Province announces new limits for debt-settlement agencies
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Hey there, time traveller!
This article was published 02/02/2012 (5379 days ago), so information in it may no longer be current.
The province will ban upfront charges by debt-settlement agencies, set maximum fees for them and require that they become licensed, Consumer Affairs Minister Jim Rondeau said Thursday.
The initiatives will take effect Feb. 15. They are a result of amendments to regulations under the Consumer Protection Act.
“We want to be sure that people already struggling with debt don’t find themselves paying large fees upfront with no guarantee the service will actually reduce their debt,” said Rondeau. “Some consumers have found themselves worse off than before signing up for debt settlement.”
Under the debt-settlement model, consumers may be told to stop paying their creditors and put money aside in a separate account. When the account accumulates a large enough balance, the agency will then attempt to persuade the creditors to accept a smaller payment than what is owed.
Debt-settlement agencies have claimed to reduce debt significantly but there is no guarantee the creditor will take anything less than full payment, said Rondeau.
Under the new rules, consumers can only be charged a fee if the creditor and debtor reach an agreement on reduced repayment. The debt-settlement agency’s fee will be limited to a maximum of 10 per cent of the debt owed. The new rules are based on Alberta laws that have been effective in addressing the need for consumer protection in debt settlement, the minister said.
For more help finding financial counselling and support to manage debt, contact the Manitoba Consumer Protection Office by email at consumers@gov.mb.ca or by phone at 204-945-3800 or 1 800-782-0067 (toll-free).