Collection Agencies in Quebec: Know Your Rights

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Collection Agencies in Quebec: Legal Framework and Debtor Rights

When a creditor is unable to collect a debt, they often assign the file to a collection agency or sell the receivable to a third party. In Quebec, collection activities are strictly regulated under the Act respecting the collection of certain debts (ARCCD), administered by the Office de la protection du consommateur (OPC). This law aims to protect debtors from abusive practices while allowing creditors to legitimately exercise their rights. Every collection agency operating in Quebec must hold a permit issued by the OPC, and its agents must comply with precise rules or face sanctions.

Practices Prohibited by Law

Contacting the debtor outside permitted hours (8 a.m. to 8 p.m., Monday through Saturday; never on Sundays or statutory holidays).
Using threats, intimidation, or harassment to force payment.
Communicating repeatedly and excessively to exert undue pressure.
Revealing the existence of the debt to a third party (employer, neighbour, family member) except in cases expressly permitted by law.
Providing false or misleading information, such as claiming to be a lawyer or bailiff, or threatening seizure when the creditor has not obtained a judgment.
Demanding fees or amounts exceeding what is legally owed.

Debt Prescription in Quebec

Under Quebec civil law, debts are subject to prescription periods. Article 2925 of the Civil Code of Quebec (CCQ) provides a 3-year extinctive prescription period for most civil and commercial debts, including consumer debts such as credit cards, personal loans, and unsecured lines of credit. This period runs from the moment the right of action arises, generally the date of the last payment or the last acknowledgment of debt. After 3 years without activity (no payment, no written acknowledgment, no legal proceedings), the creditor loses the right to use the courts to recover the debt. The debt still exists morally, but it is no longer legally enforceable.

Extinctive prescription: Under Quebec civil law (article 2921 of the CCQ), extinctive prescription is a means of extinguishing a right of action through the simple passage of time. For consumer debts, the period is 3 years. Once prescribed, the debt can no longer be the subject of legal proceedings.

Impact on Credit File and Mortgage

An account transferred to collections is recorded on the credit file with an R9 rating, the lowest possible score. With Equifax, a collection account remains on file for 6 years from the date of the last payment. With TransUnion, the duration is similar. Even if the debt is prescribed under the CCQ, the credit file entry can persist for the full regulatory retention period. For mortgage financing applications, A lenders (banks, Desjardins caisses) generally require all collection accounts to be settled before approving an application. B lenders are more flexible but apply higher rates. The AMF-certified mortgage broker can help the client develop a prioritized settlement strategy: which accounts to settle first, how to negotiate with agencies, and how to obtain a release letter confirming full settlement.

As a mortgage broker in Quebec, knowledge of the legal framework governing collections and debtor rights is essential. The LDPSF requires the broker to act in the client's best interest, which includes informing them of their rights when dealing with collection agencies, directing them to appropriate resources (OPC, consumer associations, legal advisors), and helping them build a credit restoration plan compatible with their mortgage goals.

Frequently Asked Questions

When can a collection agency contact me?

In Quebec, a collection agency can only contact you between 8 a.m. and 8 p.m., Monday through Saturday. Calls are prohibited on Sundays and statutory holidays. Additionally, the agent must clearly identify themselves, name the agency they represent, and specify the amount owed. You can demand that all communications be in writing.

Can a collection agency contact my employer?

An agency can only contact your employer to verify your address or employment, and only if they cannot reach you otherwise. They cannot reveal to your employer that you have outstanding debts or attempt to pressure your employer into intervening.

Is my debt prescribed after 3 years in Quebec?

Most consumer debts in Quebec are prescribed after 3 years of inactivity (article 2925 of the CCQ). Caution: a partial payment, written acknowledgment of the debt, or a promise to pay can reset the prescription period. Mortgage debts have a different timeline. Consult a lawyer to verify the prescription status of your specific debt.

How do I file a complaint against an abusive collection agency?

You can file a complaint with the Office de la protection du consommateur (OPC) of Quebec. Document all communications: dates, times, content of calls. The OPC can investigate, impose sanctions, and even revoke the agency's permit. You can also pursue a civil remedy for damages if your rights were violated.

Does collection activity affect my mortgage application?

Yes, significantly. Accounts in collection appear on your credit file with an R9 rating and reduce your credit score. Most A lenders require collection accounts to be settled before approving a mortgage. Your AMF-certified mortgage broker can help you develop a settlement strategy.

Can I negotiate the amount of a debt in collections?

Yes, in most cases, collection agencies are willing to negotiate a settlement for less than the total debt, especially if the debt is old. A settlement of 30 to 70 cents on the dollar is common. Always demand written confirmation of the agreement and the final balance before making a payment.