Debt Collection Agency Canada
Amicable Debt Collections Canada
1. General information
In the amicable phase, Cosmopolite Collections follow a collection process that is professional at all times with the objective of retaining the relationships between our clients and their debtors whenever possible.
Our staff of collection professionals carry out the first collection tier in-house. We pursue debtors verbally and in writing within the bounds of federal and provincial laws.
1.2. Local agents
Cosmopolite Collections maintain direct contact with all debtors and clients whenever possible.
However, if required, we have local debt collection agency contacts throughout Canada to assist our clients’ collection needs. At the present time, we cannot offer a field service for visiting debtors in Canada.
The collection of interest is permissible under Canadian law.
If the terms and conditions of the contractual agreement between the client and the debtor contain a clause that permits the collection of interest costs, then it may be added to the overall debt.
Canada’s Criminal Code makes it a crime to set an interest rate above 60%
1.4. Debt collection costs Canada
The addition of collection costs (success fees) is not permissible under Canadian law. However, if the terms and conditions of the contractual agreement between the client and the debtor contain a clause that permits the collection of costs, then it may be added to the overall debt.
The general limitation of action for collection of past due debts varies from two to six years. Most areas of the country apply the two-year limitation, but some provinces or territories with limited exposure apply six years.
2. Legal Debt Collections Canada
2.1. General information
Under the Canadian constitution, commercial law is generally within provincial jurisdiction. Certain exceptions exist, such as interest, currency, bankruptcy and insolvency, which are governed under the federal law.
Canada include ten provinces and three territories that utilise the British common law (a system originated in Great Britain). Quebec is the only exception, which utilises a civil law system based on French law.
The general statute of limitations is two years less a day. This is based on the date of the last invoice or payment recognised, unless there has been a written acknowledgement of debt.
Courts in the provinces or territories vary by the court. Cases can be heard based on the balance due.
As a general rule, debts with balances less than CAD 25,000 are heard in small claims court, and greater than CAD 25,000 in superior court.
2.2. Required documents
In order to start legal proceedings, Cosmopolite Collections require certified copies of documents that support the claim, including any documents relevant to any dispute.
These documents must be in English or French and must bear authentication by a notary or an affidavit by an expert if they have been translated from another language.
Security costs may be required to cover any costs should the debtor be successful or if the plaintiff does not reside in the specified provinces. If witnesses are necessary, phone or video conferencing services may be available. These are the basic requirements and may vary from province to province and territory to territory.
2.3. Legal dunning procedure
To assist our clients in reducing additional costs, the local attorney assigned to the debtor will attempt to collect monies prior to commencing any legal action.
The attorney will use verbal and written communication within the bounds of the federal and provincial laws, which may include negotiations on payment and/or settlement opportunities.
The attorney will also complete due diligence to determine any future action. If the legal dunning phase fails, the attorney will provide recommendations for further action.
2.4. Lawsuit in Canada
The regular lawsuit procedure is either initiated directly after the amicable collection has failed due to a dispute by the debtor or directly after the legal dunning procedure if the debtor has appealed. Legal proceedings can take anywhere from a few months to a few years to complete.
There are ten provinces and three territories, which have different legal proceedings and rules for carrying out the proceedings. In some provinces, extensive pre-trial procedures, such as examination for discovery, are common.
These procedures provide opportunities to uncover damaging information about the debtor. Other provinces offer the ability to request settlement conferences at any stage of the legal proceedings.
2.5. Debt collection costs Canada
Due to the different provinces and territories throughout Canada, it is difficult to predict total costs. Legal costs generally depend on the amount of the outstanding principal debt and the location of the debtor.
Legal costs vary in each of the provinces and territories from CAD 450 to CAD 6,000. Costs of witnesses or other experts might also arise.
On average, a client may expect to pay CAD 1,700 to begin legal proceedings. Cost estimations will be provided on a case by case basis should legal action becomes necessary, and actions will not commence without prior consent.
2.6. Expected time frame
The average duration of a legal dunning process is between eight and 12 weeks, whereas a court procedure can take 12 months or longer depending on the complexity of the case and the availability of the judge and lawyers on both sides.
2.7. Interest and costs in the legal phase
All or a portion of the costs is usually awarded to the successful party at the trial. Court fees, expert costs, witness fees and copying costs are recoverable in some provinces.
Unfortunately, travel costs of the council to the place of trial are not generally recoverable. However, the necessary travel costs of the witnesses, including parties, may be recoverable in specific provinces.
Certain provinces also allow attorneys’ fees and administrative charges to be claimed only if the contract makes acceptable provision.
3. Insolvency proceedings
3.1. General information
The insolvency process is a legal proceeding that is dealt with under the provisions of the Bankruptcy and Insolvency Act.
This act is administered by the Office of the Superintendent of Bankruptcy at a federal level, and only a trustee licensed in bankruptcy by the Superintendent of Bankruptcy can handle the process of proposals and bankruptcies.
There are four main insolvency options:
A proposal, formal or informal, is made to creditors who are owed money in an effort to settle the debt.
The assets of an individual or a company are liquidated. Depending on the province, some assets are exempt from liquidation. Secured creditors are paid first, followed by unsecured creditors, who may be paid with the remaining funds and, if there is one, a dividend.
In order to receive a dividend, a proof of claim must be filed by the creditor within the timeline given by the trustee.
A secured creditor represented by a receiver takes control of the assets of the debtor company. Once an audit is complete, the company may operate under the receivership, or the receiver can petition the company for bankruptcy.
-Company Creditors’ Arrangement Act
A compromise or an arrangement is proposed between the debtor company and their unsecured creditors. Meetings of the creditors, trustees and shareholders may be ordered by the courts, and the whole process can last for many years.
3.3. Required documents
In order to complete a proof of claim on behalf of the client, Cosmopolite Collections need:
- An original power of attorney
- Copies of invoices
- Copies of contracts
- Copies of orders, confirmations and delivery notes
- Copies of general conditions of sale, should there be any
- Copies of any other correspondence that may verify the claim.
Regarding the proof of claim, our preference would be to have the clients complete this themselves to ensure accuracy.
3.4. Expected time frame and outcome
The deadline to lodge claims varies between provinces. The whole duration of an insolvency proceeding is between one and three years.
Collecting business debts in Canada can be a challenging process for foreign businesses, especially if they are unfamiliar with Canadian laws and procedures. There are a few specificities that foreign businesses should be aware of when collecting debts in Canada:
- The capital city of Canada is Ottawa.
- Canada is divided into 10 provinces and 3 territories.
- The government of Canada is a federal parliamentary democracy and a constitutional monarchy.
- The official languages of Canada are English and French.
- The currency of Canada is the Canadian dollar.
- There are a number of debt collection agencies in Canada, and the industry has existed in the country for many years.
- The national credit bureau in Canada is Equifax. Some of the private credit reporting companies in Canada include TransUnion, Experian, and Credit Karma.
- Debt collection laws in Canada are generally the same countrywide, although there may be some local variations.
There are several benefits to using commercial debt collection services in Canada:
- Expertise in Canadian debt collection laws and procedures.
- The ability to communicate with debtors in multiple languages.
- A network of local debt collection agents.
- Experience negotiating settlements and payment plans.
- Professional and respectful approach to debt collection.
- Timely and efficient debt recovery process.
- Regular updates and transparent communication.
- A high success rate in recovering debts.
Our debt recovery agency has a very high success rate in Canada thanks to our multilingual debt collectors located in the country and our 24/7 online debt recovery report website. We have local debt collection managers in the main cities of Toronto, Montreal, and Vancouver.