You may be considering filing bankruptcy in Canada because you are getting telephone calls from collection agencies. Back in 2008 a Registrar with the Ministry of Small Business and Consumer Services Debt Recovery Regulation Unit issued a letter of direction to the collection agency industry in Ontario.
Draft Statement of Claim
In this letter he warned all collection agencies to stop using the “trick” of sending “draft” legal documents with their cover letters and claims to people they were contacting. These draft legal documents made it appear that the collection agency was just about to initiate legal action against the person receiving the letter – the truth was it was a simple computer template designed to scare people into making payments.
Over the years I have met with hundreds of people who have received these “Statement of Claims” from lawyers. They look real; they appear to have an official red seal on them, and they have the person’s name and address on them. They assume it’s an official court document, and that they will be required to go to court.
Here’s the truth: it is against the law to send out a “Draft” Statement of Claim. If you owe money to a bank or credit card company, and you don’t pay them, they are well within their rights to take you to court and sue you in an attempt to garnishee your wages. However, they are not permitted to pretend they are suing you; they must either do it, or not.
The letter from the Registrar goes further and warns collection agencies using lawyers to ensure that the lawyers comply with all of the legal requirements and restrictions placed on the collection agencies themselves. This means the lawyers must clearly disclose who they have been retained by (who they are working for). For example, just stating that they are collecting for Visa is not sufficient, the letter must state if the lawyer is working directly for Visa or for a collection agent. Similarly, the lawyers are not permitted to attach “draft” Statements of Claim that give the impression that a lawsuit is pending. Again this trick is designed solely to scare people into making payments.
Collection agency laws vary from province to province, and enforcement of these laws is not consistent across the country. There is currently a case in Ontario now that is set to go before the Law Society of Upper Canada, where a lawyer is purported to be working for a collection agency, and is sending out Draft Statements of Claim. We shall see if anything comes of this process.
If you are receiving calls or letters from collection agents then you probably have a debt problem. There are many strategies for dealing with collection agencies, including filing a consumer proposal or filing personal bankruptcy. Which strategy is correct for you? Contact a professional today to arrange a no charge initial consultation to review your options.
You do not need to spend weeks or months dealing with the stress of collection agency phone calls. There are options, so research your options today.
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Tags: Collection, Collection Agency
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