Debt Settlement Agencies – Manitoba’s New Policy

by Cyndi Michalos Baker on February 7, 2012

Last Thursday the Province of Manitoba amended their “Consumer Protection Act” to include regulations around Debt Settlement Agencies. We have begun to hear a lot about these agencies  here in Ontario and have been working with clients who fell prey to their sales tactics.  I have included the entire article below for you . With enough complaints, perhaps Ontario will follow Manitoba’s lead…

February 2, 2012

REGULATIONS PROTECT AGAINST UNFAIR DEBT SETTLEMENT FEES: RONDEAU

Debt-settlement Agencies Must Now Be Licensed

Amendments to the Consumer Protection Act regulation have been made to protect Manitoba consumers by banning upfront charges, setting maximum fees and requiring debt-settlement agencies to become licensed, Healthy Living, Seniors and Consumer Affairs Minister Jim Rondeau announced today.

“We want to be sure that people already struggling with debt don’t find themselves paying large fees upfront with no guarantee the service will actually reduce their debt,” said Rondeau.  “Some consumers have found themselves worse off than before signing up for debt settlement.”

Under the debt-settlement model, consumers may be told to stop paying their creditors and put money aside in a separate account.  When the account accumulates a large enough balance, the agency will then attempt to persuade the creditors to accept a smaller payment than what is owed.  Debt-settlement agencies have claimed to reduce debt by a significant amount but there is no guarantee the creditor will take anything less than full payment, said Rondeau.

Under the new regulation, which comes into effect on Feb. 15, consumers can only be charged a fee if the creditor and debtor reach an agreement on reduced repayment.  The debt-settlement agency’s fee will be limited to a maximum of 10 per cent of the debt owed.  The new rules are based on Alberta laws that have been effective in addressing the need for consumer protection in debt settlement, the minister said.

Manitoba is committed to working to promote improved financial literacy through education and outreach initiatives, he added.  A variety of financial literacy education options are supported by the province including asset-building programs, financial management workshops and training, new elements of the high school curriculum and information resources.  Information on Manitoba’s financial literacy resources can be found at www.gov.mb.ca/finance/literacy/index.html.

For more help finding financial counselling and support to manage debt, contact the Manitoba Consumer Protection Office by email at consumers@gov.mb.ca or by phone at 204-945-3800 or 1?800-782-0067 (toll-free).

Improving options for debt management is a part of Let’s Make a Better Deal, Manitoba’s five-year plan for consumer protection.

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