Frequently Asked Questions

About Debt

What is the Collection Agencies Act?

The Collection Agencies Act regulates the practices of collection agencies and holds them accountable for their actions. The act states that you must be notified in writing that you have a debt to be collected or if any legal action is going to be taken to collect a debt. Collection agencies may not contact you in any way that may be perceived as harassment. They may not call you on Sundays or before or after specific hours on statutory holidays. When contacting you, collection agencies must disclose the bank or company that originally held the debt that you owe. Collection agencies are not permitted to contact friends or relatives of yours unless there are provisions on the account that state otherwise. It is very important that you know your rights when dealing with a collection agency. It is also very important that you communicate your situation with your creditors and/or the collection agency. If you have made attempts and you are getting nowhere, contact your local government to file a complaint if the agency is not adhering to the law and then contact Consolidated Credit Counseling Services of Canada, Inc. by calling 1-800-656-3920 for additional assistance.

Is a home equity loan a good way to pay off credit card debt?

Credit card debt is unsecured debt, meaning there are no assets backing it up that the lender can come after if you fail to pay what you owe. But a home equity loan is secured debt and your home is the collateral. If you don't pay according to the terms of the loan, the lender can seize your home as a way of obtaining payment.

You can put yourself in jeopardy with Home Equity Loans and Home Equity Lines of Credit if a job loss, illness, divorce, death in the family, or other event makes it impossible for you to make the loan payments. The lender can then force you to sell your home in order to repay the loan. Also, if you do sell the home, you may not get what you owe on it, depending on market circumstances.

The bottom line is you should not use your home as a bank to fund your lifestyle or mend poor financial decisions you may have made. When you use your home as collateral for a loan to pay off other debt, chances are high that you will get right back into debt with additional purchases, putting your home at risk. Consolidated Credit offers you a better way, simply because we also educate you on how to control your spending and manage your budget.

What is unsecured debt?

An unsecured debt is debt that a creditor holds without collateral, so they cannot take back anything if the debtor fails to pay. For example, a house or car is a secured debt because it is used for security and can be repossessed if payments are not made. Examples of unsecured debt would be credit cards, department store cards, signature loans, personal loans and cellular phone bills.