CREDIT CLINIC: Things to consider before taking a dip in the debt pool

Jake has three credit card debts totalling $20,000.  He can no longer keep up with the payments, and is considering bankruptcy.

He sees an ad for a service that says it can reduce his debts and set up one affordable monthly payment.  Sounds great, but is it too good to be true?

The ad Jake saw is for a “debt pooling” service.  A debt pooler accepts payments from you and distributes it to your creditors based on an agreed upon repayment program.

A debt pooler will typically offer to negotiate a reduction in your debt and/or interest. Keep in mind that this service is not free – a debt pooler usually charges various fees, including a set up or administration fee as well as a monthly fee.

Debt pooling is a legitimate industry.  However, difficult economic times have also made it a new angle for scam artists who target vulnerable people desperate for financial help. If you are considering using the services of a debt pooler, consider the following.

Make sure the debt pooler is licensed.  Any debt pooler operating in B.C. must be licensed with Consumer Protection BC. To find out if a particular service is licensed, contact Consumer Protection BC at 1-888-564-9963 or do a license search on their website

Consider whether debt pooling is right for you. You must have some extra income each month to put towards your debts, and be willing to do so for an extended period of time.

You may want to talk to a non-profit credit counselling service before going ahead with a debt pooling agreement.

Shop around. Ask about your responsibilities and what the debt pooler can do for you, and get it in writing.

Compare fees. Make sure you feel comfortable with the debt pooler, as it may take some years to complete the repayment plan.

Read the contract carefully before signing. In B.C., a written contract is required between the debt pooler and the consumer. Considering taking the contract home so you can read it without feeling pressured to sign on the spot.

Know the law. In B.C., debt pooling is regulated under the Business Practices and Consumer Protection Act.

Consumer Protection BC has an excellent article on its website that summarizes some of the law around debt pooling.

Give them a call if you have particular questions or concerns.

Amy Taylor is Coordinator of the Kootenay Boundary Credit Clinic, a project of Castlegar & District Community Services. The Clinic provides free information and workshops about debt, credit and money management.  Call 1-877-565-0013 or go to for more information.

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