Mar 19, 2013

The Vancouver Sun just released a story with a very startling introductory statement, “Lack of regulation in B. C. opens doors for national or international companies to abuse clients.”

This is very interesting. More on this later.

The article then quotes Blair Mantin, senior vice-president at Sands & Associates, a bankruptcy firm, who talks openly about people being hoodwinked by debt settlement companies. The victims, accordingly, include seniors, recent immigrants and families all owing more money after working with the debt settlement companies than before contacting them.

Debt settlement companies advertise and project an image they can quickly and easily negotiate a settlement on debts for a reduced amount– (for a fee.)

Most of the time, they are unlicensed (in BC) because current laws only require organizations that receive and disburse money on behalf of the debtor to be licensed like debt poolers (credit counsellors).

I have been asking for better regulations for many years for credit counselling because financial problems in general and debt problems in particular, exert intense pressure upon people that renders them vulnerable. Often people are desperate – this is what drives many to pawn shops, lottery kiosks, casinos and debt settlement companies.

People reach out during their moment of anguish to experts…they believe or want to believe there is a solution that will bring their impossible debt problems to a conclusion – and many of these people want to do the honourable thing – many individuals and families do not want to go bankrupt because they believe this is the easy or less than honourable way out. These attitudes accentuate their vulnerability if they should fall into the clutches of those preying on exactly such beliefs.

Debt settlement is a respected and important tool for helping individuals and families find a viable alternative to bankruptcy. The glossy-eyed advertising doesn’t mention that the credit industry will only look at taking a significant loss on their accounts if the alternative, like a bankruptcy, is worse. In other words, people not only have to be insolvent before a creditor will entertain a lesser amount on their debt, they also have to be convinced that the debtor will go bankrupt or do something else that will produce a bigger loss than if they accept the settlement.

The credit industry will accept reductions on debts owed from respected credit and debt counsellors. However, they need to know the integrity of the credit counsellor or agency.

I applaud the other provinces that have taken regulatory steps to either outlaw up- front fees entirely, or limit them to a percentage of the debt that is actually settled by debt settlement companies.

However, I would prefer to see more standards with the licensing of credit counsellors – standards that would protect the public interest against poorly qualified people giving bad advice that potentially harms or ruins someone’s life.

I would like to see the acronym ‘debt pooler’ eliminated and replaced with the more accurate designation of ‘credit counsellor’. Then, debt settlement companies should be subjected to the same scrutiny, qualifications and licensing requirements of licensed credit counselling (debt pooling) agencies.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!


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