Question

I received today a letter from a collection agency threatening to commence full legal action unless I pay them $1,700 due to them.

This is not a legitimate debt.  This alleged debt arose out of a misunderstanding over an apartment in Toronto which I thought had been resolved.

From the letter it appears that the collection agency has reported this debt to a credit reporting agency and is prepared to sue me in Ontario Small Claims Court.

What do you think I should do?  My wife is sick (cancer) and is staying home.  The last thing I need, given her condition, is to have collection calls being made to my home.  Thank you very much.

Answer

Your e-mail, which had to be condensed due to its length, raises numerous issues, too many to deal with on this blog.  I suggest you call my office toll free at 1 (866) 996-9941 for a free 10-minute telephone consultation.

Question

I live in Ontario. Recently I received a letter from a lawyer demanding payment of an outstanding credit card debt. This lawyer`s letter contained an enclosure, a 2-page Plaintiff’s Claim, that looks like a court form issued by the Ontario Small Claims Court, with the word `DRAFT` printed on it.

Have I been sued?  Is it legal for a lawyer to send this type of document to me?

Answer

You have probably received what is known in the collection industry as a “draft statement of claim”, a document which is only a draft of a claim and, in fact, is not an actual legal document commencing a lawsuit.  A draft statement of claim is an incredibly effective written notice used to intimidate unsophisticated consumers to pay an account. 

You should be able to recognize a document as a ”draft statement of claim” by the fact that (1) the document does not contain a court file number issued by the Small Claims Court, (2) the document is not signed by a court official,  and (3) the word ‘DRAFT’ is prominently displayed on the document.

Brian Pitkin, the Ontario Registrar of Collection Agencies, wrote a letter dated October 27, 2008, to Ontario collection agencies advising them that the practice of lawyers sending “draft statement of claims” to consumers at the request of collection agencies or creditors would no longer be tolerated.  Therefore, it would appear that it may be illegal in Ontario today for a lawyer to send a “draft statement” to a consumer. 

If you suspect that you have received a “draft statement of claim” I would suggest that you call our office toll free at 1 (866) 996-9941 and we can discuss the correspondence you have received.