Are you looking for professional debt help? Before connecting with an advisor, read on to learn about debt management services in British Columbia and understand some of the regulatory gaps that can have serious impacts to consumers looking for debt advice.
What Professionals Offer Consumer Debt Management Services in Canada?
There are two types of debt help professionals in Canada: Licensed Insolvency Trustees and informal debt service providers, who may use many different titles.
- Titles like credit counsellor, debt advisor, or debt consultant are not regulated ‘professionals’ and anyone can use these names to purport to offer debt management and related services.
Licensed Insolvency Trustees: Established as Canada’s only official debt help professionals and the people who can administer legal solutions that allow you to have some, or all your debts forgiven.
- Common debt solutions and relief Licensed Insolvency Trustees provide to individuals include Consumer Proposals (a specialized type of non-borrowing consolidation where you can consolidate and cut your debt without interest or added fees), and personal bankruptcy for full debt forgiveness.
- With a Consumer Proposal you can avoid both bankruptcy and more borrowing – and:
- Consolidate and cut virtually all types of debt, from credit cards to tax debt, CERB overpayments to payday loans, overdrafts, student loans and more.
- Offer to repay what you can afford (often as little as 20-50% of your total balance) over a period up to five years, and creditors will agree to forgive the unpaid balance so you can move on with your life.
- Pay no further interest, consolidation costs, or professional fees.
- Legally protect your assets and stop creditors from pursuing you for payments (including garnishments and seizures by even government creditors such as Canada Revenue Agency).
Consumer Proposals are an advantageous debt solution of choice for people who may have previously considered filing for bankruptcy, or are looking at costly consolidation loans to manage their debt.
Credit Counsellors: May offer different types of debt help services through for-profit and non-profit organizations.
- Although they may include free education as part of their offerings and resources, credit counsellors charge for their debt management services (such as monthly debt repayment plans) and these costs may include: Fees for initial set-up, monthly maintenance, application, membership, and more.
- You may need to pay fees even if creditors refuse to negotiate or make a deal with you through your credit counsellor.
Debt Consultants: These agents may operate in a few ways, one by offering debt settlement services like a credit counselling repayment plan, another is by acting as an agent for a person who wants to work with a Licensed Insolvency Trustee on a Consumer Proposal.
- Some credit counsellors and debt consultants may say they are certified by an accreditation body, but there is no certification body in the debt advisory sector that is widely recognized or reputable.
- Agents may hold a business registration and pay license fees to operate as a debt repayment agency, but this is not the same as being part of a fully regulated profession.
“…the profit orientation of an organization—whether for-profit or not-for-profit—does not dictate the quality or ethicality of its business practices or behaviors. Non-profit organizations are different from charitable organizations….” – Government of Canada position paper: The Adverse Effects of the Debt Advisory Marketplace on the Insolvency System
Insolvency filings across the country are on the rise as consumers face a slew of financial challenges contributing to problem debt. At the same time, the Government of Canada has published observations about debt advisor services, flagging specific concerns about the risks unregulated advisors pose, especially where consumers are looking for Consumer Proposals and bankruptcy relief.
Should I Work with a Debt Settlement Agent or Credit Counsellor? What’s the Difference?
Misleading Debt Services Being Sold to Consumers
Over the years consumers have endured predatory unlicensed debt services such as scammy companies operating US-based debt pooling, shady agents charging huge upfront fees without results, misleading quick-repair credit rebuilding services and more. Unfortunately, official efforts to curb these issues take time to have an impact and sadly, many consumers suffer the adverse effects before then.
Issues that have recently caught the Federal Government’s eye involve the debt advisory marketplace, and its impact in the insolvency system. There are several concerns within the industry, including consumers being sold and charged for what may be dishonest and less than transparent services, including:
- Being referred to a Licensed Insolvency Trustee (“LIT”) by a third-party agent.
- Insolvency advisory.
- Consumer Proposal exit loans.
- Insolvency filing insurance.
Consumers do not need a third party’s services to safely access impartial advice and solutions through a Licensed Insolvency Trustee. If you hire another advisor for services related to your Consumer Proposal or bankruptcy, understand these are completely unnecessary add-on services, and offered by agents who are not qualified to administer the Consumer Proposal or bankruptcy for you.
