There are a lot of parasites in sheep's clothing operating these days. They're mostly ex-collection agents who are still scum, but have decided to go about it another way. Here's how it works:
1. Settlement
A collection agency usually expects that you will settle for some amount. After they have successfully brainwashed you into thinking you're a bad person and that the billion dollar predatory lender they represent is the victim, they'll try and get blood from a stone. They'll start at 100% and work their way back, getting you to disclose all sorts of information (your employment situation, your wage, your assets) to them that you should never tell anyone, let alone tell an evil collection agency that represents your adversary in this contract dispute, all of which they will use against you. After they evaluate your financial situation, they'll put pressure on you to ask your family and friends for money, because the bank/Rogers needs money more than your grandparents, they think. Usually, they've bought your debt from the bank for about .25 on the dollar, which means anything over that they keep. So say, you owe $100,000, they bought it for $25,000 and will try to get an amount over that from you.
2. Debt Settlement Companies in Canada are Almost as Bad
This is where settlement companies come in. 99% of the time these companies are run by ex-collection agents who could no longer stomach themselves. Now the deal is that they will "represent you" by getting the collection agencies to settle. Here's the thing though, you don't need to settle, and if for some reason you want to, you don't need them. See the next section "How to Negotiate a Settlement on your Own". These "wolves in sheep's clothing" are essentially just friendlier collections agents. They'll tell you "Okay, you owe $100,000. What if I could get that down to $35,000?" It sounds like a good deal, but 1. you don't need to pay anything 2. The collection agent is making $10,000 off of you 3. (the worst part) is that these scumbags actually CHARGE you 50% of what they've "saved" you!!! Is in this example, you need to pay these bastards $32,500! They might be worse than a collection agent. Do not use debt settlement companies in Canada, they are a total scam. The worst part is that even if you do want to settle for some reason, you can settle for the exact same amount by dealing with the collection agency directly. Why you would ever do that is beyond me, but if you do decide that is the best course of action for god sake don't use a debt settlement company.
3. Canadian Credit Counselors
These guys are okay, but also not worthwhile. Their deal is that they stop the interest, and have you repay the FULL principle amount over a fixed period of time. Say 5 years. Your credit is already ruined at this point so it won't save your credit, in fact it will prolong the damage. See the section on credit bureaus for more information. Basically, 6 years after you stopped making payments the account that you defaulted on will disappear from your credit bureau. If you decide to make payments through credit counseling, it will show on your bureau for the 5 years you take to repay the debt, plus 6 years after that, so 11 years total. A settlement will disapear after 6 years, or the original debt will disappear after 6 years as well, so I don't see an advantage.
4. Consumer Proposal
This is probably the best route to go if you aren't just going to ignore it till it goes away. You'll need a bankruptcy trustee, and generally speaking they'll do what the debt settlement company would charge you tens of thousands of dollars to do, but they do it for "free". They're licensed by the government and will include their fee in your settlement. Do not use a debt settlement company under any circumstance. If you MUST settle, either do it yourself or use a Canadian bankruptcy trustee.
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