The Worrying Truth About Unlicensed Debt Consultants
Debt can be scary.
It can distract us while we’re at work, and it can keep us lying wide awake late at night.
The more debts we accumulate, the more our debts weigh on our mind and potentially affect our physical and emotional health.
As the cost of living rises, and saving becomes increasingly untenable, many Canadians find that they have no choice but to pile new debts on top of old debts in order to cover unforeseen expenses.
Debt can make us feel extremely vulnerable, yet the prospect of reaching out to our creditors directly may seem scary to us.
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When we’re in this mindset, the idea of reaching out to a third party who can help to negotiate better terms with our creditors and give us the combination of practical advice and support is understandably appealing.
Just be careful whom you’re reaching out to.
The unfortunate truth is that trusting the wrong people may result in more than you bargained for and result in a lot of unnecessary expense and frustration.
Here we’ll look at where you should turn when you need help with your debts, and which parties should be avoided at all costs.
Understanding the key players
There are 3 main types of entity that help people with debt.
Some of them are run as non-profit enterprises while others are private companies.
They are broken town into three types:
Credit Counselling services are predominantly non-profit organizations, although there are also some private companies who offer this service.
When your debts get too much for you, they may be able to help by putting a Debt Management Plan forward to your creditors.
They can negotiate on your behalf to arrange more favourable rates of interest and help to consolidate several debts into a single monthly repayment to make them more manageable.
It’s important to note that a Debt Management Plan is a voluntary arrangement that creditors enter into of their own free will, and they can (at least in theory) opt out of it just as easily.
The services offered by Credit Counsellors may not be appropriate for those with large debts (over $15,000), numerous creditors or government debts like student loans or CRA debt.
However, they are generally a trustworthy and reliable ally who can help to make your debts more manageable.
Licensed Insolvency Trustees
These are the only professionals who are actually licensed by the Canadian Government.
Unlike Credit Counsellors, Licensed Insolvency Trustees can do more than simply put a Debt Management Plan to your creditors.
If you have significant debts and numerous creditors, the services that they offer you can be invaluable.
Not only are they the only people who can show you all of the options available to you, they are also instrumental in putting them into action.
It’s impossible to file for Bankruptcy without a Licensed Insolvency Trustee.
They can help you to meet all of your obligations within the first 9 months of filing so that your debts are automatically discharged and you do not need to go to court.
They also arrange for you to attend mandatory counselling sessions to help you to identify where things went wrong with your finances and teach you practical strategies to improve your finance and reduce your reliance on credit.
They may also recommend a Consumer Proposal which, for many, offers the best of both Bankruptcy and a Debt Management Plan.
You can see a how a Consumer Proposal stacks up against Bankruptcy here.
A Consumer Proposal can allow you to write off the lion’s share of your principal debt and eliminate interest payments altogether.
Unlike a Debt Management Plan it’s, also legally enforceable.
As long as the majority of your creditors (51% or more) agree to the terms of the proposal whether they voted in favour of it or not.
A Trustee acts as your Proposal Administrator.
They take stock of your assets and circumstances and use them to calculate a mutually beneficial proposal.
The third and final party is a Debt Consultant.
These guys spend a fortune on SEO so that their websites are prominently featured when Canadians consult search engines about ways to deal with their debts.
Trusting debtors then find themselves reaching out to these private companies and invariably find themselves worse off than if they’d enquired elsewhere.
Why you should be wary of Unlicensed Debt Consultants
For starters, there are no legal requirements to be a Debt Consultant in Canada.
Literally anyone can do it.
In fact, the only thing that they can do is refer you to a Licensed Insolvency Trustee (and charge a hefty fee for the privilege).
And by hefty, we mean around $2,000 for doing virtually nothing.
The Trustee then advises you of your available options and facilitate either a Consumer Proposal or Bankruptcy proceedings.
The Debt Consultants don’t even do any paperwork as this can only be carried out by the Licensed Insolvency trustee.
Is that even legal?!
There is completely legal to operate this kind of “service” in Canada.
And because so many of their clients don’t have a better understanding of their options they are none the wiser and may even leave thinking that they’ve gotten a good deal.
The good news is that most Licensed Insolvency Trustees want nothing to do with Unlicensed Debt Consultants and tend to give them a wide berth.
No bogus fees, no nonsense, just the support you need!
If you’re looking for a Licensed Insolvency Trustee, you can find one without having to pay a single red cent by clicking on This Link.
If you’d like to talk to someone about your debt worries with 100% confidentiality, zero obligation and (of course) completely free of charge, call us today on (877)879-4770.
At BankruptcyCanada.com we’ve been helping Canadians unshackle themselves from the dead weight of debt for over 20 years and have helped over 100,000 people just like you to live debt-free!