Debt Settlement Companies to be Regulated!

Written by NEWS Friday, 03 February 2012 06:20

Amendments to the Consumer Protection Act regulation have been made to protect Manitoba consumers by banning upfront charges, setting maximum fees and requiring debt-settlement agencies to become licensed, Healthy Living, Seniors and Consumer Affairs Minister Jim Rondeau announced today.

“We want to be sure that people already struggling with debt don’t find themselves paying large fees upfront with no guarantee the service will actually reduce their debt,” said Rondeau.  “Some consumers have found themselves worse off than before signing up for debt settlement.”

Under the debt-settlement model, consumers may be told to stop paying their creditors and put money aside in a separate account.  When the account accumulates a large enough balance, the agency will then attempt to persuade the creditors to accept a smaller payment than what is owed.  Debt-settlement agencies have claimed to reduce debt by a significant amount but there is no guarantee the creditor will take anything less than full payment, said Rondeau. 

Under the new regulation, which comes into effect on Feb. 15, consumers can only be charged a fee if the creditor and debtor reach an agreement on reduced repayment.  The debt-settlement agency’s fee will be limited to a maximum of 10 per cent of the debt owed.  The new rules are based on Alberta laws that have been effective in addressing the need for consumer protection in debt settlement, the minister said.

Manitoba is committed to working to promote improved financial literacy through education and outreach initiatives, he added.  A variety of financial literacy education options are supported by the province including asset-building programs, financial management workshops and training, new elements of the high school curriculum and information resources.  Information on Manitoba’s financial literacy resources can be found at www.gov.mb.ca/finance/literacy/index.html.

Budgeting

Written by Margaret Johnson Wednesday, 18 January 2012 07:53

Shelter

The shelter expense for family budgets is one of the most misunderstood categories of all. Why? Because we are told we have total control over the choices available.

The first and second issues are inseparably linked: availability and affordability.

Availability

Where do you live?  Actually, the questions is, “What geographical location do you reside? Are you in a remote community, a large urban centre, a rural setting? These situations dictate price and availability.

In larger urban centres there may be appear to be more choices but vacancy rates determine availability as market conditions (supply and demand) affect house prices.

In other words, urban centres tend to be more complicated. Where you live may depend upon the need for schools, access to public transit or the worksite.

Now that we are finished this short summary of issues we do not fully control, we move on to affordability.

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The 5 Year Lock-In is Back

Written by Margaret Johnson Wednesday, 18 January 2012 07:19

 The Bank of Montreal’s January 12^th 2012 media-attracting announcement of 2.9% interest for a 5 year mortgage sent a few shivers up and down my central nervous system. Why? Because I remember all of those locked in mortgages in the early 1980s – where people rushed to get locked in at extremely high rate mortgages at 18% or more because of fear.

Fear is a great motivator. Especially when it is disguised as a great opportunity to protect yourself from something bad like interest rate hikes – just lock-in now for 5 years.

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