Credit Counsellors/Debt Repayment Agents
The majority of companies that advertise that they are “credit counsellors” and offer credit counselling services, are Debt Repayment Agents licensed under the British Columbia Business Practices and Consumer Protection Act. These companies sometimes advertise that they are non-profit societies – they are still registered debt repayment agents. Their license allows them the ability to accept payment from you for distribution to more than one creditor. Think of these firms as reverse collection agents. You hire them to negotiate a settlement with your creditors. Yes, there are fees involved, whether they are not-for-profit or for profit. Further, be aware that if the contract you sign with a debt repayment agent does not include the following statement:
“Debt repayment agents operating in British Columbia are required to be licensed under the Business Practices and Consumer Protection Act and are regulated under that Act. The services of a debt repayment agent are not provided on behalf of, or in affiliation with, the Province of British Columbia or the Business Practices and Consumer Protection Authority, commonly known and doing business as Consumer Protection BC. Using the service of a debt repayment agent will not necessarily improve your credit rating, deter the efforts of a creditor to collect a debt or prevent legal action to recover the debt, including garnishment of your wages. For more information on the regulation of debt repayment agents, please contact Consumer Protection BC.”
They are not licensed debt repayment agents. You may also check if a debt repayment agent license is valid here https://www.consumerprotectionbc.ca/check-a-licence-search/.
Debt Repayment Agents do not offer a formal process. Your creditors are not legally bound by the process and can sue you or continue lawsuits at any time. There is no stay of proceedings as in a Bankruptcy or a Consumer Proposal. Should a creditor not agree, or changes their mind, they are not bound by the process. Should your situation change, they could ask for more money or larger payments at any time. We have been advised that Government Agencies (Canada Revenue Agency) will not, under any circumstance, agree to this process. Even if all your other creditors agree, Canada Revenue Agency can and will garnish your wages, stopping you from living up your payments to the debt repayment agent. What documentation will you receive at the end of the process stating that you no longer owe the creditor money? In a Bankruptcy or a Consumer Proposal you receive a Court Order stating your debt has been discharged.