Ontario Debt Rules

MNP's TAKE: Finding yourself stuck in what feels like a never ending cycle of debt can be overwhelming. With so many debt settlement companies across the country, offering 'quick fixes' to significant financial disparity, it's difficult to discern where to turn and who truly has your best interests at heart. 

Thankfully, Ontario is joining several other provinces across Canada, in implementing new rules that protect consumers from being sold ineffective debt solutions attached to costly price tags. While these changes will help mitigate risk for financially vulnerable Canadians, it's still incredibly important to do your research when trying to decide which organization will recognize your financial needs while presenting all of the options available to you. We recommend seeking out federally regulated trustees. In addition to being a qualified debt advisor, a bankruptcy trustee in Canada is a person, licensed by the federal government, to administer your bankruptcy or consumer proposal. The role of the trustee is to help you understand your options, review your situation to advise you on the best course of action, prepare the necessary paperwork and complete the process from start to finish- allowing you the fresh start you need to rebuild your credit and start working towards your financial objectives. 

To learn more about what debt solutions are available to you and how you can come up with a customized strategy to manage your debt contact Grant Bazian, CIRP, Trustee and the CEO and President of MNP Ltd. at 778.374.2108 or grant.bazian@mnp.ca

BY CRAIG WONG FOR THE CANADIAN PRESS

OTTAWA - New rules in Ontario to better protect consumers from unscrupulous debt settlement companies come into force this week, but bankruptcy trustees says those in financial trouble seeking help still need to be cautious.

Trustee Doug Hoyes says unscrupulous companies that were taking advantages of borrowers in trouble have already closed up shop in anticipation of the new rules taking effect.

However, he says the new regulations set up a possible conflict of interest for collection agencies that will also be able to offer debt settlement services.

"It certainly opens the door for a different form of collection activity," said Hoyes, co-founder of bankruptcy trustee firm Hoyes, Michalos & Associates Inc.

"You're getting a phone call to collect your cellphone bill, and now you feel a lot of pressure because all of a sudden this guy on the phone also says you can deal with your other debts as well. What are you going to do?"

Ontario announced in 2013 that it would join provinces like Alberta, Manitoba and Nova Scotia in making changes to the rules amid increasing complaints about debt settlement companies including unclear or misleading contracts, high fees and a failure to reduce debts as promised.

The new rules that take effect Wednesday will not impact bankruptcy trustees who are already regulated by Ottawa and covered by federal rules that govern their conduct and what they can charge.

The new Collection and Debt Settlement Services Act replaces the Collection Agencies Act.

The rules put an end to upfront payments charged by debt settlement services other than a nominal amount and they place limits on the amount that can be charged.

Debtors also get a 10-day cooling off period during which they can cancel a debt settlement services contract with no reason.

However, Andre Bolduc, a bankruptcy trustee with BDO Canada, says the provincially regulated debt settlement companies aren't a replacement for federally regulated trustees.

"It is important for consumers to still do their due diligence, still do their homework, to do their research and make sure when they do get help that they get help from qualified individuals," he said.

Trustees are obligated to review all the possible options for clients up to and including a bankruptcy filing.

Bolduc said many of the clients he's seen in recent years first tried to get help from a debt settlement company before dealing with him.

"They spent a lot of money for no reason," he said. "Now hopefully maybe they'll come straight to us or they'll go straight to reputable credit counselling industry players."

 This article was written by Craig Wong and The Canadian Press from The Canadian Press and was legally licensed through the NewsCred publisher network.