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Canadian Debt Settlement Company Reviews, Complaints, and Scams

How to Tell if a Canadian Debt Settlement Company is Trying to Help You or Just Make Money Off of You
A Guide to Review Debt Settlement Companies Yourself

In Canada it's unfortunate that not all provinces have updated their consumer protection laws to protect Canadians from the unethical debt settlement practices that ravaged the United States until October of 2010 when the government cracked down on these companies. Tragically some of these American companies continue to operate call centres in the U.S. and now target Canadians instead of Americans. Alberta and Manitoba have enacted legislation to clamp down on these companies, but unscrupulous companies are free to go after consumers in other provinces. If you want to keep from getting ripped off or scammed, here are some of the red flags we would suggest that you look out for when reviewing a debt settlement company:

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1. The Debt Settlement Company Charges Substantial Fees Before Providing Service

In the financial world, reputable professionals usually don't charge their clients fees until after they have provided a service. Unfortunately many debt settlement companies exist only to make as much money as they possibly can. They do this by charging people significant monthly fees before they successfully negotiate the settlement of any of the client's debts. The problem with this is that most debt settlement companies who charge monthly fees before providing a service never end up negotiating settlements for the vast majority of their clients. So in the end their clients are left with more debt and less money.  We would recommend that you only consider working with a debt settlement company that only charges fees after they have successfully negotiated the settlement of your debt.

2. The Debt Settlement Company Advertises Reducing Your Debt by 40% to 70%

Some debt settlement companies claim in their advertising that they may be able to reduce your debt by up to 70%. According to the U.S. government, “the methodology used to calculate these percentages is fundamentally flawed” (Federal Trade Commission Report, page 59).According to the Canadian government, “many companies will claim they can work with your creditors to reduce your debts by a large percentage—maybe 60 percent or even more. However, there is no guarantee that your creditors will agree to reduce your debts. In fact, they may not even agree to participate in debt negotiations. You could end up paying fees for nothing” (FCAC Consumer Alert - January 10, 2012).

3. They Claim to Be Part of a Government Approved Program

The Canadian government has warned consumers that “Some debt reduction companies may try to give the impression that they are approved by the Canadian government or that their services are part of a government program. This is not true” (FCAC Consumer Alert - January 10, 2012).

4. They Don't Have Real Offices in Canada

Before working with a debt settlement company check out their mailing address, and see if it is a real office where they have real employees. Many companies simply rent a Canadian mail box (or "virtual office") so that they can look like a Canadian company. You can do an internet search for any company address to see if you are able to rent a mail box at the same address.
Canadian financial services companies that truly care about their clients typically have a real Canadian office somewhere in Canada where you could go and speak with a company representative face to face if you had a problem.

5. They Claim that All Your Creditors will Work with Them

With most debt settlement companies this is simply not true. Call your creditors. Ask them if they work with the debt settlement company you are considering using.

6. Call the Better Business Bureau or Check Their Website

You can search for any company by name on the Better Business Bureau's website and see how many complaints have been filed against them. Good companies will have no complaints. However, if the Better Business Bureau's page about the company shows that they have been active in Canada for less than two years, then complaints may not have had enough time yet to catch up with the company.
You can also call the Better Business Bureau and see what they think of a debt settlement company. You can also ask them what debt settlement company they would recommend. The Better Business Bureau gets thousands of calls about debt settlement companies, they will definitely be able to point you in the right direction.

7. Call Your Province's Consumer Protection Authority

Contact your province's consumer protection authority and tell them about the debt settlement company that you are investigating. Ask them what they know about this company and who they would recommend you contact. Consumer protection authorities exist to protect consumers and keep them from getting ripped off. They can be a great resource.


What to Do if You have been Ripped Off or Scammed by a Debt Settlement Company
Where to File a Complaint and Report the Company


1. Contact the Debt Settlement Company and Demand a Refund

If a debt settlement company has charged you fees and hasn't negotiated any debt settlements for you, then they haven't done anything for you, and you should demand a full refund regardless of any fine print that's contained in their contract. Don't settle for anything less than a full refund if they didn't settle any debts for you.

2. File a Complaint with the Better Business Bureau

If you believe that a debt settlement company has ripped you off, then consider filing a formal complaint with the Better Business Bureau. It seems that for every thousand people who are upset with the service they receive from a debt settlement company only one files a formal complaint with the Better Business Bureau. It seems as though the embarrassment and shame of being duped hinders people from taking action. Filing a complaint against an unethical company is very important because it is recorded on the Better Business Bureau's website and helps to warn other consumers.

