Debt repayment
When you are looking for help to manage your debt, it can be difficult to choose between all the debt management options. Some business models are licensed and regulated while others aren’t.
What is a debt repayment agent?
A debt repayment agent is a person who helps to make arrangements or negotiate with your creditors, (include receiving money from you to distribute to your creditor) for a fee.
Simply put, 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.
Looking for information on the debt collection and debt repayment security claim form?
Check the licence of a debt repayment agency, or debt repayment agent.
Read the Business Practices and Consumer Protection Act.
Read the Debt Collection and Repayment Regulation.
I want to know more about their fees
This can get a bit complicated. Debt repayment agents can charge different amounts depending on the business model they are following.
Scenario 1: The debt repayment agent negotiates with your creditor(s) the amount to be paid and you either make a one-time payment in full, or a payment plan lasting less than 90 days, then the debt repayment agent can charge you a maximum of 10% of the gross amount received. This fee is paid after an agreement with the creditor has been made. In this scenario, you pay the debt repayment agent and they distribute the money to your creditor(s).
Scenario 2: The debt repayment agent negotiates with your creditor(s) the amount to be paid and you pay this amount directly to the creditors. In this case, the debt repayment agent can charge you a maximum of 10% of the gross amount paid. This fee is paid after the agreement with the creditor(s) is made.
Scenario 3: The debt repayment agent negotiates with your creditor(s) the amount to be paid and you make a payment plan lasting more than 90 days, then the debt repayment agent can charge you a maximum of 15% of the gross amount received, along with a one-time charge (no more than the average monthly distribution to be made to the creditor). These fees are paid after an agreement with the creditor(s) has been made. In this scenario, you pay the debt repayment agent and they distribute the money to your creditor(s).
Take a look at our visual representation of the debt repayment business models and fees.
What to expect from a debt repayment agent
A debt repayment agent must:
- Provide you with a written contract with specific information, like lists of all the fees to be paid and when they must be paid
- Account for and pay the money collected, to the proper creditor within a specific time frame
- Return your money within 60 days, if they cannot locate your creditor
- Notify you within 30 days, if a creditor has declined a debt repayment proposal
A debt repayment agent must not:
- Lend you money, provide you with credit, or help you get a loan
- Charge up-front fees until a repayment proposal has been agreed to by both the debtor and creditor(s)
- Include terms in their contracts that prohibit you from communicating with your creditor
- Entice you to enter a contract by offering a gift, bonus, or premium
What about other debt management options?
There are many options to choose from and it can be difficult to make an informed decision when you are feeling the stress of being in debt. Here are a few things to consider before choosing one particular option:
- Do some research. What types of businesses need to be licensed and follow certain rules? Looking at some online reviews may also help.
- Ask yourself some questions. What are you hoping to achieve?
- Ask them questions. What services will they provide? How much does it cost? What are the timelines?
- Read the fine print. Always read the terms and conditions before signing up. You may find yourself on the hook for something you didn’t expect.
- Be realistic. If the offer seems too good to be true, it probably is.
Read our consumer tips on debt repayment.
