Collection and Debt Repayment

See also CPLEA’s Consumer Law resources for more information.

Debt

Who is a creditor?

A creditor is a person, business or bank that a debtor owes money to. For example, if you borrow money from the bank, you are the debtor. The bank you borrowed from is the creditor.

Last Reviewed: March 2022

What is a collector?

A collector is a person who works for or on behalf of a collection agency or debt repayment agency.

Last Reviewed: March 2022

Collection Agencies

What is a collection agency?

Collection agencies act on behalf of creditors to collect monies owed by debtors. In Alberta, the Consumer Protection Act and the Collection and Debt Repayment Practices Regulation govern collection agencies. These laws set out rules that collection agencies must follow.

Last Reviewed: March 2022

What does the Consumer Protection Act say about collection agencies? What can a collection agency do and not do?

The law says that collection agencies must be licensed and follow rules about how and when they interact with you. These rules include identifying themselves when they contact you and using only the name on their license.

Collection agencies cannot:

• contact you more than three times in seven days on behalf of the same creditor, except by mail
• visit or telephone you between 10pm and 7am
• contact you, anyone in your household, or your employer, neighbours, friends, relatives or acquaintances in a way that could be harassment
• charge fees beyond what you owe the creditor
• agree to accept less money from you than what you owe the creditor, unless the creditor approves
• give you or anyone else false or misleading information, including references to the police, a law firm, credit history, court proceedings or a lien or garnishment
• contact your employer except to confirm your employment
• contact your spouse, adult interdependent partner, relative, neighbour, friend or acquaintance except to get your home address, personal phone number or work phone number
• continue to communicate with you or collect from you if you have said you are challenging the debt and taking the creditor to court
• give information about the debt to anyone except you, your debt guarantor or your chosen representative without your express consent
• fail to leave a contact number if using an automated call system
• cancel or change a debt repayment agreement if you are following the agreement
• misrepresent what the creditor’s rights and powers are, your legal obligations or the true nature of the terms of any agreement to repay

For more information, see CPLEA’s information sheet on Collection Agencies. See link below.

Last Reviewed: March 2022

What if a collection agency is harassing me?

Harassment can be behaviours such as:

• threats
• profane language
• unreasonable pressure
• excessive emails or phone calls

You can make a complaint about a collection agency to Service Alberta’s Consumer Investigations Unit.

Last Reviewed: March 2022

Can a collection agency contact other people to get info about me?

Sometimes. A collection agency can contact your spouse, adult interdependent partner, relative, neighbour, friend or acquaintance to get your home address, personal phone number or work phone number. A collection agency cannot contact anyone else for any other information.

Last Reviewed: March 2022

Can a collection agency call my employer?

Yes. But only to confirm your employment and the business name and address to prepare legal proceedings. The collection agency cannot give information about your debt to your employer. And you can ask the collection agency not to contact you at work as long as you make arrangements to talk with the collection agency at some point and actually follow through with those arrangements.

Last Reviewed: March 2022

Do I have to pay a collection agency?

Collection agencies can only charge a reasonable fee for a dishonoured (bounced) cheque, and only if the agency told the debtor about the fee in writing before the debtor submitted the cheque. A collection agency cannot charge any other fees beyond the amount of debt the debtor owes.

Last Reviewed: March 2022

Debt Repayment Agencies

What is a debt repayment agency?

A debt repayment agency is a type of collection agency that acts for you, the creditor, in negotiating with your creditors. You must pay a fee or commission to a debt repayment agency to act on your behalf.

Last Reviewed: March 2022

What does the Consumer Protection Act say about debt repayment agencies? What can a debt repayment agency do and not do?

A debt repayment agency cannot:

• collect a fee higher than the law allows for the agency to make arrangements or negotiate with the debtor’s creditors
• collect a debt without stating the agent’s name and agency’s name in all communication with the debtor and credits
• agree with a debtor to accept less money that what is owed without the creditor’s consent
• fail to give a written report of person’s account with the agency
• give false or misleading information (directly or indirectly, by implication or otherwise), including references to the police, a law firm, prison, credit history, court proceedings or a lien or garnishment
• charge a fee for a bounced cheque unless the fee was stated in the agreement with the debtor
• charge or receive a fee as a promissory note or negotiable instrument, except as a cheque or draft
• lend money or give credit to a debtor
• offer, pay or give a gift, bonus or reward to a debtor for entering into a debt repayment agreement
• collect a fee for helping a debtor get credit from a lender, creditor or service provider
• sue a debtor for breach of contract because the debtor cancels a debt repayment agreement
• not tell a debtor that a creditor has decided not to participate in a debt repayment program. The agency must tell the debtor within 30 days of the creditor contacting the agency
• communicate information about the debt to anyone except the debtor, guarantor of the debt, debtor’s representative or creditor

A debt repayment agency cannot collect a fee for its services until it has entered into a written agreement with the debtor and given a copy of the agreement to the debtor.

A written agreement must be:

• dated and signed by you and the debt repayment agency
• include your name and contact info
• include the debt repayment agency’s name and contact info
• describe the services to be supplied
• state all fees you are to pay
• list all creditors to be paid
• state the total amount owed, the payment amount and the payment schedule

Last Reviewed: March 2022

Do I have to pay a debt repayment agency?

Yes. You must pay a fee or commission to a debt repayment agency to act on your behalf. The debt repayment agency cannot collect any fees from you until you agree in writing (either a written agreement or signed written authorization).

The fee charged by the debt repayment agency depends on the arrangement:

• if you have a debt repayment agreement with a schedule of payments, the fee cannot be greater than the sum of a one-time administration fee less than or equal to the average monthly payment AND 15% of the scheduled payment amount received from the debtor
• If you are making a one-time payment to creditors, the fee cannot be more than 10% of the debt owing
• If you have an agreement for the debt repayment agency to negotiate with the creditor on your behalf, the fee cannot be more than 10% of the debt owing

Last Reviewed: March 2022

Resources

• CPLEA’s Collection Agencies information sheet – printable information about collection agencies and debt repayment agencies
• Help with Debt Alberta – answer questions to find resources for your debt situation
• Consumer Debt Negotiation Clinic – get free legal advice about your options and help negotiating with creditors
• Government of Alberta webpage on Collection Agencies and Debt Repayment