Leveling The Debt Collection Playing Field
On today's show former collection agency lawyer, Mark Silverthorn exposes five collection agency dirty tricks. During his 12 years in the industry, Mark witnessed many tactics used by collection agencies to get people to pay up. He's written a book on the topic called, "A Wolf At The Door: What To Do When Collection Agencies Come Calling," and now works as a consumer advocate in his consulting firm called Comprehensive Debt Solutions Inc. to help people deal with collection agencies and in his words, "level the playing field" for consumers.
5 Dirty Tricks That Collection Agencies Play
1. Threatening to sue when permission has not been granted by the creditor. Mark explains that it is illegal in Ontario for collection agencies to threaten you with a lawsuit if they have not been authorized to do so. Furthermore, Mark points out that,
If [the creditor] wants to file a suit, they would give it to a lawyer or a law firm; it would never even get sent to a collection agency in the first place.
2. Calling payroll at the consumer's work. Mark describes times when collection agents would call payroll and ask if the consumer works for the company and whether the person on the phone would be responsible for processing garnishments. While it is not illegal for them to do so as long as they do not disclose the existence of the debt, they use this tactic to plant a seed that connects the consumer's name to a possible garnishment.
3. Calling a neighbour. When collectors can't reach the consumer, they'll sometimes call that person's neighbour and explain that the person in question needs to attend to an urgent legal matter, asking whether the neighbour could leave a note on the individual's front door. This dirty trick is not only legal as long as they do not disclose the name of the collection agency and debt, but all of a sudden neighbours are privy to the fact that the consumer has some sort of legal matter going on.
4. False reporting to credit bureaus. Under the Ontario Consumer Reporting Act, an unpaid account is required to be taken off of a credit report six years from the date of the last payment. According to Mark,
[Some collection agencies will] make up a non-existent or a fictitious payment, or they may even make a $10 payment; and they'll report it as being a payment made by the consumer and that will restart the six year clock.
5. False statements about legal action. Mark explains that some collection agents will call up a consumer and provide information about false legal action. Mark provides an example of a stay-at-home mother who was called by an agent claiming that a bailiff would be by with a writ of seizure and sale for their unpaid account and that,
it was going to be necessary for her to put all of the family's electronics and home entertainment equipment out at the curb so that the bailiff can pick it up and seize it and take it away. And in fact, these people had never been sued.
So how should you deal with collection agents?
I ask Mark what listeners can do if a collection agent gets them on the phone. His response is that you are under no obligation to speak to anyone on the phone and you have a right to hang up if you feel threatened. He also recommends that you ask the collection agent a series of questions including their name, contact information, and specific information about the debt that they have been hired to collect.
Although it's possible to screen collection agency calls using call display or setting up an unlisted number, I don't recommend avoiding collection calls unless you have no income or assets. If you ignore a collection agent for too long, you run the risk of a garnishment or the original creditor suing you. Mark explains that to stop collection calls (especially if you're receiving them at work), you need to send a registered letter to the collection agency demanding that they cease from any further calls and invite them to settle the matter in court.
My advice? Know your rights and your options. If collection calls keep coming and you're struggling to pay off your debt, it's time to take action. Consider options like settling with the collection agent or filing bankruptcy or a consumer proposal to eliminate your debts.
Resources Mentioned in the Show
- Ontario Consumer Protection Laws
- Mark Silverthorn's website
- Mark Silverthorn's blog
- Mark Silverthorn's article on LinkedIn: No sinner like a former collection lawyer and industry insider
- Mark's book, A Wolf At The Door: What To Do When Collection Agencies Come Calling
- Video interview with Doug Hoyes and Mark Silverthorn from 2010: