How to Avoid Debt Settlement & Debt Relief Company Scams | Canada
By Jordan Evans
Q: I keep getting telephone messages from a company that says I can get a 3 month break from paying my credit cards. They also say that I can settle my debts with my creditors and get out of debt sooner. It sounds great, but why would my creditors go along with this?
A: When something sounds too good to be true, it often is. We have been getting increasing numbers of complaints from consumers who entered into an agreement with different debt settlement companies only to find out that most of the money they paid to these companies went to pay fees. Worse yet, the people were now months behind on their payments and in many cases their creditors are taking action against them.
3 Ways to Spot a Debt Settlement or Debt Relief Scam
There are 3 things to be wary of if you are considering using the services of a debt settlement company:
- They require you to pay most of their fees up front before any of your money is used to settle your debts.
- They make unrealistic promises without any understanding of your financial situation. The truth is they have little if any influence with creditors.
- They tell you to stop talking with your creditors.
Pay Attention to the Details of Your Debt Settlement or Membership Agreement
Make sure you read and review the agreements from these companies carefully and pay close attention to the breakdown of the payment schedule. Are the majority of your payments applied to their fees first, before accumulating funds to settle your debts? Reputable credit counselling companies don’t require you to pay their fees up front before delivering any tangible service.
As the saying goes, “there is no free lunch;” everything comes at a price. If you stop making payments on your credit cards, it will negatively impact your credit rating…for years. It could also cause your creditors to initiate collection or legal action against you. That’s a heavy price to pay for a 3 month break from making your payments.
How to Choose a Good Debt Relief Agency
If you want your creditors to work with you when you are experiencing financial problems, you need to keep the lines of communication open. Refusing to speak with your creditors will not help you to gain their understanding or cooperation.
My advice here is the same I would give you when choosing any service; do your homework and check this company out thoroughly before signing anything. Also listen to your inner voice, it’s usually right and knows when to walk away. I suspect that after doing your homework your inner voice will be telling you to run not walk away.
Thank you for this post. I am a big fan of this website. Would like to keep updated.
I’m no professional, but I feel you just made an excellent point. You obviously know what you’re talking about, and I can truly get behind that. Thanks for staying so upfront and so truthful.
canadian customer debt relief in Saskatchewan under CCDR wants me to submit some documents etc and will put my debts into one payment, which sounds too good to be true, they want a certain amount of money upfront for administration, so I have not sent them anything so far
Hi Marty, If the payments you are talking about are for a consumer proposal or bankruptcy, then there is no need to pay this company. They are not licensed with the government as Licensed Insolvency Trustees. So it would not be legal for them to collect fees for these services as the law only permits licensed trustees to do so. If you are paying for other services or another type of program, then that would need to be looked into on its own merits. Our best suggestion would be to speak with one of our credit counsellors first to make sure that the program you are pursuing is in your best interest. Unlike with many for-profit companies in our industry, our credit counsellors are not paid commission of any kind. We believe that this allows them to be more objective and look for solutions that are in your best interest rather than those of a sales person. Give us a call at 1-888-527-8999. If you are fully convinced that insolvency is your only option, then you can also do a Google search for a Licensed Insolvency Trustee near you and speak with them about your situation.
Hi sorry. i just read your reply to Marty. i just spoke ccdr yesterday and they asked 700 for their fees. and i sent my drivers. am i screwd right now.
If you are going onto a consumer proposal then there was no need to pay anyone other than a Licensed Insolvency Trustee. By law they are the only ones who can charge a fee (one set by the government) for providing a consumer proposal. The law (Bankruptcy and Insolvency Act) states that no one other than a Licensed Insolvency Trustee is even allowed to do the paper work for a consumer proposal. If you are referred to a trustee for a consumer proposal by a debt consultant or debt relief company, then it is normal for these kinds of companies to want to bill you for their consulting services. These same services are offered for free by non-profit credit counselling organizations like ours (and even trustees will talk to you for free), but we live in a free country and businesses can try to charge people for whatever service they can convince them to pay for – even when that service is offered for free by many others.
