*iStock photo
*iStock photo

There has been quite a bit of discussions lately about debt collection on the island.  

Consumer Affairs does get calls from consumers with concerns about managing debt as well as how to deal with debt collection and local debt collection agencies. 

The staff and board of Consumer Affairs is looking at current debt collection practices to address many consumer concerns; however, in the meantime, this article will share some basic information on how to handle debt collection.

When you owe money, the person you owe it to is considered the creditor. If you do not pay this money there are various methods creditors can use to collect their money.

Late charge fees on overdue accounts

Some businesses add a “late fee” or “penalty charge” to accounts that have not been paid by the agreed time period or due date. The amount may vary and if you were made aware of a late fee penalty and agreed prior to services being rendered you are responsible for this charge.

Debt collection fees

Many local businesses will refer customers owing money to a local debt collection agency. Debt collection agencies charge a collection fee in addition to the amount of the debt. Be aware when you do business with a local company if they are a member and use a debt collection agency.

If you have been contacted by a debt collection agency, do not ignore them. Ignoring the problem will not make it go away — in most cases it makes the problem worse and the debt will most likely increase. 

If you agree that you owe the money, make arrangements with the agency to repay.

Take the time to discuss your debt with the agency and if necessary make an appointment to sit down and review your situation with them. 

If you are in agreement that you owe the money and are paying through a debt collection agency, contact them and work out a payment plan, based on what you can afford to pay, before you make any payments. 

Make sure you are aware of the interest charges and all additional fees. Do not be afraid to ask to have the interest fees halted or for more favourable collection fees based on your agreement to pay.

Once the plan has been agreed by you and the debt collection agency, get it in writing and remember that it is important to:

Make regular, timely payments;

• Always read your monthly statements promptly to make sure your creditors are getting paid according to your plan;

• Contact the debt collection agency responsible for your debt if you will be unable to make a scheduled payment, or if you discover that creditors are not being paid;

• Keep a record of all your communications with the debt collection agency.


Here are some frequently-asked questions about debt collection.

Can I control which debts my payments apply to?

Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. A debt collector may not apply a payment to a debt you don’t think you owe.

Can a debt collector garnish my bank account and/or wages?

If you don’t pay a debt, a creditor or its debt collector can take you to court for a judgment. 

If they win, the court finds judgment against you, the creditor or collector can get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.

Wage garnishment happens when your employer withholds part of your compensation to pay your debts. 

Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.

What happens if I dispute a debt?

If you dispute the amount of money a creditor says you owe, do not ignore the notice or phone calls. Advise the agency and the creditor (in writing) that the debt is being disputed and why. Make sure you have supporting documentation (evidence) if possible. 

The creditor may wish to stop any action until the matter is resolved (only the company that is owed the money can stop any action).

If the matter can’t be resolved the creditor or collection agency may then take you to court to recover the money owed. 

If you find yourself in court make sure that you do not miss any court dates.

If you are in a situation that you feel you need legal advice to help but you can’t afford a lawyer, you can receive free legal advice every Thursday, 5:30 to 7pm, at the Centre on Angle Street.

Remember, paying all of your bills on time is very important, but if you can’t, contact your creditors before they contact you. A company, and a debt collection agency, will be more understanding if you communicate openly and honestly about your financial setback and if you tell that you do intend to pay your debt.

At Consumer Affairs, we offer guidance to consumers, businesses and other organizations. Before contacting us we recommend that you first visit our web-site, www.ca.gov.bm and read the relevant advice. If you are unable to find the information you require on our web-site please email us at consumers@gov.bm.

Honey Adams Bell is the education officer for Consumer Affairs.