You might owe money to creditors and are receiving collection calls—at home, at work, and on your cell phone. It is quite common for a consumer with one debt to get collection calls from multiple sources over the space of a few days. The fact that you might be receiving collection calls from more than one organization in relation to a single debt can be confusing and add to your stress level. Who are these people who are calling you demanding payment of your account?

1. Who are these people making collection
calls?
You might owe money to creditors and are receiving collection calls—at home, at
work, and on your cell phone. It is quite common for a consumer with one debt to
get collection calls from multiple sources over the space of a few days. The fact that
you might be receiving collection calls from more than one organization in relation
to a single debt can be confusing and add to your stress level. Who are these
people who are calling you demanding payment of your account?
I spent hundreds of hours working as a lawyer for four of the ten largest collection
agencies operating in Canada over a 12 year period between 1995 and 2007.
Consequently, I know how large creditors—including banks, credit card companies,
and utilities; cell phone, cable television and internet service providers– collect
monies from Canadians. Their conduct is very predictable. What is much less
predictable, however, is the behaviour of a small creditor such as a dentist,
handyman, or veterinarian. This blog focuses on people making collection calls on
behalf of large creditors.
Collectors employed by your creditor
For the first three to six months your payment is overdue staff employed by your
creditor will call you seeking payment of your account. Large creditors have
massive in-house collection departments, employing hundreds of collectors. Your
creditor’s in-house collection department might be located in a single location or it
could operate out of three or four regional call centres located across the country.
British Columbia is the only province in Canada that regulates the conduct of
collectors employed by creditors. Some of the worst complaints I am aware of
about collectors involve collectors working for a creditor. I remember one client in
particular who called me one day, virtually in tears, because he was receiving
repeated phone calls at work from a very aggressive collector employed by a credit
card company.
Those unpleasant calls from a collection agency
Once your debt is six months old the person calling demanding payment from you
will likely be a collector at a collection agency. A collection agency, is a company,
licensed and regulated under provincial law, that collects debts on behalf of others.
The collection agency is the collection agent for your creditor and it has the right to
contact you and demand payment for a debt as long as it complies with the law.
The collection agency is working for the creditor on a commission basis and it
receives a percentage of any monies recovered from a consumer. If the collection

2. agency calls you demanding payment of your overdue account and you don’t pay
then the collection agency does not earn a penny.
The fact that collection agencies work on commission helps explain why collectors
from collection agencies are often very aggressive on the phone or engage in
unethical and illegal behaviour. It is common for collectors to tell recent immigrants
that they will be deported if they don’t pay a debt. When I did work as a lawyer at a
collection agency I was told the story of a collector who called a woman at home
and told her that the sheriff was coming to her home at 5:00 p.m. that day to seize
some of their property because they owed money. The collector instructed the
woman to put the family’s television and stereo equipment by the front curb so the
sheriff could pick it up. When her husband came home after work he was shocked
and embarrassed to see the family’s belongings on the front yard.
It is illegal for a creditor to hire more than one collection agency at any given time
for the purposes of collecting a particular debt. A creditor can, however, recall your
overdue account from Collection Agency ABC and give it to Collection Agency XYZ.
Creditors typically do not hire a collection agency to collect a debt for a period of
more than six months. In some cases a collection agency might only have your past
due account for 30 to 90 days before it is given to another collection agency. Your
creditor is motivated to leave your account with a particular collection agency for a
relatively short period of time to put pressure on that agency to make its best effort
to collect your debt before it is given to another collection agency.
Collection calls made after your original creditor has sold your debt
Your original creditor is the company that provided you with goods, services, or
credit. At some point your original creditor might decide to sell your debt. A debt
buyer is a company that purchases debt owed to others—and a debt buyer might
buy thousands, tens of thousands, or even hundreds of thousands of debts in a
single transaction—and one of these debts might be yours. A debt buyer purchases
debt at huge discounts, sometimes for less than one cent on the dollar. A debt
buyer that purchases your debt steps into the shoes of the company it purchased it
from and, therefore, it obtains the right to collect the debt from you.
Historically, Canadian banks have been very reluctant to sell their debt, preferring
to collect the debt themselves and subsequently using collection agencies on a
commission basis. Creditors that are more inclined to sell their debt include
department store credit cards, cell phone, internet and cable service providers. It is
more common for creditors to sell their debt after it is several years old. There are,
however, a few companies, who will sell their debt when it is only six months in
default.
There are two categories of debt buyers. The key difference between the two types
of debt buyers is whether or not, in addition to buying debt, they collect debt on
behalf of others on commission.
• Collection agencies
Some, but not all, collection agencies buy debt. Purchased debt, however,
comprises a relatively small percentage of a collection agency’s inventory of bad

