How do Loan Collection Departments Work?

In Canada, there are numerous companies willing to help you to enjoy a luxury lifestyle by giving you a loan on seemingly easy terms and conditions. By having such a loan, you can buy the luxury car that you always wanted or turn your dream of years to buy your own home into the reality. 

Once you have gotten into an agreement with a company, taking a loan from it, and fulfilled your dream, now comes the tough time – the time for repayment. It is a known fact that not only the amount of loan but also the pre-decided interest is to be paid to the company.

In any case, you have missed making your loan installments, the following process is followed by the loan collecting companies in Canada. Although the regulations vary with the province you are located at, the general process followed is explained below.

Continue reading!


First Letter

The process of loan collection in Canada typically starts with sending the first letter. This is the first contact between you and the collection department. The body of this letter includes a request from the collection department to pay the remaining amount you owe.


2nd Contact: Phone Call

After 4 days of the first contact, collection department is now allowed to get in touch with you via phone calls. In case you have changed your number, they are legally allowed to get in touch with anyone you know i.e. your family, friends, employer, neighbors etc. with the purpose of finding a way to contact you.

Many people believe that it is an aggressive action; however, it is undertaken solely to communicate with you. The person with whom they have gotten in touch with to find your contact information, they can refuse to provide the collection department with any information if they do not want to. Law forbids them to be forced by the department to divulge details related to your contact information.


Proof of Debt

Now that the collection department has successfully gotten in touch with you, they must provide proof of debt to you. For this, they have to provide written proofs related to details of the loan obtained. For example, the original amount of loan, the date when the amount was transferred to your account by the company, and the amount that is still left to be paid.


Pre-Legal Request

At this point, it is advised to settle the debt and spare yourself from the dire consequences you may have to face in the following stages. In case you still do not repay the amount you owe, the collection department may make a final attempt to get in touch with you and get the remaining amount. It is called final pre-legal attempt since they resort to taking a legal action against you for getting the amount back.


Legal Action

This step deals with legal action. The collection department, if they deem necessary, can take legal actions against you. In case they have taken the legal route, a notice will reach you 21 days prior to the legal action.


Court Proceedings

In this step, the decision will be in court’s hand. You will have to attend a court hearing due to the department’s legal action they have taken against you. The decision will be based on proofs the collection department will present against you.


What are My Rights in Such a Case?

You can excel these rights in case the collection department is contacting you for the amount due on you:

1. The collection company is only entitled to contact you only at your personal or home number. They are not allowed to contact you at your workplace number unless permitted. Furthermore, in case you do not want to make phone calls to you, you can write to communicate with you only in writing. You need to provide them your mailing address to excel this right.

2. They cannot discuss the amount you have to pay with your friends, family or employer when they contact them for getting in touch with you. They can merely ask for your contact information.

3. They cannot threaten you or harass you in any form.