The Budget Binder

Q & A

Collection Agencies

My husband and I have about $6000 in debt, plus about $30,000 in student loans. We have 2 small children, a toddler and an infant. I am on Parental Leave and my husband makes $23,000 a year, bringing home about $1400 a month, and my EI is $802 a month. I will not be returning to work on the end of my parental leave as daycare will cost upwards of $1000 a month, and I have secured a part time position that has flexible hours (many working from home) so I will be able to work around my husband's schedule while making up the balance of the budget. We ran into a rough patch last year, which got us into this situation, I had to leave my job for medical reasons 74 hours short for employment insurance - I had NO income whatsoever for 6 months. After I had the baby, I was able to secure a position to get those hours, but now I don't have a traditional job to go back to.

We had started a consumer proposal, however the person who was handling it got fired in the middle of the proposal, in addition made an error and had our credit card accounts closed, even though they were paid off and up to date. Almost all creditors had voted no and our file had been shuffled between several hands and not one person there knew what was going on so we decided to pull from the proposal and made a plan, using the jar system and other tips from your show.

We have taken a 2nd job (in my husband's name which we can do as a family), which starts in 2 weeks and will be able to pay off the $6000 by November 2009 and Student Loan by December 2011.

The creditors will be receiving notice that the Consumer Proposal has been withdrawn this week. I imagine by Wednesday, I will begin receiving phone calls again (which is why we started the consumer proposal to stop the calls as they were impacting my health). We are receiving about 9 or 10 calls a day (they are all relatively small debts). Because I am home with the children, I have to answer the calls. If I let them go to the machine, they fill it up with their long-winded messages, or if I answer, I have to be verbally assaulted with "there must be SOMEONE you can borrow the money from" and start listing various relations or they start with the deadbeat path. We already received one call on Friday, and we notified her to watch the mail for correspondence, and she replied she will be sending out a worksheet that we need to fill out and send back.

We are just polishing off a letter to all creditors outlining our repayment abilities and will be mailing out their copies tomorrow along with a cheque for their 1st payment.

That all being said, my questions are:

Do I have to talk to them? Or can I request that correspondence be in writing (I'll accept e-mails). I'm to the point I'm scared to answer the phone. I can't take care of my children and give them the attention they deserve while trying to deal with the creditors at the same time. I used to have a very high stress job, which I left because after 5 years it became too much, even though it was good money, my health is worth way more than that. I have been stress free for almost 2 years, but when the creditors begin to call the chest pains come back after a few weeks of non-stop phone rings (sometimes people, some times automated machines) and I have to go to the hospital for treatment. The phone calls have stopped because of the consumer proposal, and my chest pains have gone, but I'm afraid once the calls start again, they will come back and I will need treatment again.
Can they refuse our payments? We had one tell us pre-consumer proposal that what we offered was unacceptable and she wasn't going to cash our cheques, she wanted higher monthly payments.

Some general guidance on how to handle the collections people would be appreciated. I was enjoying my relatively stress free life, then we had our blip and are getting back on track and I'm starting to enjoy life again. Now that we have a plan, I'm not worried anymore and a huge weight is lifted off my shoulders. The only concern I have now are these phone calls (and what my 3 year old is going to jump off next!)

Thanks so much! I love the show and watch it whenever I get the chance.

Name withheld

I’m sorry you’re having a tough time of it. But I have some questions for you, and they aren’t going to be easy. Brace yourself.

What made you think you should go ahead and have two babies when you barely make enough to keep body and soul together?

Why would you settle for an income of $23,000 a year when you have a family to take care of? If you have to work two jobs, three jobs, whatever it takes, you have to come up with more money. And if you have to work the shift after your husband gets home to look after the kids, hey, you made this bed. Part-time just won’t cut it kiddo.

What the hell where those student loans for?

It’s all well and good to say you’re all stressed out, but when the credit was extended to you, you chose to use it. When did you think you were going to pay it back?

I don’t mean to rag on you… well, actually I do… since it appears that you’re moseying through life a little divorced from reality. Heads up, girl. You’ve got two children to think about and la, la, la-ing along isn’t going to cut it. Love is great, but it doesn’t fill an empty belly.

You and your husband need to wake up to your responsibilities.

Okay, that being said, the rules for how to deal with collections calls differ slightly from one part of the country to another. Since I don’t know where you’re located, here’s a partial list of the rules for Ontario.

CAs may not harass you or your family, including repeated calls to you while you're at work. Feeling overwhelmed? Keep a record of the time, date and frequency of the calls just in case you decide to make a formal complaint against the collection agency.
CAs may not call you on a statutory holiday, on a Sunday before 1 pm or after 5 pm, or on any day before 7 am or after 9 p.m.
CAs may not call you, leave you a voicemail or email you more than three times in any seven-day period on behalf of the same creditor.
And they can’t contact friends, relatives, neighbors or employers for information other than your address or telephone number, with limited exceptions.

Be straight up with the person on the phone. Yes, you have to take their calls. Don't let them to bully you into making commitments you can’t keep. So if you can repay $20 a week and no more, that’s all you commit to. If you make a commitment, keep it or be prepared to explain why you couldn't.

Want more detailed information about collection agencies in Ontario? Read the Ministry of Consumer and Corporate Relations' free brochure A Consumers Guide to Collection Agencies.