Debt Consultants or Licensed Insolvency Trustees: Who To Trust?
Debt is a serious problem for many Canadians.
Just take a look at the statistics.
As a nation, we carry a staggering amount of non-mortgage debt.
Indeed, the average Canadian household owes over $20,000 in debt and around 15% of all their disposable income goes towards debt repayments.
Of this, a staggering 7.1% is dedicated to interest alone.
While many credit cards come with appealingly low interest rates at first, they can quickly climb when the introductory period ends.
As debts pile on top of one another, they can get harder to manage and interest rates can spiral out of control.
When this happens, Canadians can grow desperate to relieve their debts and make them more manageable.
Yet, while there are many ways in which they can do this, desperation and a lack of understanding can cause them to look for help and support in all the wrong places.
Thus, many desperate Canadians are driven into the arms of unlicensed Debt Consultants.
This can see them waste a fortune in unnecessary fees and introduce an unnecessary middleman.
Here, we’ll look at the difference between a Debt Consultant and the person you should be dealing with… a Licensed Insolvency Trustee.
What are Licensed Insolvency Trustees?
Licensed Insolvency Trustees are the only professionals who can help you with every available debt relief and management option when your debts spiral out of control.
They’re also the only professionals who are also licensed by the Canadian Government (specifically The Office of the Superintendent of Bankruptcy).
A Licensed Insolvency Trustee is vital in providing you with the information you need to find the right debt relief option.
They’re also necessary to facilitate certain debt management solutions.
For instance, you cannot file for Bankruptcy without the aid of a Licensed Insolvency Trustee.
As well as making sure you make an informed decision that it’s the best option for you, they will support you in meeting all of your obligations within the first 9 months of filing.
This prevents your case from going to Bankruptcy Court (where creditors may be given a change to dispute an automatic discharge of your debts).
A Licensed Insolvency Trustee also assists by arranging mandatory credit counselling sessions.
These help prevent you from making the same mistakes again by identifying where things went wrong with your finances, and providing realistic strategies to help you better manage your money and reduce your reliance on credit.
A Licensed Insolvency Trustee can help with more than just Bankruptcy.
They can also help to facilitate Consumer Proposal by acting as a Proposal Administrator.
You find out more about the difference between Bankruptcy and a Consumer Proposal here.
A Consumer Proposal allows you to write off up to 80% of your principal debt and eliminate interest payments and charges.
Your Proposal Administrator takes stock of your income, assets and circumstances and helps you put together a proposal that will be beneficial to you and your creditors.
As long as 51% or more agree to the terms of the proposal, all of your creditors are legally bound by it.
Whether they voted in favour of it or not.
What are Debt Consultants?
Unlike Licensed Insolvency Trustees, Debt Consultants are completely unlicensed.
There are no federal licensing or educational requirements necessary to set up shop as a Debt Consultant.
Their services are completely extraneous.
All they really do for their fee is put you in touch with a Licensed Insolvency Trustee.
Some won’t even bother to do that much of the paperwork for you.
Unfortunately, many Debt Consultants spend big money on SEO.
So that when you’re looking for debt relief advice, their page is one of the highest ranked.
So many debt-plagued Canadians go through these unnecessary intermediates simply because they don’t know any better.
Are Debt Consultants the same as Credit Counselling services?
Credit Counselling services are usually non-profit entities (although there are also some private companies that offer this service).
Credit Counselling services aren’t licensed to facilitate the same debt relief and management measures that a Licensed Insolvency Trustee can offer.
All they can realistically do is help you to set up a Debt Management Plan with your creditors.
However, this is not really appropriate for larget debts (over $10,000) or government / CRA debts.
Why Debt Consultants can’t be trusted
Debt Consultants are not federally licensed, and as such you should be extremely wary of entrusting them with your financial wellbeing.
When you make contact with them, you will notice certain telltale signs that they cannot be trusted.
They will claim to offer the same services as a Licensed Insolvency Trustee.
But they will be distressingly vague about whom you’ll be dealing with, how their fees are structured or exactly what you’re getting for your money.
Worse still, some of them will charge an upfront fee for a consultation.
This should be a serious red flag.
Ultimately, they’re trying to get you to pay a fee just to set you up with a Licensed Insolvency Trustee.
Something that you can do right now, for free, by clicking here.
We’re here to help!
We’ve been helping Canadians from all walks of life to find the right debt management solution since 1999.
We’ll never, ever charge you an upfront fee for a consultation, or charge you a consultation fee to put you in touch with a Licensed Insolvency Trustee.
To find out more, or to schedule a completely free, confidential and no-obligation callback, give us a call today on (877)879-4770.