When an account becomes overdue, businesses often turn to collection agencies for help. Here’s how the process typically works in Ontario:
🔹 Account Placement: The creditor sends the file to a licensed collection agency, including all relevant details (debtor name, amount owed, last payment date, etc.).
🔹 First Demand Letter (FDL): The agency issues a formal notice to the debtor. This outlines the amount owed, the client’s name, and gives the debtor a chance to resolve the debt voluntarily.
🔹 Follow-Up Contact: If there’s no response, the agency will follow up via phone, email, or mail — always following provincial regulations and privacy laws.
🔹 Credit Reporting: In some cases, the debt may be reported to credit bureaus like TransUnion, which can impact the debtor’s credit rating for up to 6 years.
🔹 Resolution Options: Debtors may settle in full, negotiate a payment plan, or dispute the debt. Agencies document all communication and report progress back to the creditor.
📌 Note: In Ontario, collection agencies must be licensed, and debtors have rights — including the right to request written proof of the debt and to file complaints with the Ministry of Public and Business Service Delivery if they believe rules are being violated.