It can be difficult to choose between all the debt management options and not all businesses are created equal. 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.
8 tips for choosing a debt relief service
Do your research.
There are different laws for different debt relief services. Check to see if the business is licensed. For example, in BC, debt repayment agents are required to be licensed with us and must follow certain rules. Learn the difference between a credit counsellor and a debt repayment agent.
Ask questions.
Donât be afraid to ask a lot of questions, this will help you make an informed choice and hopefully weed out the bad operators. Here are some questions to ask:
- How does the proposed debt relief service work? What services are actually being provided?
- Will the agency give you a written proposal describing how they will help you?
- Can it affect your credit report?
- Does it carry any potential financial risks or other possible consequences?
- What are the fees?
- Are they licensed?
- Will you get a monthly statement of payments? What qualifications do they have (education, special training, or years of experience)?
Donât always believe the hype.
Businesses may over-promise in their ads or use false or misleading testimonials from customers on their website to promote their success. Watch out for advertising that sounds too good to be true, offers a quick fix, or claims to be a part of a government program. Always independently verify any claims the business might make.
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. (By law, licensed debt repayment agents are not allowed to make this guarantee.) 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.
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.
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 canât charge you up-front fees until youâve 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 didnât 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.
Where to go for help
Debt relief isnât 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 youâre getting collection calls. In BC, you have rights when it comes to debt collection. Not everyoneâs 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.
Learn more
How to get the calls to stop
What to do if itâs 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 canât help with every debt related issue and weâre not financial advisors. Find out more about us and the other industries and transactions we oversee by exploring our website.
I’m interested in this This division of the debt collection industry. I was told it is a very misunderstood industry. Now that I have read all of the comments above do I ever agree!
I don’t understand why consumer protection is so against the people that they license in different categories. I don’t mean to be sarcastic. I believe this the very serious situation. The notes above suggest instead of dealing with a licensed certified debt consolidation person you contact your financial institution. What a mistake! That’s all we need to hear that it debtors on the verge of bankruptcy. The pulley asset so fast you won’t know what happened. I have 40 years experience behind me. I don’t have the answer for what I’m saying today but I believe that the entire Consumer Protection BC mandate with the public needs some type of review. You can’t wear both hats you can’t license companies and then go against them. It’s gotta be away other than what’s going on today. I am absolutely not worried about being identified. For the record, Robert Weber. Thank you
Hi Robert, thank you for sharing your concerns. I’m not sure what you are trying to accomplish here but if you are one of our licensees and would like to share your thoughts and concerns, there is another channel to do so. Please let me know if you would like to talk to someone directly as I will share the contact information.
Being in debt is not a walk in the park with your dogs on a nice bright sunny day. It’s serious, to some people it suicidal. The very few debt consolidation people in the market other than the large not-for-profit Major organization out of New York that makes millions really do care about the people they serve. I wished I had a better answer. Most sincerely Bob Webber