If you’re dealing with debt and decide you want some help from a credit counsellor or debt repayment agent, here are some things you may want to keep in mind.
Debt relief: credit counsellors vs debt repayment agents
You may know the term credit counseling, but you may not have heard about debt repayment. If you’re getting help with debt relief, it can be confusing to know the difference – and even more so when the same company offers both services. Here’s some information to help you understand the difference.
- Credit counsellors: Credit counsellors can offer a variety of different services. They may offer one-on-one counselling and offer budgeting courses and tips. A credit counsellor cannot make repayment arrangements on your behalf unless they are licensed as a debt repayment agent.
- Debt repayment agents: A debt repayment agent is a person who helps negotiate with your creditor to reduce or eliminate the interest rates or fees on your debts or extend the time needed to pay off your debt. You pay them and they distribute the money to your creditor for a fee. In BC, anyone who charges a fee to negotiate with a creditor on your behalf is required to be licensed with us and must follow certain rules.
4 tips if you decide to get help from a credit counsellor or debt repayment agent
Here are some tips to help you get started if you’re thinking about getting help from a credit counsellor or debt repayment agent.
Do your research.
Both not-for-profit organizations and for-profit companies offer these services. You can do a search on our website to find out if a debt repayment agent is licensed by us. Depending on the type of business, you may want to become familiar with the laws they have to follow. Knowing your rights will help you make an informed decision. Find a trustworthy organization with a good reputation and customer reviews.
Understand the charges.
Make sure you know what services they offer and how much it will cost. A debt repayment agent can’t charge you until they have an accepted repayment proposal with a creditor, and then it is at prescribed amounts. Learn more about what fees a debt repayment agent can charge and when.
Dig into the promises.
Debt repayment agents are not allowed to make promises to improve your credit score. If a company claims to be a part of a government program, you should verify the information directly to confirm. Always read the fine print and if you’re not sure about something, make sure you ask questions until you fully understand what you’re agreeing to.
Know what impact (if any) it will have on your credit report.
Simply talking to a credit counsellor won’t negatively affect your credit score but entering into a debt management plan with a debt repayment agent may. Learn more about that by visiting the Financial Consumer Agency of Canada’s website..
Make sure you weigh your options carefully. Take your time and make the decision that’s right for you.
Where to go for help
Debt relief isn’t something we can help you with but there are other options to consider. You may be interested in speaking to your financial institution or a financial advisor to see if they can help you reach your financial goals. The Financial Consumer Agency of Canada also has information and resources available online to help you make a plan to be debt-free.
If you decide to work with a debt repayment agent, make sure you brush up on your rights and obligations in BC. We licence debt repayment agents in the province and enforce certain rules when it comes to their business practices. 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.
Getting calls from a debt collector?
We know dealing with debt can be stressful, especially if you’re getting collection calls. In BC, you have rights when it comes to debt collection. Not everyone’s experience with debt is the same but the rules apply to all of us. Learn your rights in BC and access tools and resources to help you on your debt journey.
How to get the calls to stop
What to do if it’s not your debt
The rules debt collectors must follow in BC
The impact of debt on your credit report
4 ways to manage debt
Debt relief: Credit counsellors vs debt repayment agents
8 tips for choosing a debt relief service
3 simple steps to create a budget
How to save for a rainy day
How to prepare for changing interest rates
About Consumer Protection BC
We are responsible for licensing debt collectors and regulating certain aspects of the debt collection industry in BC. The law speaks to when a collector can contact you and how they can communicate with you. We can’t help with every debt related issue and we’re not financial advisors. Find out more about us and the other industries and transactions we oversee by exploring our website.