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Recent Money Matters Articles
Consumer Protection Suspends License, Freezes Accounts
Options Credit Services Canada Ltd a BC licensed debt settlement company is in the news again. On Dec 5 2013 the BC Consumer protection Agency suspended the license of the company and seized the bank accounts associated with the company. Options Credit Services,
Financial troubles and collection agencies or harassing creditors seem to come together in hand in hand.
There is nothing worse than being harassed or hounded by creditors or collection agencies, they call at work, they call at dinner, they disrupt your life. There are horror stories of collection agencies stocking people, showing up at their home in the middle of the night or even at their place of work.
The first step in bringing an end to the fear of collection calls is to understand your rights and your options.
There is a difference between a collection agency and a creditor. You should always deal with your creditor if possible.
What is a creditor- An individual or business who gave credit to a debtor, which has not been repaid, there are 2 types of creditors – Secured Creditor and Unsecured Creditor.
What is a collection agency- A collection agency is a business that obtains or arranges for payment of money owed to either a person or a company. When you have an account with a business that is “past due” or in default, the business may sell your account or turn your account over to a collection agency.
- Keep a log of who calls, time and date of call, name of person that is calling and what is said by them and by you
- Stay calm and be polite and be honest
- Do not make promises you can not keep
- Ask questions:
Will the creditor reduce or eliminate the interest on the debt?
Can the creditor reduce the outstanding amount owing?
Will the creditor extend the timelines to repay the debt?
Can the creditor remove the account from the hands of collections?
There are very specific laws that dictate how debt can be recollected and regulate how collection agencies operate in Canada. National and provincially the laws vary and can be researched in depth at the following agencies.
Understanding your rights is an important first step. Here are helpful links for every province and our federal consumer protection agency, each agency has a process to file complaints against unlawful collection tactics.
Canada – Industry Canada
Alberta – Alberta Fair Trading Act
Manitoba – Consumer Protection Act
Saskatchewan – Consumer Protection Act
Newfoundland – Department of Government Services
Nova Scotia – Service Nova Scotia and Municipal Relations
Nunavut – Community and Government Services
Northwest Territories – Municipal and Community Affairs
Dealing with your creditors is the most important factor – Ignoring the issue like an ostrich is a foolish short term reaction, not a solution.
You do have many options
Finding the solution that suits your specific situation is important. There is no one size fits all solution to debt repayment, being proactive and talk to a good professional will get you on the right track.
Offering less borrowing power against their home, Canadians face fewer options to pay off debt.
The government announced on June 21 2012 it will reduce the maximum amortization period for a government-insured mortgage, lowering it from 30 to 25 years, and also drop the upper limit that Canadians can borrow against their home equity from 85 per cent to 80 per cent.
A far cry from the CMHC rules of 2006, which allowed insurance for 40-year-amortizations, when it also moved to provide mortgage insurance on 100 per cent financing.
All these changes are sparked by the continued indebtedness of Canadians, which sits at a staggering 152 % of their income and growing.
Protecting Canadians from their spending habits the government has changed the rules 4 times in 4 years. Cutting the mortgage duration which stood at 40 years in 2008, dropped to 35 years, then dropped to 30 years and now stands at 25 years. Many of the changes are specifically tied to high ratio, government insured financing.
Refinancing and leveraging properties to a maximum of 80% of their value will form a barrier to prevent Canadians from over extending their credit. As many Canadians struggle to meet their payment obligations at historically low interest rates, the fear of financial destruction will become reality when interest rates rise.
For Canadians using a yearly influx of equity loans, to pay off their debt. That door has now been slammed closed.
We suspect this new cap on home equity borrowing will force many Canadians to face the reality of their spending and debt.
Good people have unfortunate events in their life. Getting back on your feet and rebuilding your financial life is possible.
Here is a helpful 5 step approach to rebuilding credit after bankruptcy or a consumer proposal.
Courtesy of Sands & Associates.