Having trouble paying your bills? You've probably heard the radio ads promising you relief -- but not all debt settlement programs work for everyone.
Andres Londono is like many Canadians with credit-card debt. He'd like to get rid of it, and he wondered about claims from debt settlement companies promising an easy way out
"A lot of times it seems too good to be true; you owe $10,000 and you pay $4,000," Londono said.
And when he phoned, they seemed more interested in signing him up than addressing his specific needs
"Right off the bat they are saying, this is the best program for you," he said.
Scott Hannah of the Credit Counselling Society is worried about American companies that are now heavily advertising here.
"We certainly feel a sense of responsibility to inform consumers to be careful who they turn their money over to," he said.
CTV News looked over one of the programs. You pay more than a $1,000 to the company up front, plus monthly fees. You stop paying your bills and instead put that money into what is called a "debt pooling" account to offer to creditors months down the road.
The hope is by that point your creditors will be happy to accept any amount you offer, like 40 cents on the dollar. But there is no guarantee they will accept the offer.
Under B.C. law, debt poolers need a licence. Money must be held in a trust account and consumers need to sign a contract. Debt poolers may charge an administration fee, monthly fee, cheque fee and a statement fee.
While B.C. has licensed debt poolers, Scott Hannah says the companies he's worried about are not licensed. He's asked Consumer Protection B.C. to investigate.
"We believe that people are at risk and have no recourse if problems arise,"
So why are they targeting Canadians? Turns out that back in October, the U.S. Federal Trade Commission banned these companies from charging any fee until they successfully negotiate a settlement. Canadians don't have that protection.
The Better Business Bureau has received over 300 inquiries and has a warning for consumers.
"Just because they are offering to make a settlement on your behalf doesn't mean your creditors will accept this settlement," the BBB's Simone Lis said.
Londono is going to get some debt counselling with the B.C. Credit Counselling Society to review his options.
With a report from CTV British Columbia's Chris Olsen