What to know about the rights of creditors

In Canada, the Debt Collection Act sets out a strict code of conduct for creditors and collection agents. It's important for both debtors and creditors to understand these rights.

Creditors’ rights are designed to protect persons to whom money is owed. They include the procedures in place to allow them to collect the funds that they are owed.

• Creditors have the right to expect payment as per the conditions and terms of the agreement that was made.
• They are also allowed to ask for immediate repayment of a loan if a payment or multiple payments are missed.

Property seizure usually applies to contracts related to the purchase of goods or to real estate. Conditions for seizure of property are usually written into the sales contract.

• A creditor is only allowed to seize property when all reasonable efforts to receive payment have failed.
• Conditions can vary greatly based on a contract, and provisions in case of non-payment may even be written into it as well.

If a payment is missed, the creditor can demand payment from the debtor.

• They should mention the amount owed and any interest that applies to the late payment when making this demand, as well as by what date they expect payment.

The creditor can also request the services of a collection agency.

• In Canada, collection agencies must be registered and use official government documents. However, creditors do not have to be registered.

• They can only require the debtor to pay the debt owed.
• The cannot require other family members such as a spouse to pay the debt, unless this other person has signed on to the debt.
• Only the amount owed can be requested. They cannot ask for more.
• A creditor can only contact a debtor at specific times, excluding special occasions and holidays.
• These times vary between provinces. Check your local legislation to find out these times.

• They must identify themselves using their business name and cannot misrepresent themselves or the person that they are working for in the case of a collection agent.
• They must remain polite and cannot threaten a debtor or the debtor’s family with exaggerated or unrealistic consequences for the non-payment of the debt. Facts can be stated, as well as the normal and lawful course of action that will follow if a payment is not made.
• A creditor must respect a debtor’s written request if they ask not to be contacted in a certain location, such as their workplace, if it could be cause for embarrassment.

These are the basic rights of creditors, but there are even more guidelines related to specific situations.

• If your employer is going bankrupt, if you are negotiating a consumer proposal, or if you need advice on the repossession of goods, a professional will be able to explain your rights in any specific situation.