Many people who are drowning in debt will try almost anything to get back on their feet. Unfortunately, many companies are out there who seek out these unfortunate debtors and take advantage of them. As stated in a recent Global News article, these companies label themselves as “financial innovators but the Financial Consumer Agency of Canada (FCAC), is warning Canadians that these businesses generally charge fees and high-interest rates. Some of them over-promise, and some are misleading.”
It’s important to be cautious when looking for help with your debt.
One type of company that is popping up claiming they “help” people with poor credit scores are “credit repair companies”. They claim they will help you rebuild your credit score if you make timely repayments. They usually do this by lending money to borrowers through secured credit. Secured credit means that in order to borrow money, you need to give the lender money. For instance, if you want to borrow $500, you will need to leave $500 with the lender as a deposit. So it’s much different than a credit card. Secured credit isn’t used to receive a cash advance. It’s used to prove that you can make disciplined and timely payments, which in turn can help increase your credit score. An issue with this type of borrowing is that high-interest rates are usually associated with these loans.
Other companies that you may hear about if you’re in debt are companies who claim they can solve your debt problems. If you pay someone to negotiate with your creditors, there is a good chance you may just end up incurring more cost. Creditors have the right to say no and if so, not only will you still have your debt, but you will owe money to the “negotiator”.
Canadians need to know that “it’s impossible to change or erase information that’s part of your credit history unless information is inaccurate. Improving your credit score will take time. You have to show your creditors that your habits have improved and that you are paying back your debt on time,” FCAC stated.
If you’re struggling with debt, contact a licensed insolvency trustee. Licensed insolvency trustees are licensed by the federal government’s Office of the Superintendent of Bankruptcy. At Welker & Associates, we offer free, no-obligation consultations where we review all options with you and allow you to decide which option is right for you.
