What can a Collection Agency do to me in Canada?

One of the first questions you ask when you are under credit stress is: can a collection agency sue you? Can they take you to court? Generally, a creditor has the right to take you to court and sue you over the debt that you owe if you stop making payments on it. However, depending on how old the debt is, they may not legally be allowed to do so.

In fact, every province and territory across the country has different Canadian collection laws with various statutes of limitation on when a creditor can sue a debtor or take them to court. A Licensed Insolvency Trustee can let you know the laws that apply for your region, and can advise you on how to deal with collection agencies in Canada.

To learn what the statute of limitations is in your area, we strongly recommend that you contact a Licensed Insolvency Trustee and discuss your situation with them. Your first meeting is always free.

How to deal with collection agencies in Canada

If you’ve stopped making payments to your creditors, you need to understand that they have the right to take you to court. Before that happens, though, there are a few things you can do to stop the process.

  • Talk to a Licensed Insolvency Trustee. In a free, no-obligation meeting, a Licensed Insolvency Trustee can help you review all of your options and arrive at the best solution for your situation. Licensed Insolvency Trustees are licensed and regulated by the government and are experts in their field.
  • Make a deal with your creditors. Call the people you owe money to and see if they’ll work with you to come up with a payment plan that works for both of you.
  • Make a Debt Management Plan. Like the first option, you make a deal with your creditors, but this time you work with a credit counseling agency that will help you through the process. Be careful which credit counseling agency you choose, and be sure to check them out thoroughly. They are not regulated in most jurisdictions.

The worst thing you can do when you stop making payments is to ignore the notices and phone calls, and simply hope that it will all go away. Taking control of the situation is your best option to avoid being taken to court and being sued.


What happens when my creditor takes me to court?

You have stopped making payments and now your creditors, or a Canadian collection agency on behalf of some or all of your creditors, are taking you to court. Here is what you can expect:

Your creditors will file a lawsuit against you. If you fail to file a defense against the lawsuit, your creditors will automatically win by default. To find out what you have to do to defend yourself, contact a Licensed Insolvency Trustee.

If you decide to file a defense, a trial date will be set.

The trial will have one of two outcomes: Your creditor, or the Canadian collection agency on their behalf, will be successful and they will obtain a judgement against you; or you will be successful, and no judgement will be awarded.

Collection agency FAQs

Here are some of the questions we most often see on Canadian debt collection laws. The information below applies to you if a collection agency taken you to court and won a judgement against you.

Can collection agencies garnish wages?

Yes, collection agencies can garnish your wages in Canada. The amount they can garnish and how that garnishment will be handled depends on what type of debt you owe, where you live and how much money you make. To find out exactly how much money could be garnished from your wages, talk to a Licensed Insolvency Trustee.

Can collection agencies charge interest in Canada?

No, a debt collection agency cannot charge new interest to you on the debt they are attempting to collect. Keep in mind, though, that the amount they are attempting to collect may include interest assessed by the original creditor.

What else can Collection agencies do?

  • They may ask you to make a payment or payments on a voluntary basis.
  • Collection agencies can garnish your bank account. Again, the laws surrounding this vary depending on your situation and province. A Licensed Insolvency Trustee can help you calculate how much money could be garnished from your account.
  • They can obtain a Writ of Execution from the courts that allows them to seize non-exempt personal property, which will be sold to pay the judgement.
  • They can file the judgement in Land Titles against your home or other real property you own (also known as a “registering a lien” against your property). If the judgement is not paid they can eventually obtain a court order to sell the real property.

Going to court is a daunting experience. Having an expert on your side who understands Canadian collection laws and who can outline your options, or who can stop the process of debt collection entirely could make all the difference. Talk to a Licensed Insolvency Trustee and get the professional advice and help you need.