3. File a Complaint with Your Provincial Consumer Protection Authority

Provincial consumer protection authorities exist to protect consumers and enforce consumer protection laws. If you think that a debt settlement company has taken advantage of you or possibly broken the law, contact your consumer protection authority, speak with them, and consider filing a formal complaint if necessary.

4. Contact your MLA

If you have been ripped off by a debt settlement company, then your local MLA needs to hear about it. If enough people complain to their local MLAs, then provincial governments will realize that there is a need to clamp down on unethical debt settlement companies and update their consumer protection laws.

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Comments

Unfortunately, I feel into this "trap" of debt settlement. I am out over $1000 and should just be happy it wasn't more. I've sent a couriered letter advising of my cancellation and requesting a refund. I've had no response. I don't expect to see a penny but I will try. I should have done my homework before falling victim to such a scam. I actually did research the company and really couldn't find anything bad about the company. In reviews that I read it was about 50/50. However, I slowly came to realize what kind of predicament I was putting myself in, my children and my common-law (though he has nothing to do with my personal debt). I was leaving us all totally unprotected should anything happen with my pays (garnishment, being sued, etc). I spoke with a financial advisor with a well established firm (in person). She was pushing me toward bankruptcy saying I really didn't have a choice. However, in reading more and more and speaking with advisors, I found that a proposal is what would work best for my situation. Please people.....read up on ALL of your option on legit (if possible, Government) websites. Speak to financial advisors; it should cost nothing, educate yourself before making your decision. Consider that with a long drawn out settlement, you and your family and your assets are NOT protected! Your hard earned pays are NOT protected. Knowing what I know now, I would advise against settlement unless you are in the position to do it yourself. I did that once with my student loan (went to Collections). My father passed away and I inherited a very small sum. I contemplated what to do with $2000 and thought "Dad would want me to take care of this" so I called and made a deal. I was at about $2400 and after speaking with the rep....I had $200 left in my pocket but my debt was clear and I felt relief. I wish I was in a position to do the same with my current collectors, but unfortunately, no one has left me a nice sum (which is a good thing, really!). Point is.....be careful. EDUCATE! EDUCATE! EDUCATE!!

Thank you very much Julie for sharing your story and offering your advice. Unfortunately we had to remove one thing from your story: the name of the debt settlement company. Since we have not verified your story we can't publish the name. However, we really appreciate you coming forward with your story. Most people who get burned by debt settlement companies never come forward and warn others, and so these companies stay in business and take advantage of more people. You are so right when you emphasis that people have to educate themselves, and they shouldn't make a major financial decision on the advice of just one "financial advisor" (some of whom have little to no financial education or experience). Talk to other financial professionals and to people you trust - like family and friends - and see if what you are being advised to do makes sense to them. At the end of the day, if it sounds too good to be true, it usually is.

Hi there, We have just realized how foolish we were to have hired a debt settlement company. We have asked them to cancel everything as of today and they replied with a form that they say needs to be signed to cancel the agreement. The form will basically waive our rights to any of the fees ($3800 JUST in fees) in order to get the money that they are holding in trust for us. They have not only NOT negotiated any settlements on our behalf, they have not even made contact with any of our creditors ever. We are just sick, and feeling extremely foolish. We are going to resume communications with our creditors (we have stopped paying all our minimum payments - which they explicitly advised us to do and which they want us to sign saying they did NOT advise us to do!!) and would very much like to have the money in our trust account released to us as soon as possible, but we don't want to waive our rights to the fees that they have charged us. What should we do?

Thank you for sharing your story. Hopefully it will help others learn before it's too late. You are on the right track with how you're trying to resolve your situation. However, before you sign anything, contact the Consumer Protection office in your province. They will be able to help you understand what you can do to proceed and hopefully recover some if not all of your money. They will also be able to tell you how to file a complaint against the company and help protect others. Different provinces have different rules regarding what can and can't be done in terms of debt settlements. This additional information may answer some more of your questions: http://www.nomoredebts.org/blog/debt-settlement/companies/16x9-investigation-canada-review.html#comments.We understand how hard it can be to ask for help when you feel foolish and aren't sure who you can trust. Reputable companies and organizations have no problem with you checking them out ahead of time with the Better Business Bureau and Consumer Protection office. Also ask your creditors who they would recommend you seek help from. While the road ahead will likely be a bit rocky for while, we'd encourage you to follow through with getting help with your debts, and if we can help, we're happy to do that.

