In this one-minute video featured on YouTube I inform Canadians that they can stop collection calls in connection with monies owing to a bank for about ten dollars. Video footage courtesy of Emilie van Gent.
Somewhere between 50 and 75 percent of all collection calls made to Canadians involve an unsecured consumer debt owing to a bank–credit cards, personal loans, lines of credit, and bank overdrafts.
A Canadian’s options for stopping collection calls on monies owing to a bank
A Canadian consumer, receiving collection calls on monies owing to a bank, who want to stop these calls has a number of options. They can meet with a bankruptcy trustee and file for personal bankruptcy or make a consumer proposal. Alternatively, they can enroll in a Debt Management Plan with a credit counselling agency–in which case they would typically make 48 monthly installment payments for an amount equal to somewhere between 110 percent and 130 percent of their current unsecured consumer debt–to eliminate their debt.
Alternatively, a consumer could, all by himself, spend about $10.00 and send a one-page “cease and desist” letter, by registered mail, to the bank, or its authorized collection agent; collection agency or law firm, demanding that the collection calls cease. Once the entity making the collection calls received this one-page “cease and desist” letter by registered mail it would then be illegal for this entity to make any further collection calls.
Federal Credit Business Practices Regulations
On January 1, 2010, the federal Government enacted the Credit Business Practices Regulations, SOR/2009-257. Section 7 of this Regulation contains an incredible array of weapons for Canadian consumers coping with collection activities on behalf of Canadian banks. You can find the link to the Credit Business Practices Regulations on my firm’s website, www.comprehensivedebtsolutions.ca. Here is the link:
Best kept secret in Canada
Unfortunately, these regulations are the best kept secret in Canada. I recently had a conversation with the owner of a debt settlement firm in Ontario who was not aware that these regulations even existed–some five years after they became law! If he is not aware of the existence of these regulations then I doubt that more than 5,000 Canadian adults are familiar with this law and most of these individuals are likely employed full-time collecting monies owing to banks.
Two situations where this remedy is not available
There are two circumstances where a debtor receiving collection calls in connection with monies owed to a bank is not going to be able to take advantage of federal law to stop collection calls by sending a “cease and desist” letter by registered mail:
- The debt was incurred by a business and not a “consumer”
- The debt has been sold and is no longer owned by a bank
If the bank has sold your debt then you will likely not be entitled to stop collection calls by relying upon federal law because these rights are only afforded in circumstances where the monies are owing to a federally-regulated bank. It is possible, however, that your bank debt has been sold to some other entity which is a federally regulated financial institution in which case you could still send a “cease and desist” letter to stop collection calls.
In Canada it is not common for banks to sell their debt. In fact, I would be surprised if more than five percent of all unsecured consumer debt owned by Canadian banks is ever sold to a debt buyer. If you incurred debt owing to a bank in a consumer transaction–and not for business purposes–then the odds are somewhere around 95 percent that you are going to be able to stop collection calls concerning this indebtedness by sending a “cease and desist” letter by registered mail.
Logistics regarding stopping collection calls on a bank debt
If you want to stop collection calls regarding monies you allegedly owe to a bank then the first thing you need to confirm is which entity is making these collection calls. There are four potential scenarios:
- collectors employed by a bank
- collectors employed by a collection agency
- employees at a law firm
- collectors working at a dedicated debt buyer (remedy not available)
Once you confirm the entity which is making these collection calls then you need to obtain its mailing address.
Language to be used on your one-page cease and desist letter
The wording that you should use on your one-page cease and desist letter to be sent, by registered mail, to the entity making collection calls, is pretty straightforward.
You can demand that any further communications from their firm be in writing and you provide them with your current home mailing address.
You can inform them that you dispute owing the debt, and you invite them to resolve the matter in court.
Requirement that your cease and desist letter be sent by registered mail
It is a legal requirement that your cease and desist letter, sent to an entity attempting to collect a debt owing to a bank, demanding that collection calls stop must be sent by registered mail. This will require you, or someone on your behalf, to attend at a Canada Post office, or Canada Post franchise, and arrange to send your cease and desist letter via registered mail. A registered letter costs about $9.00, plus postage–or approximately $10.00.
Important for you to be able to prove you sent your cease and desist letter
Bill collectors often like to play games with consumers. One of the games some unprofessional bill collectors like to play is called “We never received any cease and desist letter from you”. It is important that you keep the following in a safe place–and ideally scan these images onto your computer:
- copy of your signed cease and desist letter
- your receipt from Canada Post for your registered letter
Your receipt from Canada Post for your registered letter will contain a tracking number for your letter and this will enable you to prove your registered letter was received.
If a bill collector claims that it never received your cease and desist letter then you can request the e-mail address for the collector and/or their supervisor and send them, via e-mail, not only a copy of your signed cease and desist letter but also your receipt from Canada Post for your registered letter.
It might be necessary for you to send another cease and desist letter at some future date
A bank will typically try to collect an unpaid account using staff working in the bank’s in-house collection department for six months. At some point after monies owing to a bank are more than six months in default your account might be sent to a collection agency–for collection on a contingency basis–or in some cases it might be sent to a law firm. There are a number of law firms in Canada that employ staff whose primary function is to make collection calls just like a collector at a collection agency or your the in-house collection department at your bank.
If your bank farms out your unpaid bank debt to a collection agency, and it remains unpaid, then after a period of several months, your bank will typically recall the account and assign it to a different collection agency.
The fact that over a period of three to 24 months that you might receive collection calls from three or four different organizations means that you will have to send out more than one cease and desist letter if your goal is to stop collection calls regarding monies owing to a bank.
Collection calls that are made after an entity receives a cease and desist letter
Once an entity receives a cease and deist letter demanding that it stop making collection calls in connection with a bank debt then it is illegal for that entity to make any further collection calls to you. If you do receive collection calls after the entity has received a cease and desist letter you have a number of remedies available to you.
Depending upon which entity is calling you and the unprofessionalism of the collection calls then you might want to make a complaint to the following organizations:
- Financial Consumer Agency of Canada (FCAC)
- provincial regulator responsible for regulating collection agencies
- senior management at bank to whom you allegedly owe the money
- senior management at the organization making these collection calls
- contacting the media
- call the police (where warranted under the circumstances)
Furthermore, you might want to obtain legal advice concerning a potential lawsuit.
For more information about stopping collection calls from banks you are welcome to call Mark Silverthorn toll free at 1 (866) 996-9941 or (519) 827-5513 or contact via e-mail at firstname.lastname@example.org