Hello,
I’m writing on behalf of my mother. I ask for your patience as I am an amateur when it comes to these processes and the terminology. To put it simply, my mother has decided what I believe to be a debt consolidation? She spoke with representatives from DebtReview.ca and they told her about a “government program” that she’s eligible for that “expires in December”. Pretty much, they’re going to waive half of her debt (let’s say she now owes 20k) and her monthly minimum payment will only be $535. This offer sounded much too good to be true so she entrusted me to source out this company. So far, I seem to have not found much – which I am taking as a sign – and I have a gut feeling this deal is not real nor is it a good idea. If you could please help check the legitimacy of this company I would greatly appreciate it! I understand someone previously asked about it last year, however I wanted to see if anything has changed. Thank you for your time and patience as we’re both very stressed and exhausted. If possible, I’d like to speak to a counsellor about our options please and thank you.
Hi Winter, Thanks for asking your question. We don’t like to comment on any company specifically, but a number of things you appear to have been told are misleading. There is no such thing as a government debt relief program. It doesn’t exist. What they are referring to is the Bankruptcy and Insolvency Act which was created over 30 years ago. It allows for two types of insolvency in Canada: personal bankruptcy and a consumer proposal. These guys appear to be referring to a consumer proposal. While a consumer proposal can be thought of as a type of debt consolidation, it would be more accurate to call it bankruptcy’s little brother. It has many of the same consequences as bankruptcy. By law a consumer proposal can only be offered by a bankruptcy trustee (they now call themselves Licensed Insolvency Trustees). No one else is allowed to offer or administrate them. You should never pay anyone money for consumer proposal services unless they are a Licensed Insolvency Trustee. It’s illegal for anyone else to charge money for them. The legislation that governs consumer proposals has no expiry date. It’s like any other law that governs the land. It’s not going away any time soon. Any debt consultant that puts pressure on someone to act quickly before a program expires should not be trusted. This is simply not true. That’s a sales tactic. If you’d like to explore all your options to get out of debt, give us a call at 1-888-527-8999 and speak with one of our non-profit credit counsellors. Alternatively, you could do a Google search, find a local Licensed Insolvency Trustee, and go to them directly.
I’m wondering if DebtPros is a legitimate company.
We see that this company promotes consumer proposals. To administer a consumer proposal, you have to be licensed as a bankruptcy trustee (now called Licensed Insolvency Trustees). You can view the list of bankruptcy trustees here: https://www.ic.gc.ca/app/scr/tds/web
We don’t see the company’s name on the list, nor do we see the names of any of their employees. So they cannot legally provide you with these services. What does happen, though, is that some debt consultants will charge you for these services and then refer you to a trustee who will charge you all over again. Some companies will also pretend that the bankruptcy trustee works for them when this is not true and is illegal. We don’t know exactly what this company is doing, but how they have framed their services on their website is concerning to us. We would suggest that you find a bankruptcy trustee by doing a Google search or by getting a referral to a reputable trustee from a non-profit credit counselling service. You are welcome to contact us as well to get an unbiased review of your options. Our staff are not paid on commission, so they have no incentive to steer you towards a particular solution and will instead help you figure out what is in your best interest.
I would like to just find a way to take care of my debt, I am not sure if I should declare bankruptcy or what,the stress of it is wild, any suggestions, not even sure how much I owe1
Hi Joel, it sounds like you have a lot on your plate and you’re not sure what to do next. The good news is there is always a way out of debt no matter how stressful it feels at the moment. You may benefit by speaking with one of our certified credit counsellors. They will discuss your current situation and go over all of your options, including bankruptcy. Whenever you’re ready, give us a call at 1-888-527-8999 we have counsellors standing by and ready answer all your questions.
Is credithelper. Ca a legitimate company as far as BBB says they are accredited an a+ but they ask for fees first an offer a credit rebuild is this correct
Hi Chad, that website appears to be promoting their car loans as a way to build credit. If you don’t actually need a car, then this would be a waste of money. Getting any kind of credit product and making payments to it on time will work to rebuild your credit just as well as a car loan from this company. We recommend that you get a credit product that’s actually helpful for you, like a secured credit card that you can make everyday purchases on.
