Credit Card Debt in Canada: negotiate with the bank or the collection agency?
Thank you for your support on this website. It has prepared me so much! Wonderful kind work you do! I'm from Canada but I'm assuming it's similar so your advice will help some....
I haven't been financially able to make a single payment on a credit card (CIBC bank) debt of $6500 for approximately 8 months and have not contacted them about it other than once to say that we can't pay. It has recently gone to collections. I just got a tax return that will enable me to settle for $3500 if they accept. So I called the bank saying I want to settle on a lump sum payment that is a lower. Immediately the lady said they will accept 80%, which is more than I can pay. I told her that is still too much and she said that's all she can do and to call the collection agency.
My question is, do you think I'll get any further with the collection agency or should I keep trying with CIBC collections department? What's my best bet? Do I ask to talk to other people "higher up the ladder"? If it seems like they won't budge, will they still if I push it?
other info:
I have a mortgage with CIBC and have equity in my house; however we've been trying to sell the house to pay off the debts for 2 years and the house isn't getting any offers due to the crumby market right now. We also have another credit card that I was just summoned for for the amount of $16,500.
What's my best bet at this point: negotiate with the bank (visa) or with the collection agency?
—Rochelle
The principles of how and why debt settlement works are not any different in Canada than here in the US in my experience. At some point, when payments have not been made long enough, something starts to look better than nothing.
Settling Credit Card Debt with Collectors and Banks
The last time I worked with a person assisting them to settle debts in Canada was several years ago. I worked with a married couple where one was from the US and one from Canada. They had both US based credit card debts, and credit cards through Canadian banks.
We were able to help them settle all of them. There was not much difference in the savings rates on the settlements, but some of the timing of negotiations were a little different. Also, a couple of the accounts were settled with a collection agency, or a collection law firm.
Settling with a Debt Collection Agency in Canada
The couple mentioned above settled an account with a collection agency for roughly 40% after 14 months of non payment. The settled with an attorney collector for 60% of the balance owed a couple months before that.
The same processes for settling credit cards with banks, debt collectors, and law firms were applied. Initiate negotiations over the phone. When speaking with anyone about the debt, stick with the a brief description of the hardships that led to your inability to keep payments on your credit cards current. Talk about hardships that are on going. Ask about any options they make available to account holders like you.Bring up the fact that you did some searches on line and read about some people having settled debts for less than the balance owed by borrowing from a freind or family member what they were able to lend. That you might be able to try to borrow from a family member if the balance were reduced to a certain amount.
In your case, your source of funds is from a tax refund, which is still a one time lump sum cash infusion. It works the same way as a loan from a family member.
Once you can agree to a fixed settlement amount, get the deal in writing before funding a penny.
Being Summoned for Credit Card Debt in Canada
I am not all that familiar with the court processes for suing on credit card debts in Canada. I won’t be of much help in this regard, other than to say that settling is always an option no matter what stage of collection you are in.
What are your thoughts for managing the credit card you are being sued for? Are you thinking to manage the smaller balance one with a settlement, while making payment arrangements on the larger?
I would be very interested in keeping this page going with updates from you, or other Canadians settling their credit card debts. I will provide whatever feedback and experience I can along the way. I may even be able to reach out to some past contacts in the collection space that operate in Canada to seek out some tips for you. If you are up to participating through the comments below, this page may be able to be a resource for other Canadians seeking to resolve credit card bills with settlement.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
The banks are practicing usery! Grinding people into poverty! Evil money grabbing bastards!
Hi There!
I have a $32k loan with RBC that was sent to a collections agency in 2012 when I lost my job and was unable to make payments. I made some lump sum payments totalling $6500 within the first yr and then stopped as I was unable to do anything additional. A year later I started making monthly payments of about $250 until Jan 2018. In June 2019, I received a call from a different collection agency advising me they had taken over my file. Since July 2019 to present, I’ve been making monthly payments of $450, however, would like to negotiate a settlement. Can you please provide some insights or advice on how I can negotiate to settle for 50% or less of the original 32k? My parents have agreed to help but can only help so much. The agent previously mentioned (on his own) that they would settle for the original 32k and minus I’m the interest. When I told them I didn’t have that money or anyone to borrow from, and if they could reduce further, he said no as this was the only debt I had and one day I could be making enough to pay it off so the bank wouldn’t settle for less and they could leave my file open for years and just wait for me to pay it all off. Also, he said, the bank would ask for proof that I couldn’t pay the full amount- such as bank statements, proof of income, etc. What are my options? Should I stop making payments for some time and tell them I can no longer afford to make monthly payments? I may be able to borrow some money and settle for a small amount? Please help!
Thank you!
What is the name of the collection agency you are currently paying?
MJR, previous to that it was alliance.
