Do collection agencies take you to court?

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If a collection agency is knocking at your door, they might take you to court to recover debts, especially if the debt is substantial. Don’t ignore any legal notices, as this could lead to a default judgment, risking your paycheck or property. Agencies must adhere to legal timelines and prefer negotiating payment plans. A chat with a Licensed Insolvency Trustee can help—but remember, not all trustees can be trusted. Reach out if you have any questions. (Like who’s the best trustee to use!)

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Collection Agencies Question

Do collection agencies take you to court? I’m asking because I’ve heard mixed things about whether collection agencies actually sue people or just threaten to. It’d help to understand what they can legally do.

From: Anonymous Question
Location: Waterloo, Ontario (ON)
Category: debt settlement

Collection Agencies Answer

If you owe money and a collection agency’s knocking at your door, they can indeed take you to court to get back what you owe. But here’s the scoop—they typically only do this when the debt is big enough to make the legal costs worth it or when they think they’ve got a solid shot at winning. So, if you find yourself slapped with a Statement of Claim or a summons, don’t just stick it in a drawer! It’s super important to reply, or you might end up with a default judgment against you. This could mean anything from your paycheck getting a haircut to the agency eyeballing your assets.

Now remember, these moves by collection agencies aren’t free-for-all—they have to play by the rules, which include a limitation period that varies across provinces, usually from 2 to 6 years after your last payment or recognition of the debt. Ignoring the court game can lead to some pretty sticky situations, including having a lien registered against your property that gives the agency the green light to go after your assets. While legal threats might be thrown around, many agencies are open to talking things out, preferring smooth negotiations or setting up payment plans over court dates. So, if you’re tangled up with collection agencies, chatting with a Licensed Insolvency Trustee could be a wise move. Just a little tip—make sure to pick a trustworthy one!

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

Yes, collection agencies can take you to court, but they often use threats of legal action as a tactic to encourage repayment. The Canada Collection Agencies Act, specifically in Section 15, outlines that a collector may pursue the debtor through legal means if necessary. However, actual court action is not common, and many debts are resolved without litigation. It’s important to understand that while they have the legal right to initiate a lawsuit, many prefer to settle debts out of court to avoid the time and expense involved in legal proceedings. If you’re facing this situation, you may want to explore options for resolving your debts, such as a consumer proposal.

From: OSB Helper

Related Questions to Collection Agencies And Court

Here are the top 5 most frequently asked questions related to the topic of collection agencies taking individuals to court, based on common concerns and online search trends:

1. Can a collection agency sue me?

Yes, a collection agency can sue you if you have not paid your overdue bills.

2. How long can a collection agency try to collect a debt?

A collection agency can contact you indefinitely, but they are limited by the statute of limitations for taking legal action, which varies by province.

3. What is the statute of limitations for debt collection?

The statute of limitations varies by province, but for example, in Ontario, it is two years from the date of the last activity on the debt.

4. Can a collection agency take me to court if the debt is old?

A collection agency can only take you to court if the debt is within the statute of limitations for your province; otherwise, you can defend the lawsuit by stating the debt is beyond the statute of limitations.

5. What should I do if a collection agency is threatening to sue me?

You should seek advice from a licensed insolvency trustee or a financial advisor, and keep records of any communication with the collection agency in case you need to file a complaint or defend yourself in court.

If you have a question about debt see our debt questions or ask your own debt related question.

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