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Third Party Debt Collectors
Creditors are entitled to sell your debt. The practice of selling the debt of delinquent accounts onto third party “debt buyers” is actually quite common. The original creditor will sell the debt for pennies on the dollar, simply to recoup some of their losses and the new owner of the debt can then come after you for the remaining balance. This is how many collection agencies function.
Major creditors like banks will often sell debts in blocks, meaning a whole list of delinquent accounts will be sold in a bundle. If the lists aren’t “cleaned” first this can lead to problems.
Occasionally somebody whose debt was discharged years before through a consumer proposal or bankruptcy will still be in the main creditors system as a delinquent account. Though the debt is for all intents and purposes settled, the computer system has not been adjusted to reflect this. If this debt is then sold as part of a block a person who thought themselves to be debt free can start receiving collection calls again.
If this is you, don’t panic. There is a limitation period on suing for debt in most provinces, and if you have already been through insolvency, it is likely this limitation period has passed, so you cannot be subject to legal action. All they can do is harass you and you can stop that by contacting the original creditor and informing them of the situation. They should have a record of your insolvency on file and can contact the third party collector and let them know of their mistake. You should also inform the third party collector of the mistake that has been made and provide them with paperwork to support your claim.
At this point you should also check your credit report and ensure that the discharged debt is not still showing up as unpaid. If it is you can contact the credit bureau and your original creditor and have this amended.
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