Whether you’re trying to catch up on bill payments or dealing with an unexpected life event, most Canadians would agree: struggling with debt can be a stressful and overwhelming experience.
Unfortunately, many Canadians find themselves under financial pressure to make ends meet. If the situation is particularly bad, you may also find yourself receiving phone calls from your creditors or debt collection agencies.
To get your financial situation in check, you begin to look for help. You may even explore some of the debt relief options you’ve seen advertised that promise to help you get out of debt. Before you sign up for any service that promises to help you get rid of your financial woes, make sure you know what to expect.
Top tips for choosing a debt relief service
With information from us and the Competition Bureau, here are some tips to help you when considering a debt management option:
- Do your research. There are different laws for different debt relief services. Find out which businesses are licensed and/or regulated. For example, our organization licences and regulates debt repayment agents in BC.
- See what others have to say. Look into what other consumers have to say about their experiences with a business. You can also check with the Better Business Bureau to see if there are any complaints filed against the business.
- Don’t believe all testimonials. Businesses may use false or misleading testimonials from customers to promote their success. Recognize that a testimonial may actually be inaccurate or fake.
- Be cautious of any guarantee that your debt will be reduced. There is no guarantee that your creditors will accept your specific debt settlement proposal. Only Licensed Insolvency Trustees, federally regulated by the Office of the Superintendent of Bankruptcy, are authorized to administer government-regulated insolvency proceedings that allow you to be discharged from debt, such as consumer proposals or bankruptcies.
- Be wary of any claim offering protection from your creditors. Your creditors may still take action to recover the money you owe them. Only a consumer proposal or bankruptcy administered by a Licensed Insolvency Trustee will give you legal protection from creditors.
- Ask questions. How does the proposed debt relief service work? Can it affect your credit report? Does it carry any potential financial risks or other possible consequences? What are the fees?
- Know the rules and get it in writing. In BC, debt repayment agents must give you a written contract with specific information, including the fees to be paid and when they must be paid. And, by law, they can’t charge you up-front fees until you’ve agreed to the repayment proposal.
- Read the fine print. Always read the terms and conditions before signing up. You may find yourself paying for something you didn’t expect.
- Be realistic. If the offer seems too good to be true, it probably is. Getting out of debt is not something that can be done quickly.
Remember, you can always speak to your creditors and/or credit card company directly to try to negotiate a lower interest rate or to work out a repayment plan.
If you believe you are the victim of a scam or fraud, report it to the Canadian Anti-Fraud Centre or your local police.
Learn more about your rights and obligations when dealing with a debt repayment agent in BC. If you encounter an issue with a debt repayment agent that you think falls under our laws, you can submit a complaint to our office.
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About Consumer Protection BC
We are not-for-profit regulator responsible for overseeing certain industries and specific consumer transactions in British Columbia. If your concern is captured under the laws we enforce, we will use the tools at our disposal to assist you. If we can’t help you directly, we will try to offer a referral to a relevant organization, if one exists. Other times, court or legal assistance may be the best option. Explore our website at www.consumerprotectionbc.ca.