Debt reduction companies may not do all they claim to do

 

The Financial Consumer Agency of Canada is issuing a warning to Manitobans to be wary when it comes to claims being made by debt reduction companies. 

FCAC spokesperson Julie Hauser says some companies are claiming they can slash your debt significantly - claims she says are not guaranteed.  Hauser says because of that, they've sent out a warning.

"We've put out an alert to consumers to warn them to be very cautious about companies that claim they can negotiate a deal to cut the amount of debt that you have to repay to your creditors.  In some cases, people are getting phone calls that say that they can have their debt reduced by 60% or even more."

Hauser has some questions people can ask if they are contacted by one of these companies.

"One of the things you should ask is about the fees.  Some companies will charge over $1000.  Another is whether there is any guarantee that your debt will be reduced as they say.  Otherwise, you could end up paying the fees and get nothing for it."

She adds if your debt is getting out of control, your best option might be a Credit Counselling Agency.  They usually don't charge fees for services and they are much more reputable, with a stronger track record.  At the end of the day, she says it all goes back to that old adage...

"If it sounds too good to be true, it probably is.  Take the time to check it out, don't agree to anything on the phone.  Do some research, ask questions, call them back.  If it is something you're interested in doing, take the time to find out and get your questions answered."

For more information or for some debt reduction tips, Hauser encourages people to check out the FCAC website.