If a collection agency is calling you it is because someone (or some business) has hired the collector to try and recover money that they think you owe them. Unlike sales calls, the collection agency is looking specifically for you and the only way they get paid is if they can convince you to pay. That’s why some of them start off so aggressively – calling and calling and calling in the hopes that you will be so annoyed you’ll make a payment to get them to go away. Of course they don’t go away – if you pay once then they’ll start calling again to get the next payment…
This is the gamble that you are taking – if a collection agency can’t reach you they have to decide either to try something else, or give up on the debt. If they give up on a debt then they won’t get paid, so they generally will try something else before they give up.
What kind of something else? If they can’t get you on the phone they may try your employer. That’s always unpleasant. If you are on the shop floor you don’t want everyone else on the floor knowing some collection agent is calling you. If you work in an office it can worse – something new for people to gossip about. Legally, a collector should only contact your employer once to confirm your employment and to get mailing information. We all know that some of them don’t follow these rules and they may call your employer many times. If they do, lodge a complaint with the Ministry of Consumer Affairs. It won’t help you, but it might stop them from doing it to the next guy.
At some point the collection agency may simply decide to take you to Court. Debts under $25,000 can be handled by Small Claims Court – the collector pays a fee to open a file and the Court sends you a notice of the lawsuit. It comes by regular mail and they don’t have to prove you received it. If you have moved and haven’t updated your address with the creditor then you may not even know that a lawsuit has been started. The danger with that is, if you don’t respond to the lawsuit the creditor may receive a Default Judgment which in turns allows them to try and garnishee you wages or seize your bank account. The last thing anyone wants is for someone to take money directly from their pay.
Of course it possible that the collection agency may simply give up trying to contact you. When they do, the debt is returned to the person or company that you originally owed. They then have to decide whether to assign your debt to a new collection agency or give up themselves. And so we repeat the process.
There is a law in Ontario that you need to be made aware of – it is called the Limitations Act. It was passed in 2002 and brought into force in 2004. Basically, it gives you a defence in Court when/if someone is trying to collect an old debt. The law says if you haven’t “acknowledged” a debt in 2 years and the creditor hasn’t initiated legal action during the same time period, then they may no longer have the right to enforce collection of the debt. Acknowledging the debt can mean making a payment, or confirming that you owe the debt in writing. The Limitations Act doesn’t make the debt go away, but it may stop collectors from trying to come after you for old bills.
In the event that the lender or the collection agent has stopped trying to collect form you, the debt will be displayed on your credit report for up to 6 years from the date it is last reported. That means if they stopped reporting the debt today, it will still be listed on your report for another six years. This may cause more damage than any other aspect of the collection process.
So, should you ignore creditor collection calls? I still think the answer is probably not. It is probably better to consider other options to stop the collection calls, rather than ignore them.