Please note that there is no need to pay anyone to help you fix your credit. There are lots of knowledgeable people who are happy to help you for free. We’ve actually created a popular webpage that tells you how to fix your credit for free: www.mymoneycoach.ca/credit/fix-credit
This page contains all of the tips and tricks that actually work. In addition to that, if you’d like to sit down with someone and have them personally give you recommendations and answer your questions, make an appointment to speak with one of our credit counsellors for free. Bring a copy of your credit report with you. Show it to them, and then ask them how you can improve your credit. They will tell you what’s good and bad about your credit report, what you need to do to improve your score, and give you an idea of how long it will take to clear things up. You can also make an appointment to speak with someone at your bank. It’s possible they might also be willing to give you some pointers for free. There’s no need to pay a salesman for the same information you can get for free elsewhere.
Hey was wondering if debtreview.ca was legitimate. Thank you
Hi Brayden, on that company’s website, they claim to provide consumer proposals and bankruptcy. They also claim that “Once you obtain our services . . . Your creditors will legally no longer be allowed to contact you.” To do this, you have to be licensed as a bankruptcy trustee (now called Licensed Insolvency Trustees). You can view the list of bankruptcy trustees here: https://www.ic.gc.ca/app/scr/tds/web
We don’t see the company’s name on the list, nor do we see the names of any of their employees. So they cannot legally provide you with these services. What does happen, though, is that some debt consultants will charge you for these services and then refer you to a trustee who will charge you all over again. Some companies will also pretend that the bankruptcy trustee works for them when this is not true and is illegal. We don’t know exactly what this company is doing, but how they have framed their services on their website is concerning to us. We would suggest that you find a bankruptcy trustee by doing a Google search or by getting a referral to a reputable trustee from a non-profit credit counselling service. You are welcome to contact us as well to get an unbiased review of your options. Our staff are not paid on commission, so they have no incentive to steer you towards a particular solution and will instead help you figure out what is in your best interest.
any thoughts on ccdr
Hi Kim, if you are referring to Canadian Customer Debt Relief in Saskatchewan, then that company does provide legitimate debt settlement services as far as we know. However, CCDR cannot stop any legal action against you (which they advertise on their website). Only a licensed insolvency trustee can do this, and what CCDR likely does is charge you for a referral to a trustee. You should always explore all of your options, but we recommend that if you do need a trustee, you find one directly without paying a referral fee. We can also help review your situation or refer you to a reputable trustee near you for free.
Ron S. Hi Debtless credit are giving me a $1000 limit visa credit card for a upfront 20.00 activation fee via e transfer they gave me Are they legite
Hi Ron, unfortunately, we’ve never heard of this company. We also can’t find them on a Google search or on the Better Business Bureau’s website. We would not recommend dealing with any financial company that you cannot verify is legitimate. There are lots of legitimate credit card companies out there, so there’s no reason to take a risk on something like this.
Hi I have seen advertisement for for a company called ‘Debt Support Canada.’
Can you tell me if they are a reputable company?
Is a consumer proposal a good way to address a student loan over 7 years old?
Hi Neil, like “Debtless Credit,” we’ve never heard of “Debt Support Canada” and would not recommend dealing with any financial company that you cannot verify is legitimate. As for your other question, a consumer proposal can address a student loan debt over 7 years old. However, whether that’s the best option for you depends on your situation and needs. We can help you figure that out, and you can also get a second opinion from a licensed insolvency trustee (we can refer you to a reputable one for free).
If a consumer proposal ends up being your best option, it’s important to realize that no one but a licensed insolvency trustee can legally do this for you. If a debt consultant company advertises that they can, it’s not true. They’ll just end up sending you to a trustee themselves after charging you a fee. You can get the same results or better by going to a trustee yourself – plus save thousands of dollars in extra fees the debt consultant company could charge you.
Do you have a phone number or email contact for debtless credit? I am currently being charged by them without my permission and desperately need to find out their information
Hi Jakki, we sent you an email answering your question. If you need any other help, please give us a call at 1-888-527-8999.
I also am currently being charged at random by them I got ahold of another name through major Google and came to CREDIT WILLOW when I asked how I look at my “account” the operator hung up on me. Everytime I tried getting info to get into their system to see what’s going on I am blocked. I hope someone helps you my bank is of no help as they keep letting them even though I never signed up or heard of them hope this helps.