case you need to call them back but verify that the number belongs to a legitimate Canadian debt collection agency, first)


These days scam artists prey on anyone and everyone they can and telephone scams are on the rise in Canada.

Scam artists particularly like to prey on the elderly or people who they know can be easily convinced and they can tell from the moment you start talking to them.

These people are breaking the law and may not even live in Canada so it’s near impossible for authorities to track them down especially if you give them money.

It’s Not My Debt

It happens and credit agencies come looking for money only to find out they are chasing the wrong person or there has been a mistake.

If you get a letter from a debt collector stating that you owe money for a debt they are collecting and it’s not yours, act fast.

Call the debt collection agency to let them know the debt is not yours.

Find the contact information of the person/business you supposedly owe the debt to and call them for clarification.

Order your credit report to examine what is in the report including the debt that is trying to be collected.

If the debt on your credit report is not yours contact Equifax and TransUnion as negative or misinformation could mean identity theft or fraud.

Debt Collector Written Notice Of Claim

We’ve seen our fair share of debt collection notices as we’ve been dealing with debt collectors for inlaws over the years.

I remember an afternoon that we were sitting in the living room at a relative’s house and there was a knock on the door.

When the door was answered a letter was handed to my mother-in-law that certified that she was served the letter in person.

This way she could not dispute that she did not get a letter from a debt collector which is something lots of people do.

Don’t try to scam the system because a debt collector will find you when there is money involved in it for them.

Most often you will receive a debt collection letter in the mail or via email if you provide an email address but I suggest getting a letter.

When it comes to debt and finance I’m a big believer in having paperwork in front of me and maybe I’m old school but that’s the way I prefer it.

What should a debt collection letter say?

If you owe money to someone and find yourself with a debt collection letter it should follow a legal procedure to inform you of what is happening.

The debt collector must include information in the debt collection letter such as;

  1. Collection Agency name and contact number
  2. Who the debt is being collected for?
  3. Who owns the debt?
  4. Type of debt that is being collected? (Credit Card, Bank loan, School loan)
  5. How much money the debt originally was for and a breakdown of what is currently owed

If you don’t get answers to the above questions you can request that they send you this information to further clarify the debt they are trying to recover from you.

A debt collector then must wait 6 days after they send the debt collection letter before they can legally contact you.

This means after 6 days they can call you, email you or visit you in person to chat about the debt you owe.

However, there are rules in place that a debt collector must follow in Canada.

When Can A Debt Collector Call You?

A debt collector can only contact someone maximum 3 times per week for money during certain hours of the day, Monday to Sunday.

  • Monday to Saturday 7am-9pm (Imagine a nice wake-up call at 7 am or a ring before bedtime)
  • Sunday from 1 pm to 5 pm

If you allow them to contact you more than 3 times per week that is something you can allow via phone, text, email or voice mail messages.

How Often Can A Debt Collector Contact Me?

Those are the only 4 legitimate ways that fall into the 3 times per week contact count.

They are smart though because if they don’t leave a message that doesn’t count as a contact.

This gives them another opportunity to get you on the telephone because leaving a voicemail for someone to call a debt collector back likely won’t be returned.

Besides, if you don’t answer the phone and you see that they called that’s not a legit contact either.

How To Handle Threats From A Debt Collector

Debt collection agencies in Canada know they are NOT allowed to threaten anyone they are trying to retrieve money from as it is against the law.

They are not allowed to call you on a holiday, threaten you or charge you any fees related to the debt you owe apart from;

  • Interest
  • Legal fees
  • Fees for non-sufficient funds (NSF) on payments you submitted (example: A cheque that bounced)

Years ago we received a phone call from a debt collector on behalf of my sister-in-law and they were very pushy and threatening.

They wanted to know if she lived with us, where she worked, her phone number and were adamant that we tell them.

We told them, NOTHING.

Most people won’t give personal information on family and friends over the phone if it is a legitimate debt collector.

Debt collection agency phone calls are scary even for the person they are trying to bleed dry of information.

Debt Collection Scams

If you are dealing with a threatening debt collector who does any of the following you’re likely dealing with scam artists or illegal tactics by a Canadian debt collector.

  • Requires payment on the spot via credit card, PayPal or other means Don’t!
  • Threatens to take legal action and sue you
  • Uses intimidating, threatening or abusive language
  • Start calling your personal contacts including your employer

Before you offer ANY personal information upon the phone call you must;

  • Ask yourself if you even have any debt that you owe. If no, then it’s likely a scam.
  • Make Sure You Are Dealing With A Collection Agency
  • Must Be Listed On Government Website- Ministry of Government and Consumer Services
  • Debt Collector Must Send A Written Notice And Wait 6 Days Before Contacting you by phone, text, email or in-person (Did you get a written notice? If no, tell them to send it and then call you back)
  • Contact the debt collection agency direct by searching for their phone number.
  • Never use the number that is given to you just in case it is a scam artist.

Don’t let a debt collector pressure you into giving up personal information by telling you that the written letter they are legally supposed to send is in the mail.

You need legal proof that the debt collector you are dealing with is an actual debt collection agency and they are working on behalf of a client to retrieve money that you owe them.

If you don’t have it you don’t talk. Be firm, what’s the worst they can do? Nothing.

6 Days After The Debt Collection Letter

After a debt collector sends you a debt collection letter they have to wait 6 days before they can contact you.

They can also contact your friends, family, guarantor, and employer (certain rules for an employer) by law to only retrieve your phone number and address.

A debt collector cannot directly call your cell phone unless you allow them to do so or unreasonably pressure others to pay back your debt.

Debt collectors not permitted to make a false or misleading representation of you to anyone or use threatening or abusive intimidation.

What Is A Guarantor?

You will want to be careful before you sign to be a guarantor as it’s not just something that you do to help someone get a loan.

A guarantor or surety is someone who co-signs a loan or debt for someone where they will pay back if the borrowers’ debt is in default.

Essentially, they are on putting themselves on the hook to pay back a debt you don’t pay with their own assets.

The only way a debt collector can contact your employer is if they guaranteed the debt that you owe or you allow them to call.

Lastly, if a debt collector only wants to verify employment or business information they have the right to do so, once.

If they ask for any other personal information or give false or misleading information the debt collector is breaking the law and should be reported.

Debt Collector Complaints

Dealing with a debt collector who is not following the laws set out in Canada is stress but there are steps you can take to complain.

Firstly, contact the debt collector yourself and tell them that they are breaking the law and ask them to follow the procedure.

If they know you are aware of debt collector laws in Canada they may back off and follow procedure especially if you say you will file a complaint.

If the debt collection agency is not following practices and won’t listen to your complaint you can then contact the Financial Consumer Agency of Canada.

When a debt collector continues to threaten you then you can fire back by filing suit in small claims court or calling your local police department.

You can file a complaint against a debt collector that is a federally regulated financial institution,  hired by one or sold for collections.

The ministry can follow-up and fine the debt collection agency, ask them to stop contacting you or shut down their business.

For more detailed information:

Discussion: Have you ever had a phone call from a debt collector that didn’t follow Canadian laws?

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  1. Thanks for the article and advice. We were not debtors, and over time, debt collectors began to call us. For a long time, I ignored the calls, but I talked to them one day and found out that they have a desire to sue.

  2. In my practice, there were many such cases when the client could not pay the debt and turned to a lawyer for help. I think this is the right decision. Consulting a specialist can be much more effective than acting alone. I can definitely advise the advice of professionals in the settlement of accounts payable.

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