This summer another dragon has reared its ugly head in relation to questionable financial services threatening consumers in Ontario. Following news about an unregulated creature otherwise known as unlicensed online payday loan services (as I discussed in my blog last week), we are now confronting a different monster believed to have been slain, but that has come back from the dead.
The Huffington Post reports that so-called “debt settlement” services companies appear to be seeking ways to skirt Ontario’s new Debt Settlement Law “by continuing to operate without a licence or by partnering with law firms, which are exempt from the new legislation.”
Debt settlement evidently wish to disguise themselves behind the brass plaques of law firms.
Finding themselves hobbled by new regulations outlawing excessive upfront fees, misleading contracts, and dubious debt negotiation practices that have left many deeply indebted, cash-strapped consumers in the lurch, the debt settlement services companies evidently wish to disguise themselves behind the brass plaques of law firms. Or they otherwise intend to ignore legal requirements for licensing per the terms of Ontario’s Collection and Debt Settlement Services Act, which came into effect July 1st of this year.
It’s got me wondering, will the fading Canadian-born TV star Alan Thicke once more appear on air as a poster child essentially selling Ontario consumers on debt settlement services, this time from behind the curtain of law firms? Blessedly, this probably won’t happen since “the law permits lawyers to engage in debt negotiations only in the normal course of business, meaning they might not be able to advertise to attract new clients,” according to Mark Silverthorn, an attorney quoted by the Huffington Post.
The Huffington Post report distinguished between “debt settlement services” and other providers of debt services across Ontario.
I was pleased to see that the Huffington Post report distinguished between “debt settlement services” and other providers of debt services across Ontario, and for that matter across Canada. Debt settlement companies “operate in a competitive field alongside non-profit credit counselling agencies — which are funded by donations from credit card companies — and bankruptcy trustees … The new laws apply only to debt settlement companies,” the Post said.
To be clear, debt services offered by bankruptcy trustees and non-profit credit counselling agencies have a time-honoured history in Ontario of actually helping people, rather than squeezing money out of them.
My agency, Credit Canada Debt Solutions – and all of our affiliates and associates under the umbrella of the Ontario Association of Credit Counselling Services (OACCS) – adhere to stringent accreditation and industry standards to assure fair play and professionalism in relation to debt services. Meanwhile, bankruptcy trustees in the province have their own code of ethics and are up front about the services they offer.
The good guys in the debt services industry came to the rescue, eventually convincing the government to enact new laws.
Years ago, we in Ontario’s credit counselling industry joined forces with bankruptcy trustees and other consumer advocates to lobby the government about debt settlement services. This came following horror stories from consumers about shameful industry practices. Many reports arose about consumers being abandoned after paying huge upfront fees that were not recoverable from the debt settlement companies.
The good guys in the debt services industry came to the rescue, eventually convincing the government to enact new laws prohibiting all the nonsense.
Now unfortunately, as I say, the debt settlement dragon has risen like Lazarus from the dead. It means us good guys may be in for another fight. But if it comes to that we’re ready. We’re battle hardened, with swords at the ready. If Debt Settlement Law in Ontario needs further work to close legal loopholes and ensure consumers are protected from greedy tricksters, then so be it.
Stay tuned.
Frequently Asked Questions
Have a question? We are here to help.
What is a Debt Consolidation Program?
A Debt Consolidation Program (DCP) is an arrangement made between your creditors and a non-profit credit counselling agency. Working with a reputable, non-profit credit counselling agency means a certified Credit Counsellor will negotiate with your creditors on your behalf to drop the interest on your unsecured debts, while also rounding up all your unsecured debts into a single, lower monthly payment. In Canada’s provinces, such as Ontario, these debt payment programs lead to faster debt relief!
Can I enter a Debt Consolidation Program with bad credit?
Yes, you can sign up for a DCP even if you have bad credit. Your credit score will not impact your ability to get debt help through a DCP. Bad credit can, however, impact your ability to get a debt consolidation loan.
Do I have to give up my credit cards in a Debt Consolidation Program?
Will Debt Consolidation hurt my credit score?
Most people entering a DCP already have a low credit score. While a DCP could lower your credit score at first, in the long run, if you keep up with the program and make your monthly payments on time as agreed, your credit score will eventually improve.
Can you get out of a Debt Consolidation Program?
Anyone who signs up for a DCP must sign an agreement; however, it's completely voluntary and any time a client wants to leave the Program they can. Once a client has left the Program, they will have to deal with their creditors and collectors directly, and if their Counsellor negotiated interest relief and lower monthly payments, in most cases, these would no longer be an option for the client.
