Thank you Minister Rondeau - It's Time

February 2, 2012

REGULATIONS PROTECT AGAINST UNFAIR DEBT SETTLEMENT FEES: RONDEAU

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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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Don't fall for fraudulent claims

November 7, 2011

MANITOBA CONSUMER PROTECTION OFFICE ISSUES CAUTION ABOUT DEBT-REDUCTION CLAIMS

The Manitoba Consumer Protection Office is warning consumers to be cautious in dealing with companies that say they can reduce total debt to less than what is owed, sometimes by as much as 60 per cent.  This promise is tempting for consumers who are struggling with household debt, but in some cases consumers can end up owing even more money.
Debt-settlement agencies tell consumers to stop paying their creditors and put money into a separate account until they have saved a larger amount.  Then, the debt-settlement company says it will negotiate with creditors to reduce the total amount owed.
Up-front fees charged by some debt-settlement companies can be significant and are not refunded if negotiations with creditors are not successful.  Consumers may continue to receive calls from their creditors and collection agencies even after they have paid a significant amount of money to a debt-settlement agency.
Consumers thinking about using a debt-settlement agency should know:

• Creditors do not have to negotiate with debt-settlement agencies and may refuse any offer made.
• If minimum payments on debts are stopped, creditors may charge late fees and interest, or take other actions against consumers.
• Debt settlement may take years.
• Any unpaid debt will affect a credit rating for years.
• For-profit debt-settlement agencies do not have to provide any credit counselling.
• Financial counselling is available from financial institutions and non-profit credit-counselling agencies.

Debt-settlement agencies are contacting Manitobans directly and through advertising.  The services of debt-settlement agencies are not government programs.  For questions about debt-settlement agencies or help finding financial counselling support, contact the Manitoba Consumer Protection Office at 204-945-3800 or 1-800-782-0067 (toll-free) or by email at mailto:consumersbureau@gov.mb.ca.