3. debts to collect. The lion’s share of activity at a collection agency is collecting debt
on behalf of creditors on a commission basis.
• Pure debt buyer
A pure debt buyer will purchase the debts owed to others, however, in contrast to a
collection agency, it will not collect debts on behalf of others on a commission basis.
A pure debt buyer has two options for collecting its purchased debt. Firstly, it can
attempt to collect the debt using collectors working in the firm’s in-house collection
department. Secondly, it can farm out the work to a collection agency on a
commission basis.
If you have an outstanding account it might never be sold by your original creditor.
In some instances, a particular debt might be sold once, and possibly two or more
times, over a period of years.
Don’t panic if you get a payment demand from a lawyer
If you have an overdue account, you should not be surprised if you receive
a lawyer’s demand letter, a letter, on a lawyer’s letterhead, demanding payment of
your outstanding account. It is very common for creditors, collection agencies, and
debt buyers to hire a lawyer to send out thousands, possibly tens of thousands, of
lawyer’s demand letters in circumstances where the lawyer has virtually no
involvement whatsoever in connection with the collection of the debt other than
sending out the letter. These lawyer’s demand letters are typically printed by the
thousand and the lawyer often will not personally sign the letter. In many
instances, the lawyer may never even see these letters.
Lawyer’s demand letters are commonly used because a letter on a lawyer’s
letterhead demanding payment of a debt is more intimidating, and consequently
more effective in motivating a debtor to make a payment, than a similar demand
on the letterhead of a creditor, collection agency or debt buyer. Lawyer’s demand
letters can be an incredibly cost-effective collection tactic.
In Canada there are a handful of law firms that do high-volume collection work. In
many respects, these law firms operate in a manner very similar to a collection
agency. These collection law firms employ full-time staff whose sole function is to
make collection calls. It may be impossible for you to tell the difference between a
collector employed by a collection agency and a person employed at a law firm
demanding a payment from you on the phone.
The collector calling you might be a 19 year-old bankrupt with a
criminal record
With very few exceptions, people who make collection calls to Canadians,
regardless of whether they are employed by a creditor, a collection agency, a debt
buyer, or a law firm, do not need any qualifications. Some provinces require that
collectors employed by collection agencies be a minimum of nineteen years of age.
There is no requirement that anyone making collection calls have a high school
diploma. Some collectors have a criminal record and filing for bankruptcy does not
bar someone from being a collector.

4. Collectors often talk down to those who owe money expressing moral superiority.
In fact, some collectors use their knowledge of the collection industry to frustrate
their creditors when it comes to their own finances. When I worked as a collection
lawyer I can remember doing a test for a collection agency near Burlington,
Ontario, in which I tried collecting 200 of their accounts. Imagine my surprise, and
the collection agency’s embarrassment, when one of the 200 debtors turned out to
be a collector employed at their agency.
The person demanding a payment might not be a collector very long
The job of collector is essentially a commission sales position. Collectors are paid a
base salary and they can usually earn a bonus at the end of the month if they
exceed their quota. The more money they collect, the greater the bonus. Like any
commission sales job, a collector who fails to make their monthly quota runs the
risk of being fired.
Some collectors reach a point where they decide that they don’t want to work forty
hours a week demanding payments from fellow Canadians, many of whom are
going through a difficult period in their lives. I know a man who was a very
successful collector who told me that he had a life-changing experience speaking to
a particular debtor whose situation affected him emotionally to the point where he
no longer wished to work as a collector.
There is a significant amount of turnover in the collection industry for those working
as collectors. It is certainly not a job for everyone. One of the collection agencies I
did work for had a two-week training course for new collectors. I can remember the
course instructor sharing with me that “Many of the new hires did not show up for
class after the first coffee break on their first day of the course.”
If you want to learn more about how to stop collection calls and explore some of
your options for dealing with your debt you might want to speak to a bankruptcy
trustee and learn more about filing a consumer proposal or filing for personal
bankruptcy.
About Mark Silverthorn
Mark Silverthorn is a former collection lawyer and collection industry
insider. He is the author of The Wolf At The Door: What To Do When
Collection Agencies Come Calling (2010) published by McClelland &
Stewart.