My husband and I almost got trapped by a debt settlement company too! We have signed all the papers and were already feeling the relief. Feeling like finally an answer to our prayers. We even signed an auto debit for them to take $400/mo which is a way lower than what we used to pay for minimum payments for our cards. After we were done with the "legal" papers they sent me an email that has instructions of what else to do. I don't remember reading the rest of the instruction because as soon as I read their #1 instruction CHANGE ALL YOUR PHONE NUMBERS, I phoned them right away to cancel our transaction. I felt uncomfortable, that if all these were legal why would we have to change our phone numbers when you said that collection calls will be taken care off by the company? Why the need to change the number? So of course they said I have to sign and send the cancellation form by mail. When we were able to do paperwork electronically beforehand. They said if they receive the letter before the date that they were supposed to take the money from my bank then no money will be drawn out of our account. But if they received it after they will refund it back to me. I made a stop payment from my bank just to make sure they won't take anything anyhow. Just to be sure. While waiting we came across Consumer Proposal and that is what we resorted into thank goodness. No phone calls, no garnishments and I can say my husband and I have learned a lot from our financial experience.Don't jump into quick fixes right away. Go the for sure legal way.

almost trapped too but got out in time! Sounds exactly like what I almost did, described to a tee! Long story short, we resorted to Consumer Proposal as there is no "real" alternative. Please everyone! don't fall victim to these sickening and repulsive excuses for human beings! If you do a little homework, it won't take you long to figure it out.

I am just curious as to what company you were dealing with, as I am currently signed on with one, and would like to avoid any future mishaps before things become worse for me. Much appreciated!

Hi I would like to add there are more problems than what I have read with these debt consolidated companies. I have successfully gone through a payment program . I learned things that I could write a book about and it would surprise people including government agenies. The people who need these programs which is better than a bankruptcy or a consumer proprosal (you are paying the whole principle plus some interest and sometimes insurance on some of your accounts) are people who are vulnerable and easily taken advanage of by these credit consolidated companies. My advice would be to get everything in writing, monitor your credit score and reports, keep all documents, be diligent with Equifax and Trans Union in making sure that the reporting by the credit agencies is correct throughout the program as it is often times not the case.

I AM CURRENTLY WITH THE ABOVE RE; SOME OF MY DEBTS AND HAVE BE WONDERING ABOUT THEM AND WHAT THEY ARE DOING FOR ME ; I SEND THEM MY PAYMENT ONCE A MONTH; BUT I GET VERY LITTLE FEEDBACK AS TO WHERE I AM ON MY DEBT CEILING? WHAT SHOULD I DO , I DO PHONE THEM WITH SOME HELP BUT NOT QUITE ENOUGH.

For a number of reasons, we try not to comment on any company specifically. However, here’s a bit of context. When the United States and various Canadian provinces tightened the rules on debt settlements and effectively forced most companies out of the business, studies and practical experience showed that debt settlements workout as advertised for around 1% - 2% of people and up to 10% seem to have possibly benefited from the service. Since that time, only lawyers have been allowed to continue with the debt settlement business model that has been banned for everyone else. We don’t know what the stats are right now with lawyers in Canada. We can only hope that they are properly screening everyone and only putting people on their programs who are the right fit. If you’d like a second opinion to make sure the right thing is being done for you, we’d suggest that you make an appointment to speak with a local non-profit credit counsellor who has an office located near you. They can look at your entire financial situation and objectively (because they don’t get paid extra for any decision you make) tell you what your best options are and whether the program you’re on now appears to be one of your best options.

after 3 years of paying on time I am now getting regular harassing phone calls from a collection company, my wages will soon be garnisheed and the lawyers cannot be found. ( a senior with a poor future)

Hi Raymond, We're very sorry to hear that this has happened to you. Our best suggestion at this point would be to contact a local non-profit credit counselling organization and see what your options are to get out of this. They may be able to help you, but if they can't, they can refer you to a reputable insolvency trustee in your area. If you want to prevent others from suffering the same thing you have, you could consider filing a complaint against these lawyers with the bar association in your province (with enough complaints, a lawyer can be disbarred). You could also consider filing a complaint with the Better Business Bureau and posting an online review about this company to warn others.

Today i got call from canadian customer debt relief company they do all the same things like checking credit rating debts and collected all personal information i gave thrm Too i was looking for their reviews on google but didn’t find anything now i want to cancel all my agreement nd pre authorized payment deduction and need more information regarding this please help what should i do now?

Our best suggestion would be to go over your situation with a non-profit Credit Counsellor. They'll help you figure out the best course of action for your situation and then help you put together a plan to deal with your current situation and then move forward. You can find a local non-profit Credit Counsellor by contacting Credit Counselling Canada (a national association of non-profit credit counselling organizations). You can find someone near you on their website, https://creditcounsellingcanada.ca/ , or give them a call at 1-866-398-5999.