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May 27, 2013
For immediate release

Newly-approved legislation regulates activities of debt settlement companies

Environment, Labour and Justice

The Prince Edward Island Legislative Assembly has passed measures setting limits on debt settlement companies in the province, says Environment, Labour and Justice Minister Janice Sherry.

“By setting out a framework of unacceptable practices for debt settlement companies, these measures will allow beneficial groups to continue to offer assistance. This will curtail those companies which take advantage of financially vulnerable people,” Minister Sherry said.

Debt settlement companies act as mediators between people with debt issues and creditors seeking payment. In some cases this can be an effective way of dealing with debt, but occasionally customers have paid high fees in return for little help.

Recently approved amendments to the Collection Agencies Act include:

• limiting the amount of money that a debt settlement company may collect for acting for a debtor;

• prohibiting provision of false information about a debtor, including credit history; and

• banning collection of a fee from a debtor before the client and company have entered into the required written agreement.

The amendments raise the maximum fine under the Act from $1,000 to $1,500.

The new measures were developed after consultation with industry and the public.

“Debt can be a serious issue and there are groups that offer help with debt solutions. This new legislation should make it more difficult for unethical companies to lead people with debt issues into greater financial trouble,” said the minister.

Media Contact: Ron Ryder
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