Leash Tightened on Debt Settlement Companies
You've seen the advertisements on television: companies claiming they can get creditors to stop calling you and reduce your debt by 80 per cent or more. And with the average consumer debt in Ontario at over $25,000, the thought can be appealing.
Up until now, these debt settlement companies have been able to roam free but Newstalk 1010 has learned the province is putting its foot down, introducing new regulations for the industry on Friday. They will be banned from charging upfront fees, the amount of fees customers are charged will be limited and they will be required to have clear contracts.
There will also be 10-day cooling off period in place and stricter advertising rules.
The Ontario Association of Credit Counselling Services recieves over 100 complaints a month on the issue and hopes to bring that number down.
Executive Director Henrietta Ross says often creditors aren't willing to make a settlement so a consumer will be left with their original debt and will have have paid sometimes thousands of dollars to one of these companies.
Ross adds if you miss a few payments because of dealining with a company you think is handling yuor debt but really isn't, you r credit score can be affected.
She cautions that if something sounds to good to be true, it probably is.