Consumer Proposals are not loans and require no insuring, they are a legal type of debt consolidation solution only a Licensed Insolvency Trustee can administer for you. If you are offered or encouraged to use any type of financing to complete a Consumer Proposal, understand this is not only unnecessary, but counter-productive to cost advantages of a Consumer Proposal (namely, consolidation without borrowing or interest and stopping previous interest charges from accumulating).
“Debt advisors may make claims that are false and misleading. They may position themselves as advocates for the debtor, implying that without their intervention, the debtor will not be treated fairly, or that the LIT will only represent the creditors’ interests.” – Government of Canada position paper: The Adverse Effects of the Debt Advisory Marketplace on the Insolvency System
Am I Working with a Licensed Insolvency Trustee?
The best thing to do is simply ask “Are you a Licensed Insolvency Trustee?”. You can also use the Government of Canada’s “find an active Licensed Insolvency Trustee” directory, and if you’re located in British Columbia, Sands & Associates can help you.
- It is against the law for an agent to say they can manage a Consumer Proposal (or bankruptcy) for you unless they are a Licensed Insolvency Trustee.
If you’re looking for debt help online, be aware that advertising can be misleading – ‘government approved’ ‘licensed’ and ‘fast credit repair’ are all examples of this. Beyond options a Licensed Insolvency Trustee offers, there is no government debt ‘program’, and ‘quick credit repair’ simply doesn’t exist.
- A Consumer Proposal (or bankruptcy) can ONLY be filed through working with a Licensed Insolvency Trustee, and, as noted – you do not need any sort of referral to connect with a Licensed Insolvency Trustee to explore or start the process.
- If you’ve been advised against a Consumer Proposal by anyone other than a Licensed Insolvency Trustee, you should get a second opinion from a Licensed Insolvency Trustee.
- Your credit rating is related to your credit history, and building a credit history that demonstrates responsible credit use simply takes time and careful habits, such as:
- Paying all your bills on time.
- Keeping credit balances under 50% of your total credit limit.
- Having a consistent employment history.
If you speak with an unregulated debt agent, credit counsellor, etc., be aware that some will attempt to use high-pressure sales tactics to talk you into taking out a loan, setting up a debt settlement plan, or purchasing other services that are unnecessary – or they may even suggest that you take on more debt to pay their fees.
Understanding Credit Reports and Scores in Canada – Learn More
Recap – Key Takeaways for Consumers Seeking Qualified Debt Advice
- Most creditor counsellors and all Licensed Insolvency Trustees will offer you a free consultation to help you come up with a plan to manage your debts – but it’s essential to understand:
If you choose to take advice from or work with any sort of debt help professional other than a Licensed Insolvency Trustee, there are considerable gaps in regulations and consumer protection.
- In BC some provincial guidelines exist around people who charge a fee to negotiate with a creditor on your behalf, but, legally, anyone can provide debt management advice services, and there is no federal authority regulating people calling themselves credit counsellors, debt agents and the like.
- Credit counselling organizations are heavily bank-funded, and some may promote their plans over other options you have, as they make money from creditors, usually a flat percentage commission of the debt they recover. Remember: Non-profit does not mean a charity, and it doesn’t speak to quality or reputation either.
- No referral is required to talk with a Licensed Insolvency Trustee and receive qualified free, confidential advice about your situation and all your options. It is highly recommended that you connect directly with a Licensed Insolvency Trustee local to your province.
- Licensed Insolvency Trustees are professionals who provide specialized debt support and debt management services under the authority of federal regulations and legislation, operating without the limitations of credit counsellors and other debt agents.
Dealing with a debt problem can feel overwhelming, but you are not alone. Whether you are interested in consolidating and cutting debt with a Consumer Proposal, debt relief through personal bankruptcy, or aren’t sure what options are available to you – you can turn to a Licensed Insolvency Trustee for support and virtually all debt-related questions and concerns.
- We will walk you through all options to address your debts including (but not limited to): various repayment and consolidation strategies, supportive resources, credit counselling programs, Consumer Proposals, and bankruptcy.
Sands & Associates’ full suite of debt advice and debt help services is available to consumers at local offices throughout BC, as well as over the phone, or online video – whatever is most comfortable and convenient for you.
Talk with a local debt expert and get a personalized debt-free plan that’s right for you. Book your free, confidential debt consultation today.
