VANCOUVER (NEWS 1130) – The debt settlement industry will soon have new restrictions in this province.
The big one is a cap on the fees that these companies can charge you if you’re using them to help settle your debts.
Debt settlers can charge no more than 10 percent if a debt is being paid within 90 days, and 15 percent on amounts being paid over a longer period.
“Debt settlement companies will no longer be able to charge excessive fees in advance of delivering any real service,” says Scott Hannah with the Credit Counselling Society of B.C., praising the provincial government’s move. “Debt settlement companies will be required to provide the approval of the creditor and the debtor to settle a debt in advance of being able to charge a fee.”
Before these rules, the system was left open to abuse and often brought tragic consequences, says Hannah.
“At the height, we were receiving in excess of 200 calls from consumers a month regarding debt settlement practices,” says Hannah. “Consumers would call us after entering to an agreement with a debt settlement company, paying thousands of dollars in fees up front, and then finding out that the creditors had taken legal action against them.
“In some cases, their wages were being garnished, liens were being put against their homes, and in some very tragic situations, people under so much risk were actually contemplating suicide…without these regulations in place, these practices were allowed to continue and consumers didn’t understand the full impact.”
These changes come into effect April 1, 2016.