Debt-relief warning signs: questions to ask before you sign

Translate the promise into a specific service

“Debt relief” describes an intended result, not a single product. An offer might involve a loan, budgeting help, settlement negotiations or a formal insolvency process. Ask the company to name the service and explain how it works from beginning to end.

FCAC's guidance on debt settlement companies explains that creditors do not have to participate in settlement negotiations. A company may charge fees even when creditors reject an offer. That makes the details of the service more useful than a headline about reducing debt.

Write down what the company says it will do, what you must do and which decisions belong to someone else. If the explanation remains vague after direct questions, pause before sharing more information or signing an agreement.

Ask what supports an advertised outcome

A percentage reduction, low monthly payment or quick completion date needs context. Ask whether the figure is an illustration, an average with a disclosed basis, or a proposal tailored to your verified information. Ask what debts, costs and circumstances are excluded.

Then test the promise with concrete questions: “Who must agree to this?” “What happens if they refuse?” “What could increase my total cost?” “What would I owe if I stop?” A meaningful explanation should address uncertainty as well as the attractive outcome.

Be particularly careful when an assurance about legal protection appears in a sales conversation without a clear explanation of the legal process involved. Do not assume a company's willingness to handle calls means creditors have lost the ability to take action. Ask a qualified professional to explain the position before relying on it.

Follow every payment from you to its destination

Ask for a written breakdown of upfront charges, monthly charges, optional services and money intended for creditors. Find out who holds each amount, when it is passed on and what records you receive. A single payment can contain several different purposes.

In a hypothetical offer, a $400 monthly withdrawal could be described as a “debt payment” even though part pays service fees. Before agreeing, ask how much would reach creditors each month and whether unpaid interest or charges would continue elsewhere. The example is a question to investigate, not a statement about a particular provider.

• Which company receives the money?
• What service does each charge buy?
• Are fees payable if no creditor accepts?
• How can you verify payments reached the creditors?
• What happens to money being held if you cancel?

Keep the answers with the contract, not only in your memory of a call.

Ask whether any advertised “approval” is from the company itself, a lender or your creditors. Those decisions have different meanings. Keep a copy of the written approval and check which conditions remain before treating the arrangement as confirmed.

Check the provider independently

For a claimed Licensed Insolvency Trustee, use the official active trustee directory. Confirm the name and contact details before relying on a badge, review score or statement that a company “works with” trustees. A relationship described on a website is not proof of the caller's own licence.

The OSB warns about unnecessary fees for debt-help services. Ask whether you can contact the relevant professional directly and what, if anything, an intermediary adds. Being introduced to another provider should not leave you uncertain about who is responsible for the assessment.

Check the entity named in the agreement against the one you thought you contacted. Ask about any other company that will receive your information, charge you or contact you afterward. Record the answer before providing sensitive documents.

Do not let pressure replace review

The government's debt-relief scam warning identifies unrealistic promises and pressure as reasons for caution. A limited-time sales offer is different from a genuine deadline in a court or creditor document. Confirm the source of any urgency before acting on it.

Request the full contract and time to read it. Review cancellation terms, consent to share information and any authority to act for you. If you do not understand a clause, ask for an explanation and consider independent advice.

Do not follow instructions to hide information from a professional, misstate income or ignore legal documents. Bring the instruction itself to a qualified adviser. Likewise, ask for case-specific guidance before changing creditor payments because a salesperson says that doing so will improve negotiations.

If you have already agreed or paid

Gather the agreement, advertisements, receipts, messages and a timeline of what happened. Check your creditor accounts directly through verified channels to see whether the expected payments have arrived. Separate a service complaint from an urgent account or legal deadline so neither is overlooked.

Contact the provider in writing with the specific issue and the resolution you are requesting. Ask the relevant provincial or territorial consumer affairs office about complaint routes and applicable contract rights. If you suspect fraud, use official reporting channels and speak with your financial institution about any immediate account concerns.

Before buying another service to fix the first, obtain an independent assessment. A useful next step may be a verified LIT consultation, credit counselling or legal advice, depending on the problem. Keep the decision focused on evidence: who is responsible, what is promised in writing and what has actually happened to your money.