Debt Repayment - Know Your Rights

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Debt repayment is often used as an aid to assist someone in financial difficulty. Credit counselling and negotiation with creditors is typically included in debt repayment services.

A debt repayment agent is defined as a person who assists in making arrangements or negotiations with a debtors creditors, this may include receiving money from a debtor for distribution to the debtor’s creditors for a fee. Simply put, anyone who charges a fee to negotiate with a creditor on behalf of a debtor is required to have a license and must follow certain rules.  

A debt repayment agent MUST do the following:

  • Have a signed contract, which includes the prescribed terms, information and disclosure statements with the debtor, prior to representing the debtor;
  • Account for and pay any money collected from the debtor, to the proper creditor within a specific time frame (If the debt repayment agent is unable to locate the creditor they must provide the money back to the debtor within 60 days);
  • Deposit any money collected from a debtor for a debtors creditor into a trust account within 5 days;
  • If the Debt repayment agent collects more money from the debtor then the amount owing to the debtor’s creditors, they must pay the surplus back to the debtor within 60 days;
  • If a creditor refuses to accept a negotiation or settlement, the debt repayment agent must provide this information to the debtor within 30 days.

A debt repayment agent MUST NOT do the following:
  • Prohibit a debtor from communicating directly with their creditors;
  • Represent any of the debtor’s creditors;
  • Charge fees or disbursements in excess of the allowable amount;
  • Charge any amount from the debtor prior to the repayment proposal being accepted, in writing by the debtor and at least one of the debtor’s creditor;
  • Provide gifts or benefits to a person to try to entice them to enter into a debt repayment contract;
  • Provide money or credit to the debtor;
  • Assist the debtor in obtaining a loan.

Though a debt repayment agent can charge fees for their services, they are limited in the amount of fees they can charge a debtor and they should NEVER charge you any fees up front until there is a written agreement in place with your creditors.  To better understand the regulated business models and related fees, please click here

We encourage you to read the debt collection and repayment regulation in full to learn about your rights and responsibilities.