If it were me, and I confirmed the ability to pull 40% or more together, I would stop, and wait a month or 2 to negotiate a settlement.
Assuming a bad debt has gone to collections, can agreeing to a one time lump sum payment, at a negotiated reduced amount, affect someones credit rating negatively?
That can vary. Generally, if you have one unpaid collection on your credit only, and you settle it, your credit is going to improve right away. But if you settle one negative, leaving others unresolved, you may not see any improvement.
I have been paying on a student loan for my son. I don’t know the amount that was borrowed but it was through Sallie Mae and I have been paying on it for at least 17 years but now I send the payment to Navient. I’m thinking now that should have been paid off already .Could you check in on it for me? I’m a widow my husband has been gone for 8 yes and I was paying several years before that. Thanks for your help.
You or your son will need to check the loan status with Navient and be sure that all payments have been applied correctly.
Hi
I’m a Canadian Citizen, but currently US resident. I moved to USA in 2006 with my husband who was American. I had 2 credit cards which had total debt of about $2,000 and i continued to pay them online. However in late 2008 i hit financial hardship (when my husband passed away, there was no money to be collected due to circumstance of his passing) and we were young so neither one of us thought about life insurance. During this time i could not afford to pay the credit cards and at the same time i forgot about them due to what was going on, i was completely and utterly a mess. I was dealing with other things that were going on here in the USA at the time (loosing a house, and a car). Over the years I got back on my feet, i’ve gone home to Toronto few times to visit but i still reside in USA, I’ve never been contacted by any creditors or banks and honestly after everything that has happened i forgot about those credit cards over time. Now in 2017 i receive two letters from MetCredit stating that they are collecting a debt on behalf of the Canadian credit card bank and the 2 sums are totaling over $8,000. I never owed this much, last time back in 2008 before my husbands passing the amounts were around 1/4 of that. Now i don’t know what to do, i can not afford to pay those amounts, or any to be honest. I have no intentions of moving back to Canada anytime soon, maybe in 10 years from now, when my daughter is grown up. What can i do? and what can they do? do they have right to come after me after all these years? I’m afraid of what can happen now.
It is unlikely in the extreme that they will chase you down on 8 year old debts from Canada. Are these debts still appearing on your credit reports?
Hi Mike, I hold CIBC ($500) and RBC ($1000) Canadian credit cards, of which i stopped making payments since OCT 2015, I want to know when will these be reported to Credit bureaus and how can i settle these debts. I came on a Permanent resident visa and moved back to my home country as I was unable to survive there with no job.
I am surprised they are not showing as unpaid on your credit reports now.
You can settle with the banks directly, or they may tell you the accounts are with third party debt collectors, who you can also call and negotiate a pay off with. Be sure to get everything in writing before you make a payment.
My 49,000 dollar unsecured credit card debt with Royal Bank in Vancouver BC has gone to collections after 6 months of not being able to pay. Does that mean that Royal Bank is not going to sue. I have no assets and had to go on social assistance for the last 6 months due to not being able to find work. The government has funded for me to go back to school at 55 years old change careers and try and find a job. I have never had debt before and before these problems was with Royal Bank for 30 years and always paid my bills on time. I think i will apply for Bankruptcy assistance. I would like to know what you think and if you think i will be sued even if i don’t have anything. I called the Royal Bank and they told me they closed my files and sent them to collections. That’s all they could say. I’ve been getting calls from a collections agency every morning at 7:30 to 8 am. I don’t answer they just leave messages. This has been going on for over 3 weeks.
Thank You for your time,
Susanna
Royal Bank sending your account out for collection does not mean you are less likely to be sued, it means you are one step closer to being sued. I am not saying you will be, but banks go through a process with unpaid debts. More often than not, you see an account float from collection agency to another debt collector, before being sued. And this is how it typically starts. But not every unpaid account ends up in court.
You can go through the bankruptcy process, or try to negotiate a settlement when you situation improves. If bankruptcy is a good step for you, it is often best to just get that out of the way now, rather than drag out the collection process.
How soon do you think you would be in a position to gather up 30 to 40 percent of your Royal Bank credit card balance?
Hello, i have a student visa card (cibc) its about couple years back, and i owe 617.00 however due to low income and much more i dont know whether to settle with the bank or collections agencies. The agencies said 200 for me to come up with which is still a bit hard as i have a child and bills to pay. I want to get it off my credit report asap. BUT I don’t know what to do.
If you can settle for 200 that would be great. Just be sure to get any verbal agreement from them in writing before you pay.
You are not likely going to get it removed from your credit, but updated to show a zero balance owed, which is all you really need for your credit to get where you want to go.
Can they attach Canadian debt to US credit report??
I do see that happen from time to time.