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Credit counselling and debt settlement services

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What fees are there with instalment plans?

If you choose an instalment plan, the credit counsellor or debt settlement company can charge you a one-time fee of $50 for setting up a payment plan for each creditor. In addition, they can charge up to 15% of each payment they make to your creditors.

They are not entitled to their 15% fee until at least one payment has been made to the creditor. The debt settlement agreement must tell you how much the credit counsellor or debt settlement company is charging for each payment.

Example of instalment plan fees

Oscar owes:

  • $1,000 to Sears
  • $400 to Bell
  • $1,800 to the bank on a car loan

Oscar's instalment plan says he will pay:

  • $100 per month to Sears for 10 months
  • $40 per month to Bell for 10 months
  • $120 per month to the bank for 15 months

If he makes all the payments on time, the most the credit counsellor or debt settlement company can charge is:

Fee for settling up plans with each creditor $50 x 3 = $150
On payments to Sears:
15% x $100 x 10 payments
$15 x 10 = $150
On payments to Bell:
15% x $40 x 10 payments
$6 x 10 = $60
payments to the Bank:
15% x $120 x 15 payments
$18 x 15 = $270
TOTAL $630