Owing pains

Bruce Sellery says a promise is meaningless until it’s written down. Unfortunately some of us learn this the hard way.

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Question

I went through credit counseling a few years ago. All my creditors reduced their interest rates and I was able to pay them off in a timely manner, or so I thought. My credit counselor had a verbal agreement with my credit card provider to reduce the interest rate on my outstanding balance from 18% to 11%. Last year I was left some money in a Will so decide to put it towards my debt. I called to get the balance on my credit card and I was told it was $2,300. I paid that in full and thought I was finally done. A few months later I got a call from my credit counselor saying that the credit card company claimed I still owed them $1,900 because the interest rate was never lowered as agreed. I’ve been on long-term disability for more than two years now, I’m on a tight fixed income and don’t know how I’m going to pay them back. Is there anything I can do?

Answer

As the saying goes hindsight is 20/20. And you now know that a verbal agreement isn’t sufficient when it comes to dealing with creditors. But that lesson provides you no relief from your outstanding debt and your beef with your credit card provider. That being said, there are still things you can do.

1. Ask the credit counselor to intervene

Your first step is to get back in to see your credit counselor and ask them to investigate what happened. They request that the verbal agreement to lower the interest rate be honoured, plus they will outline the circumstances of your disability and confirm that you have followed through and paid all of your other debts.

It is important to remember that while the credit counselor may be able to help, the buck stops with you. “The client is ultimately responsible for any agreements they have executed,” says Jeffrey Schwartz is the executive director of Consolidated Credit Counseling Services of Canada. “These include the credit counseling services agreement and any creditor agreements.”

If for some reason you don’t feel like you can go back to the original counselor then consider finding another one to look at your situation.

2. Work with the credit counselor to develop a new repayment plan

Issues like the one you’re dealing with are rare, but they do happen. Schwartz says that a credit counselor will be able to investigate your situation to find out where the error occurred. From there, the counselor can to determine what your situation would look like today if the error wasn’t made. “If there was an outstanding balance we would work out an affordable repayment plan by creating a budget based on their current financial situation,” Schwartz explains.

As you say, you are on long-term disability and your income is fixed. But credit counselors are used to working with people who have been dealt a less than ideal set of cards.

3. Consider lodging a complaint with an Ombudsman

This issue has taken up so much of your energy already, but it may be worthwhile to contact the credit card company directly, especially if your efforts with the credit counselor don’t resolve the issue.

The Financial Consumer Agency of Canada is the federal organization charged with “protecting and informing consumers of financial products and services.” According to their website, “All banks, retail associations and federal trust, loan and insurance companies must, by law, have a complaint-handling process in place for consumers.”

To find out what the process is for the company you’ve been dealing with, go to their website and type in the first few letters of the company. It will list the address and telephone number you need to get things going. Alternatively, you can just call the credit card company and ask for the office of the ombudsman. Be sure to write down when you called, whom you talked to, and what they said so you have a record of the process.

It may not be in your nature to pursue a complaint in this way. But while it will take some time on your part, but it might really help you get this issued resolved to your satisfaction.

ask@moneysense.ca

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