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What is Collection Agencies Act?



Collection agencies are people whose job is to collect the debts from the debtors or procure money from the debtors periodically and then distribute the amount into the creditors concerning to that particular debtor. These collection agencies are sometimes also referred to as the AGENTS of the credit providers. Collection agencies are been define under special Collection Agency Act, which monitors the working of these collection agencies.


Collection agencies can be 1st party agencies or 3rd party agencies. If the agency is a first party agency then it means it is a subsidiary of the 1ST party (creditor) in the contract which is signed between the creditor and debtor. The 2nd party in the contract is the customer. The collection agencies can also be the 3rd party if they are not a part of the 1st party to the contract between the creditor and the customer. The creditor signs an agreement with these 3rd party collection agencies and following the agreement. The creditor has to pay a fee to these 3rd party collection agencies on every debt which is successfully collected. The difference between the 1st party collection agencies and the 3rd party collection agencies is that the 3rd party collection agencies are subjected to Fair Debt Collection Practices Act while the 1st party is not subjected to the act mentioned above.

Collection Agencies Act of Canada


Collection Agencies Act of Canada has set up some defined standards for the collection agencies and the act also puts a lot of restrictions on the collection agencies in order to establish a customer friendly relationship between the customer and the collection agencies. Some of the provisions of Collection Agencies Act are:-
1.)The collection agency cannot make calls to the debtor within six days from the date of issue of the notice to the debtor.
2.) The act also debars the collection agencies from making calls if the debtor didnít receive the notice until the second notice is been served to the address provided by the debtor.
3.) The collection agencies are not authorized to call if the debtor has replied to the creditor and asking for the matter to be taken to court.
4.) They cannot make calls to the debtor between 1 PM and 5 PM on weekdays and cannot make calls on Sundays and on public holidays.
5.) They cannot use threatening means in order to recover the debt.
6.)The agencies cannot contact you if you have told them that you are not the person they are looking for, but they can take reasonable methods to judge whether you are the person they are looking for or not.
7.) They also cannot serve false information to any person.
8.) They cannot contact the employer of the debtor until they are seeking for the employment information of the debtor
9.) They cannot contact your spouse or other family members regarding the collection of debt.

If the collection agencies default to anyone of the above mentioned provisions of the act, the debtor has all rights to seek for a legal action against the creditor as well as the collection agencies hired by the creditor.

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