Current as of

CanLaw can help CanLaw Lawyer referral service Good lawyers working for and with you




Some Credit "Counselling" Services Are Not Always What They Seem

Credit counselling is not a good solution for credit problems

Credit "Counselling" Services May Have Hidden Charges and Fees.


Credit Counselling vs

Bankruptcy or a Consumer Proposal


Mavis owed about $20,000.00 and could not pay. She went to a credit counsellor who sold her a bill of goods. Credit counselling is not a good solution for her credit problems.

She was counseled to consolidate her debts and pay them off over a period of ten years. The reason? Bankruptcy would make her credit rating poor for 6 years and if she paid off her debts, the credit card companies would consider her a 'nice' person.

Here it is, 4 years later and Mavis still is deep in debt and cannot afford Christmas presents or car insurance. She has another 5 years of living like this, thanks to the "counselling".

The Truth?

If Mavis had declared bankruptcy she would have been free of all debts within a year or so.

By now, her credit rating would be restored. Credit card companies would be offering her new credit because she would owe nothing and has had a steady job for the last 6 years plus assets acquired for the period of 6 years. A terrific credit risk!

The Reality of the Credit counselling?

Mavis will not pay off her debts for ten long years. When they are finally paid, she would not be a good credit risk, as she would not have any assets. Her kids will not be able to afford college or university and she will continue in the cycle of poverty.

Bankruptcy may not be a problem. It is a solution.

If it will take you longer than 2-3 years to pay off your debts, declare bankruptcy. You may have to anyway if you lose your job. After 6 years all is forgotten, meanwhile you can save your money, increase assets and live like a normal human being.

The credit card companies will line up like the vultures they are to offer you new credit all over again.


For more on this please refer to CanLaw's Guide to Bankruptcy Law





Debt settlement services will charge you a fee to help you negotiate a plan to repay your debts.


Debt Settlement is the latest scam which is in the same league as credit repair frauds and pay day loans











Watch out for debt settlement companies that:


  • say they can reduce your debt by 50% or more
  • charge large, upfront fees claim that if you work with them there will be no negative effect on your credit report
  • claim that their program is approved by the government
  • say they can get collection agencies to stop calling you


Always take the time to understand your contract.


Remember that some of these companies will charge a cancellation fee if you want to end your contract before the end of its term. They may also not refund any money that you paid them

Credit "Counselling" Agency at Centre of Embezzling Probe


POLICE: An investigation continues at Family Service Thames Valley


Police are investigating a possible fraud at a London credit "counselling" agency.

One staffer has been fired and about $39,000 has been returned to 51 clients and creditors by Family Service Thames Valley's credit-"counselling" division.

Executive director Warren Brooke, in a written statement, said: "discrepancies were uncovered" when the division -- the result of a 2004 merger with the former Credit "counselling" London -- began changing its accounting practices last fall.

The program is funded mainly through banks and other creditors.

At the time the "discrepancies" were found, agency employees managed a trust fund used to hold money from clients used to pay creditors.

"Client payments to us didn't get into the trust accounts," said Brooke, who apologized for any concerns or inconveniences.

"Our priority is to insure that all discrepancies are resolved as quickly as possible with minimal negative impact on clients and creditors," he said. "Funds have been returned to all clients and creditors as the discrepancies have been verified."


By JOE BELANGER Tue, June 24, 2009

Directory and Index for all of CanLaw

CanLaw Guide to the Law on Debt for the Layperson

Canada Trusts


On line Since 1996

Can't pay your bills? Need help?