{February 2, 2011}  VICTORIA, BC - Consumer Protection BC has been getting calls recently from consumers who have questions around debt pooling so we thought we would take this opportunity to share some information about this industry with you.

What is a debt pooler?
Under the law in BC, a debt pooler is a person who accepts and distributes your money to your creditors in accordance with an agreed upon repayment program.  This activity is what triggers the requirement to be licensed with Consumer Protection BC.

The law seeks to safeguard consumer money through the use of trust accounts and the requirement of security.

What is the difference between a credit counselor and a debt pooler?
Credit counselors may not accept your money to pay your creditors on your behalf.  Their services are restricted to credit counseling and sometimes negotiations with your creditors.

May a debt pooler act as credit counsellor?
Yes, most debt poolers provide some level of debt counselling services in addition to arranging debt repayment programs.

What types of fees are charged by a debt pooler?
Fees will vary but usually include some or all of the following;

1. A onetime set-up or administration fee;
2. A monthly fee that is a percentage of the amount paid to your creditors;
3. A fee for each cheque sent to creditors on your behalf;
4. A fee for a printed accounting of your debt management program.

What are your rights and responsibilities?
In BC, the law around debt pooling includes the following:

• A written contract is required between the debt pooler and the consumer and it must be signed by the consumer.
• The debt pooler must distribute the money they receive from the consumer to the creditor(s) within 30 days following the end of the month when the money is received.
• Licensed debt poolers must operate a trust account and provide security to Consumer Protection BC to safeguard consumer money.

You can view the law in full by clicking here.

Consumer Tips

• There are many legitimate companies out there.  Check our licensee search on our website to make sure a debt pooler is licensed with us.
• Consider whether a debt pooler is right for you. Not everyone will benefit from debt pooling as you have to have surplus income each month to pay your creditors and be prepared to commit to paying down your debts, often for several years or more.
• Ask what your responsibilities are and what the debt pooler can do for you.  We suggest that you get this information in writing.  This is particularly important if the debt pooler is promising to have the amount or interest rates on your debts reduced.
• You may want to consider taking a debt education program to educate yourself.

See our blog for some more helpful consumer tips around debt pooling.  We encourage you to visit www.debtrightsbc.ca for more information for consumers and the debt industry in BC.

Consumer Protection BC is a not-for-profit corporation that was created to strengthen consumer protection in BC and enforce consumer protection laws. We balance the interests of all parties to promote a marketplace that is fair for both BC consumers and businesses. We license and inspect specific industries, respond to inquiries through our Inquiry Centre, investigate alleged violations of consumer protection laws, and educate consumers and businesses about their rights and responsibilities under the law.  For more information about our organization, please visit our corporate website at www.consumerprotectionbc.ca.

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