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Debt Relief in Ontario - Why you Should not Pay a Collection Agency

Debt Relief in Ontario – Why You Should Not Pay A Collection Agency

If you have collection agencies constantly calling your phone or sending you letters and emails, you may feel pressured to pay them.


It sounds crazy, especially when you’re looking for debt relief in Ontario – why wouldn’t you pay the collectors and get them off your back?

It’s not as simple or as pressing as the collection agencies make it sound. Yes, you should pay your debt, but just paying the collection agency directly may not be in your best interest.

Here’s why:

Activity on your Collection Account Restarts the Clock

Did you know there’s a clock ticking on your collection accounts?

Worse yet, if you do any sort of activity on the collection account, the clock starts all over again and that’s not good.

If you have a collection and do nothing about it, the collection must fall off within 6 years. That’s 6 years from the date it’s reported.

Now, if you make a payment on the collection, it restarts the clock. Sure, you paid the debt, which is good, but now the collection stays on your credit report for future lenders to see for another 6 years.

Ignoring the Debt isn’t a Good Idea Either

If paying the collection restarts the clock, then you should just ignore it, right?

Ignoring the Debt isn’t a Good Idea Either


That’s not the type of debt relief we had in mind. While you could ignore it if you wanted, it could lead to lawsuits and/or garnished wages. 

If you ignore it, there’s also nothing saying the collection agency won’t continue to come after you even after the six years. Just because they can’t report it to the credit bureaus doesn’t mean they can’t try to collect from you.

The good news is, there are statutes of limitations, which limits how long they have to sue you. In some areas the time limit is as short as 2 years.

How to Handle Debt that’s with a Debt Collection Agency

So if you shouldn’t pay the debt that’s with a collection agency, what should you do? 

Try to Make a Debt Settlement

If you have the money to pay off a portion of the debt, you can consider making a settlement. Just keep in mind two things:

  • Get all agreements in writing. If you get the collection agency to write off the portion you don’t pay, get it in writing. Don’t agree to anything verbally so you have proof of what they agreed to if they try to come after you for the remainder of the debt.
  • Paying even some of the debt restarts the clock. If it’s a brand new collection, it’s not a big deal. But if it’s been a few years, you may not want to restart the clock again and should use other options.

Work with a Credit Counsellor to Create a Debt Management Plan

If you want a debt management plan, you should work with a reputable credit counsellor. You will have to pay the debt in full, or what was agreed in your plan.

Your debt management plan may get reported to the credit bureaus, that may have a negative effect on your credit report for the time being,  it lasts – usually 1 to 3 years. But it can be a way to get your debts under control and the collection off your back.

Consider a Consumer Proposal

If you’re in over your head in debt, it may make more sense to file a consumer proposal versus trying to negotiate with each creditor individually.

A consumer proposal is a plan that you present to your creditors to ask for more time to pay your debts or to pay less than what’s owed. Since it’s a legal arrangement, your creditors cannot report any new activity on your accounts. This means even your collection accounts can’t be ‘refreshed,’ starting the clock all over again.

However, it’s important to know that a consumer proposal does get reported on your credit report. It remains there for six years or until you complete the terms of the proposal – whichever comes first.

Get Help from a Credit Counsellor

The key to debt relief in Ontario is to get help from a credit counsellor. If you have collectors bugging you and you don’t know how you’ll get out of it, get the help that you deserve and call a credit counsellor.

Get Help from a Credit Counsellor

Trying to handle creditors on your own can lead to damaging your credit score even further. If your account is with a collection agency, you’re already hurting your credit. The original creditor reported your late payments and defaulted account.

The collection agency likely reported the collection account too, so your credit score takes a big hit with a collection. But, the damage of the collection doesn’t last forever. Once the clock starts ticking, you shouldn’t do anything to reactivate the collection account, but you have options.

Working with a great credit counsellor, you can determine the best steps to take to ensure that you help your credit score as much as possible during this difficult time.

Final Thoughts

It sounds crazy to say that you shouldn’t pay a collection agency, but you shouldn’t. If you have collectors calling you, it’s time to get professional help yourself. Don’t try to deal with them and their tactics – you could cause more damage than good.

Instead, let the professionals at EmpireOne Credit help! Our professionals are courteous and discreet. We can tell you the best way to handle the collection and any other debt you may have. Together we’ll put together a plan to get you out of debt once and for all.

If you’re ready to handle your debts and have debt relief in Ontario, call 416-900-2324 and talk to our credit counsellors today!

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