We can help. Here you can find answers to some of the most frequently asked questions about debt collection.

What is a professional debt collection service?

Third-party collection services collect on past-due accounts referred to them by various credit grantors/credit card issuers, banks, car dealers, retail stores, healthcare facilities, or any business that extends credit or offers payment installment plans.

Often creditors cannot locate consumers who have moved or changed their phone numbers. In these situations, the first thing a collection service must do is obtain the consumer’s current address or phone number through a process called skip tracing. The collection office then sends the consumer a notice that informs him or her of the involvement of the agency and makes a demand for payment. Once the notice is sent, a collector may call or further write to the consumer and ask for full payment of the debt. If payment in full is not possible, the collector helps the consumer make arrangements to solve the problem.

Why are accounts referred for collection?

Most accounts are referred for collection because they have gone unpaid for an average of six months and the creditor has not received communication from the consumer. Since third-party collection services use specialized phone systems, computers, and software designed specifically for the collection industry, they are more effective than credit grantors at collecting payment on delinquent accounts.

What is the difference between “in-house” collections and third-party collections?

In Canada, third-party collectors are directly regulated by Consumer Protection Acts or provincial equivalents. These acts set forth strict guidelines designed to protect consumers from abusive, misleading, and unfair debt collection practices. Credit grantors’ “in-house collectors” are covered by the Consumer Protection Act only under certain instances.

How can collectors call people about their debts day in and day out?

Though there are misconceptions and stigmas surrounding collections, many professional collectors maintain that debt collection is actually a very rewarding profession. Collectors often receive notes of thanks and words of praise from consumers they have helped through a financial crisis. Credit grantors are often unable to deal with consumers on a one-on-one basis due to their high volume of accounts receivable. Third-party collectors are often the first to engage consumers in problem-solving discussions. A paid account represents success for the collector, recovery for the client, and peace of mind for the consumer.

Is there a typical debtor?

No. People from all walks of life face financial problems. These problems can stem from poor money management and budgeting skills to the loss of a job, prolonged ill health, or a multitude of other unforeseen circumstances.

What should I do if I receive a collection notice?

First, stay calm. Just as consumers depend on an income to pay their living expenses, the people who sell goods or services on credit depend on your payment to meet their own expenses. Remember, by the time your account has been turned over to a collection specialist, the creditor has probably carried the account for several months. Second, work with the collection agency to resolve the problem before it gets worse.

What if I have fallen into debt because of unexpected or catastrophic events? Commercial Credit Adjusters​’ Code of Ethics requires our employees to show due consideration for the misfortunes of consumers in debt and to deal with them according to the merits of their individual cases. Collection professionals understand that every account is unique and are trained to carefully listen to the consumer’s situation and find a mutually agreeable solution to the individual’s payment problem.

How does bad debt affect the economy?

Because businesses need to cut losses, the cost of bad debt is often deflected by raising consumer prices. Since there is a limit on how high prices can be increased before businesses begin losing customers, bad debt also results in business failures and job loss.

A portion of the above responses to the FAQ were provided by ACA International.