CONSUMER ALERT (February 15, 2018) Victoria, BC / Ottawa, ON – Consumer Protection BC / Competition Bureau
Whether trying to catch up on holiday bill payments or dealing with an unexpected life event, most Canadians would agree: struggling with debt is not what they are looking forward to in 2018.
Fact: According to recent data from Statistics Canada, for every dollar of disposable income that Canadians have, they owe on average $1.71 in credit market debt, which includes consumer credit, and mortgage and non-mortgage loans.
Unfortunately, many Canadians find themselves under significant financial pressure just 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. There are many debt management options to choose from and it can be difficult to make an informed decision when you feel like you’re in over your head. 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.
The Competition Bureau and Consumer Protection BC offer the following 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, debt repayment agents are licensed and regulated in BC by Consumer Protection 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 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.
Consumers who believe they have been misled should file a complaint with the Competition Bureau. If you believe you are the victim of a scam or fraud, report it to the Canadian Anti-Fraud Centre or your local police.
You may wish to check with your local consumer affairs office for complaints against a business within your own province or territory. Complaints against debt repayment agents in BC should be directed to Consumer Protection BC.
- In Canada, total household credit market debt, which includes consumer credit, and mortgage and non-mortgage loans, reached $2.1 trillion as of December 2017 (Statistics Canada).
- On January 17, 2018, the Bureau and Consumer Protection BC signed a Memorandum of Understanding aimed at developing a framework for cooperation that will assist in the effective delivery of each agency’s mandate to protect consumers and foster a fair marketplace.
- Competition Bureau: Consumer and business alerts
- Consumer Protection BC: Debt repayment
- Consumer Protection BC: How to get debt collection calls to stop
- Financial Consumer Agency of Canada: Making a plan to be debt free
- Financial Consumer Agency of Canada: Financial tools and calculators
- Office of the Superintendent of Bankruptcy: Consumed by debt? Information for consumers on the insolvency process
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Consumer Protection BC
The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.
Consumer Protection BC is the regulator of a variety of sectors and specific consumer transactions in the province. Our mandate is to license and inspect our regulated businesses, respond to consumer inquiries, investigate alleged violations of consumer protection laws, classify all general release motion pictures and provide information and referrals to consumers.