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Protecting Your Rights: Collection & Debt Settlement Services Act

Ontario debtors should be aware of increased protection for them:

  • On January 1, 2015, the Ontario law, the Collection Agencies Act was renamed the Collection and Debt Settlement Services Act. Several new consumer protections are being added to protect Ontario consumers;
  • The new Act permits a licensed paralegal to represent the debtor and, in addition to a lawyer, a paralegal may send a registered letter to a collection agency asking them to deal only with the paralegal/lawyer;
  • On July 1, 2015, new amendments and regulations to the Act will provide more protection to debtors when dealing with debt settlement companies to protect them from unscrupulous ones;
  • The debt settlement company will not be able to charge a fee until the debtor begins making payments, other than a one-time fee of no more than $50, when the debt is settled in installments;
  • The total fees that the debt settlement company may charge will be limited;
  • Debtors will have a 10 day cooling-off period to cancel the debt settlement contract;
  • A mandatory cover page will be required on the debt settlement contract that outlines the debtor’s rights and contains certain required information; and
  • The debt settlement company will be required to indicate its name and registration number in its advertising.

Debtors should make themselves aware of their rights in regards to the collection of old, potentially statute barred debts, and what collections agencies can and cannot do in regards to collection of that debt.

The introduction of new Ontario legislation for debt settlement agencies or companies should also be interesting to anyone who is contemplating entering into one of their debt management programs.