Many Canadians are trapped in the never ending cycle of paying off, and then racking up mountains of debt. Credit card interest rates, often looming around 28% or higher, do not help or motivate consumers who are trapped in the debt cycle. It should come as no surprise then that Canadians indebt are easy targets for the newest "debt settlement" scheme.

An Unwanted Import

As you have probably seen on TV, many American “debt relief” companies are advertising that for a low fee they can settle your consumer or tax debts on your behalf. Recently, you may have seen these advertisements aiming towards a Canadian audience – wonder why? Well, debt settlement agencies in the USA have been banned (by the US Government) from charging any fees until they successfully negotiate a settlement on behalf of their client.  Unfortunately, we don’t have this protection in Canada! Many of these companies will ask for money up front to settle your debts. While the company ‘negotiates’ over a long period of time, waiting for your creditors to become “desperate” for cash for your accounts, your credit rating could be damaged. If the company is unable to settle your debts, you could be out the up-front cash given to the company, as well as charged back interest by your creditors. Eventually, you could be forced into bankruptcy if you are unable to afford to repay the principle, plus the back interest charged by your creditors.    

Sadly, many Canadians have already been taken advantage of by these type of companies. So what is Canada doing to prevent this situation? The short answer is nothing – but stay tuned for further developments. 

For years, we at Credit Solutions have voiced our concern about large American entities (some that have been investigated by the US authorities) moving to Canada and “setting up shop”. Below are some ways that you can protect yourself and your family from being the next victim.

Some ways to protect yourself

If you are looking for a credit or debt help agency we recommend the following:

  • Check their license with the Provincial authorities, or, simply ask for a copy of it.
  • Check their website.  How long has it been a website? Look up who “owns” the site with Webnames.ca – it will tell you how long the site has been registered and who the owners of the site are.
  • Ask how long have they been in the Credit counselling business - not just how long have they been in business – they could have just changed their name from “Joes plumbing” or been a “shelf” company.
  • Who is the President – check out their background and verify their credentials
  • Verify the qualifications of the staff – do they have proper accreditations and licensing? Are they bonded?
  • Is their staff licensed? In British Columbia you check go to Debt Rights BC and review the license.
  • Do they operate a trust account?  If you have to keep money in your own account until they are ready for it -  why do you need them to help you?

Canadians can protect themselves through education – remember, at Credit Solutions we believe in Transforming debt fear into credit knowledge™. 

If you have made an agreement with a Debt Settlement company and have experienced an unfortunate or unforeseen situation please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. or 1.877.588.9491 ext.119.