What Happens If a Collection Agency Is Calling You in Ontario? What They Can & Cannot Do—and How to Stop the Calls

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If your phone rings and a collection agent is on the other line, your heart likely sinks. The constant calls, stern tones, and subtle threats of legal action can turn daily life into a source of ongoing stress.

When you owe money, it’s easy to feel like collection agencies hold all the cards. However, in Ontario, debt collectors must abide by strict provincial laws. Understanding what a collection agency can and cannot do gives you immediate control over your interactions.

Even more importantly, if calls escalate into threats of wage garnishment or court action, you need to know who can actually help. While debt settlement companies and credit counselors offer advice, only a Licensed Insolvency Trustee (LIT) can provide the legal remedies that instantly halt collection activity, wage garnishments, and lawsuits.

What Debt Collectors CAN Do in Ontario Under Provincial Law

When a debt is assigned or referred to a collection agency, the agency can pursue payment—but Ontario law limits how it can do so.

Under Ontario’s Collection and Debt Settlement Services Act (CDSSA), collection agencies may:

• Send written notice: They generally must provide written notice before attempting to collect the debt.
• Contact you: Collectors can call or otherwise contact you about the debt, subject to Ontario’s rules on timing and frequency.
• Contact your employer in limited circumstances: For example, they may contact an employer to confirm employment information in circumstances permitted by law.
• Pursue legal action: A creditor may take legal action to obtain a judgment. A judgment can then allow enforcement measures such as garnishment, subject to Ontario’s rules.

What Debt Collectors CANNOT Do in Ontario

While collection agencies can pursue legitimate debts, Ontario debt collection laws limit how they can do so. For example, they generally cannot:

• Contact you at prohibited times: Before 7 a.m. or after 9 p.m. Monday–Saturday, outside 1–5 p.m. on Sundays, or on public holidays. After speaking with you, they generally cannot contact you more than three times in seven days, subject to exceptions.
• Harass or threaten you: They cannot use threatening, profane, intimidating, or coercive language or excessive pressure.
• Mislead you: They cannot give false or misleading information or threaten legal action they are not authorized to take.
• Improperly disclose your debt: They cannot simply tell friends, family, neighbours, or your employer that you owe a debt. Contact with third parties is subject to specific legal limits.
• Charge unauthorized collection fees: Collection agencies cannot simply add fees or charges that are not legally permitted.
• Ignore a request to deal with your legal representative: If you or your lawyer or licensed paralegal sends a notice by a verifiable method requesting that the agency communicate only with your representative, the agency generally must stop contacting you directly.
• Continue contacting you after a formal dispute: If you send the agency a notice by a verifiable method stating that you dispute the debt and suggesting that the matter be taken to court, the agency must stop contacting you unless you request or consent to further contact.

These protections can stop collection contact, but they do not erase the underlying debt. If the debt is valid, the creditor may still have legal remedies, including pursuing the matter through the courts.

What Happens If You Cannot Pay?

Knowing your rights does not make a valid debt disappear.

If a creditor takes legal action and obtains a judgment, it may be able to use enforcement measures such as wage or bank-account garnishment, subject to Ontario law.

Debt settlement and credit counselling may offer options for managing debt, but they do not automatically stop a lawsuit, cancel an existing judgment, or end a garnishment.

Tax Debts Are Different

The Canada Revenue Agency (CRA) has separate collection powers and can, in certain circumstances, require an employer or financial institution to remit money toward a tax debt without first obtaining a court judgment.

Why an LIT Offers the Only Formal Solutions That Can Immediately Stop a Garnishee

If you are facing collection calls, wage garnishment, or legal action over unsecured debt, a Licensed Insolvency Trustee (LIT) can access formal federal debt-relief options that provide legal protection from most collection activity.

LITs are federally regulated professionals who are authorized to administer formal insolvency proceedings under the Bankruptcy and Insolvency Act, including Consumer Proposals and bankruptcies.

Here is why meeting with a Trustee is the most effective move you can make:

1. The Instant Power of a “Stay of Proceedings”

The moment an LIT files a Consumer Proposal or Personal Bankruptcy on your behalf, a federal protection called a Stay of Proceedings goes into effect immediately.

For debts covered by the filing, it can:

• Stop most collection calls and other collection activity.
• Halt active wage garnishments.
• Stop most ongoing legal actions and enforcement of court orders.
• Stop creditors from continuing collection proceedings against affected bank accounts.

There are exceptions, including certain secured debts and support obligations.

Informal debt settlement companies and credit counsellors cannot provide a Stay of Proceedings. It is a legal protection that only comes through a formal insolvency proceeding administered by an LIT.

2. Comprehensive Assessment of Your Options

An LIT does not simply offer bankruptcy. The LIT reviews your income, assets, debts, and financial circumstances and explains the available options.

If a Consumer Proposal is appropriate, you can offer to repay a portion of your debts, extend the repayment period, or both. A Consumer Proposal can last up to five years, and once completed, you are generally released from the debts included in the proposal. If the proposal is accepted and you follow its terms, you generally keep your assets while making the agreed payments.

Take Back Control of Your Finances Today

When collection agencies start calling, ignoring the phone won’t solve the underlying issue—and waiting too long can lead to a sudden garnishment on your paycheque.

While knowing your rights under Ontario’s collection laws stops illegal harassment, only a Licensed Insolvency Trustee can provide legal protection that stops garnishments, freezes collection activity, and settles your debt for good.

If debt collectors are making life miserable, book a free, no-obligation consultation with a Licensed Insolvency Trustee today. Learn how a formal filing can restore your peace of mind and protect your hard-earned paycheque. Call now at 1-888-545-5365 or schedule an appointment online at one of our convenient GTA locations.

Contact Richard Killen
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