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November 27, 2012
For immediate release
Consumers advised to contact government before signing with debt settlement companies
Environment, Labour and Justice
Islanders wrestling with debt should contact the Consumer Services division for advice before signing on with debt settlement companies, says Environment, Labour and Justice Minister Janice Sherry.
“The government of Prince Edward Island is carrying out a review of our regulations for debt settlement companies. While this is ongoing, we’d like to advise Islanders to be very cautious about dealing with companies that say they can negotiate a settlement to cut the amount of debt you owe,” said Minister Sherry.
The minister encouraged anyone struggling with debt to first contact government before dealing with debt settlement companies. The Consumer Services Section of Environment, Labour and Justice can advise debt holders of other options that are available and direct people to companies and services that can help.
“These companies are claiming that they can work out a deal with your creditors to pay back only a fraction of your debt. Remember, it is the creditor who will decide whether there is a debt reduction, not the settlement company,” said Steve Dowling, General Counsel of Consumer, Labour and Financial Service. “People often do not see the savings that debt settlement companies promise and many people have paid very high fees in return for very little, if any, help.”
“We also want to look at the role government can play in establishing practices and procedures for these companies,” says Minister Sherry. “Our interest is in protecting people who are approached by these companies at a time when they are financially vulnerable.”
Consumer Services has prepared a consultation paper and draft legislation that would guide operation of these companies within Prince Edward Island. Among other restrictions, the legislation prohibits the collection of large up-front fees before final settlements are reached with the creditors.
All interested persons are invited to comment in writing on our consultation paper, available at www.gov.pe.ca/consultations.
Consumer Services can be contacted at 368-5653 or 1-800-658-1799.