Will New Ontario Debt Settlement Laws Protect Consumers?

KITCHENER, ON, June 8, 2015 /CNW/ - On July 1, 2015 provisions of the newly renamed Collection and Debt Settlement Services Act become law in Ontario. 

Prior to this new law, debt settlement companies could charge significant up-front fees without ever negotiating with the debtor's creditors, and as a result many Ontario consumers paid significant fees and received no benefit.  Under the new laws fees will be capped, and up-front fees are prohibited.  Will this help consumers?

"I believe a consumer proposal, legislated by federal law and legally binding on all unsecured creditors, is much more powerful than an informal debt settlement," said Douglas Hoyes, a trustee with Hoyes, Michalos & Associates Inc. "Consumer proposals offer instant legal protection from creditors, a protection which is simply not available in a debt settlement" says Hoyes.

"Creditors are much more willing to consider a reasonable consumer proposal because they know if they don't the debtor will likely file bankruptcy" says Ted Michalos, a trustee with Hoyes, Michalos & Associates Inc.  "That's why most consumers prefer to deal with highly educated and experienced trustees, as compared to debt settlement salespeople who have no educational requirements."

"The new laws may help, but I believe the most significant benefit of the new legislation is that it will increase awareness of all options available to consumers to deal with their debt" concludes Hoyes.

An unintended consequence of the new law is that collection agencies can now offer debt settlements, which may put them in a conflict of interest position if they are collecting on behalf of many creditors.

Full details, including links to the new legislation, are available at http://www.hoyes.com/blog/will-the-new-debt-settlement-law-protect-consumers/

About Hoyes, Michalos & Associates, Inc.

Hoyes, Michalos & Associates Inc., a consumer proposal and trustee in bankruptcy firm with offices throughout Ontario, helps people in financial difficulty.  Further information is available at www.hoyes.com

KEY SURVEY FINDINGS- JOE DEBTOR

Average Unsecured Debt $56,545






Senior Debtor (60+)




Unsecured Debt


$69,031


Male


58%


Female


42%


Payday Loan


$3,693


Easy Instalment Loan


$3,749




Lone Parent Debtor




Unsecured Debt


$52,928


Male


25%


Female


75%


Payday Loan


$2,638


Easy Instalment Loan


$3,412




Student Debtor




Unsecured Debt


$48,414


Student Debt


$13,818


Male (Student Debt)


40% ($12,431)


Female (Student Debt)


60% ($14,748)


Payday Loan


$2,461


Easy Instalment Loan


$2,894




Payday Loans 




Average Payday Debt


$2,749


Number Loans


3.5


Average Loan Size


$794




Easy Instalment Loans  




Average Total Debt


$3,608


Average Loan Size


$3,346

 

More data available at:
http://www.hoyes.com/press/joe-debtor/

Additional graphs and images available here:
http://www.hoyes.com/press/joe-debtor/media-graphics/

SOURCE Hoyes, Michalos & Associates Inc.

For further information: Douglas Hoyes, CPA, Trustee in Bankruptcy, doug@hoyes.com; Ted Michalos, CPA, Trustee in Bankruptcy, ted@hoyes.com; 1-866-747-0660

RELATED LINKS
http://www.hoyes.com

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