2025-06-02
Five Tips For Controlling Your Credit Card Use
Credit Counselling
With consumer debt at an all-time high, Canadians are being warned to take steps to reduce their debt before interest rates begin to rise.
Signs of a Debt Management Scam (MNP 3 Minute Debt Break)
C
anada has seen a steady rise in debt settlement companies recently. With enticing promises like "Reduce your debts by 70% without the need for bankruptcy," it's easy to see why many are tempted. But as with all things that seem too good to be true, it’s essential to proceed with caution.
Firstly, let’s address the 'Government Approved’ tag that many of these firms promote. It might offer an illusion of credibility, but the truth is a bit more nuanced. While there isn't a specific government licensing program for these debt settlement entities, only Licensed Insolvency Trustees , through the power of a government issued license, have the legitimate authority to administer a bankruptcy or Consumer Proposal on someone's behalf.
Then there's the alluring promise of absolute protection from relentless creditors. While these debt settlement companies can indeed sit across the table and negotiate, they can't stop a creditor from potentially taking legal steps against you during these discussions. For those seeking a real protective legal barrier, only formal procedures like a Consumer Proposal or declaring bankruptcy can genuinely promise that.
Onto success rates. Many agencies boast about their long list of successful negotiations. But context matters. Suppose you're burdened with five towering debts, and the company manages to settle just two of them. What about the other three? You’re left to grapple with them, as they remain your responsibility.
Promises around Credit Rating Protection can be a murky area. It's imperative to understand that any delays or changes in your regular debt repayments during the settlement phase can dent your credit score. It's the responsibility of a sincere advisor to be transparent about all these repercussions. If they're sugarcoating or omitting details, that's a warning sign.
And finally, there’s the murky waters of upfront fees. It's vital to understand the destination of every dollar you part with. Some companies might take your money only to push you towards a Licensed Trustee in Bankruptcy, claiming they stand by your side, while the Trustee is for the creditors. This isn't entirely true. The Trustee, as an officer of the Court, balances both sides, ensuring fairness.
To navigate this complex landscape, thorough research is your compass and make an informed decision based on all the facts. Get advice from a Licensed Trustee in Bankruptcy, even if you don’t need to go bankrupt. They are the professionals that can discuss options with you for free in order for you to make an educated decision.
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