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If the debt collector calls, what do you do? Add to ...

My friends and family think it's hilarious that I've been hounded by collection agencies ever since I became The Globe and Mail's financial services reporter. On my work cellphone, no less.

They laugh when it rings and they get to hear me, once again, trying to get the debt collectors off my back. They find my frustration amusing as I tell the agent that I have no idea who Steven Bennett is, or what he might owe, but that the phone calls must stop because they are calling the wrong number.

To be honest, I might have put more effort into the fight if it were my own cellphone, not my employer's. In any case, the situation has gone on for years. Yes, years.

Collection agencies are regulated provincially, and while the rules vary across boundaries, every jurisdiction has laws about what the agencies can and cannot do. In Ontario, where I am, it's illegal for them to call a cellphone if that call costs the user money. It is also illegal for a collection agency to continue to phone someone after that person has told the agency that they have the wrong individual, unless the agency has found evidence that they do indeed have the right person.

When collection agencies do have the right individual, the debtor has a few options. One is to seek help from a credit counsellor, who can make a proposal to the creditor with a realistic payment plan. Another is to have a lawyer contact the collection agency.

"But [borrowers]have to understand that people do have the right to call them to collect on their debts," said Jeffrey Schwartz, executive director of Consolidated Credit Counselling Services of Canada Inc. "Clients can complain all they want, but if they're in debt and they haven't been paying their debts, then someone is going to come calling for them."

Experts say more consumers have been dealing with collection agencies in the wake of the recession, as people struggle with job loss or debts. When the economy became troubled and it looked as though a rising number of consumers would be under water, many financial institutions, phone companies and retailers became less lenient about delinquencies because they feared that many customers would fail to pay their debts all at once, at a time when these companies were also feeling financially pinched because of the crisis.

That same sense of urgency developed at many collection agencies, which tend to get paid more when they are able to collect more.

"I get the sense that collection agencies may be more aggressive today than they have been in the past in terms of engaging in conduct where they're breaking the law," said Mark Silverthorn, author of The Wolf at the Door: What to Do When Collection Agencies Come Calling.

Ontario's Ministry of Consumer Services receives more complaints about collection agencies than any other business, including gyms, mechanics and car dealers. The ministry received 5,041 complaints last year, up from 4,764 in 2009 and 4,132 in 2008.

For every one complaint, there are probably 20 or more people - like myself - who have not lodged an official complaint, said Mr. Silverman, a lawyer based in Kitchener, Ont., who acted on behalf of collection agencies for 12 years before deciding to instead represent consumers in their battles against the agencies.

Consumers have different rights depending on what province they live in. For instance, in Ontario an agency can call only three times within a seven-day period, but most other provinces don't restrict how often they can contact consumers. In Newfoundland, it's illegal for an agency to call a consumer at their workplace, while many provinces have no such rule. A number of provinces empower consumers to stop the calls by having a lawyer send a letter to the agency.

"Like all industries, there are going to be some people that play by the rules and then there are going to be some people that stretch the rules, and we've seen some of that," Mr. Schwartz said.

Consumers who feel that they are being mistreated by a collection agency are advised to send a letter to that agency's head office, or to have a lawyer do that for them. If they believe that the agency is breaking the law, they should complain to their provincial regulator. They might also be wise to take notes when the agency contacts them.

If they genuinely owe the debt, then credit counselling is one of the best lines of defence. Debtors can work with an expert who can put together a plan for them to tackle their debts, and ask the creditors to agree to it.

Henrietta Ross, chief executive officer of the Canadian Association of Credit Counselling Services, said call volumes have been increasing over the past couple of years. "I think that's because of the rising consumer debt loads that we've seen," she said.

Canadian debt levels rose so quickly in the past year that they prompted a warning from the central bank, and this month the International Monetary Fund again cited them as a potential threat to the economy. The amount of debt that consumers hold compared with the amount of money that they make has hit record levels. Total household debt rose from $938.5-billion to nearly $1.5-trillion. As a result, Canadian consumers made $72-billion worth of interest payments in the third quarter of 2010, up from $54.6-billion five years earlier.

In my situation, Mr. Silverthorn suggested putting in a call to the company's head office rather than dealing with the collectors who keep calling. Since I'm clearly never going to pay a debt I don't owe, those collectors are just wasting their employer's time, he said.

"What happens sometimes is you get poorly trained collectors," he said. "You're dealing with front-line people. So I think if you were to speak to the owners of the collection agency or senior management, they would say, 'If we've got the wrong person, we're going to stop calling them.' The thing is the collection agency, regardless of who you're dealing with, are responsible for complying with the law."

How to deal with the debt collector

1. When a debt collector calls you, ask for and write down the following information:

-who you are talking to - is it the original creditor or is it a debt collection agency?

-the name and company of the person calling, and their telephone number.

-the amount of the debt, who you owe it to, and when the debt started. If the details of the debt are not familiar to you, looking at your statements can help you confirm whether or not this debt is yours and if the amount is correct. Tell the debt collector that you will call them back as soon as you verify the information.

2. If the debt is yours and the amount is correct, it is best to pay the money you owe right away. Paying the full amount at once will resolve the issue. If it is not possible for you to pay the full amount at once:

-explain why to the debt collector, and offer an alternate method of repayment. For example, you could offer to make two or three payments that add up to the amount owed, or make a series of monthly payments until the debt is paid off.

-follow up in writing and, if possible, enclose a first payment to show your commitment to paying back the debt.

3. When repaying your debt:

-Don't send cash.

-Always make sure that you get a receipt for any payment you make.

-Only deal with the debt collector who has contacted you to make payments. If this a collection agency, don't contact the original creditor - this might create confusion.

4. If you think that the debt is not yours, or that an error has been made, do the following:

-tell the debt collector and contact the original creditor (if that person or company is different from the debt collector) to find out how to proceed.

-order a free copy of your credit report from Canada's credit reporting agencies, Equifax and TransUnion, to see if the debt appears on your report. If it does, contact the credit reporting agencies and the original creditor to have the error corrected. An error on your credit report can negatively affect your ability to get credit in the future. If you are concerned about the identity of the debt collector or its authority to collect the debt, contact the original creditor (if that person or company is different from the debt collector) to confirm the information.

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