Debt Relief Experts
As I blogged about last week, the Office of the Superintendent of Bankruptcy has released a review of consumer proposals involving debt consultants.
Doug: A lot of people hear the ads on TV for people who can ‘settle your debts for 30 cents on the dollar, 20 cents on the dollar’ and they wonder is that what you guys do? Is that different? There are a number of different people out there who say that they can help you deal with your debts. You got credit counsellors, some of them who are not-for-profit agencies, they can do what’s called a debt management plan. Where they take your debts, and you pay them off in full over a period of up to 5 years. And most cases they can negotiate reduced or 0 interest. So, if you’re able to pay all your debts in full, but you just need a bit of a break, credit counselling through a not-for-profit credit counsellor is a good way to go. People who are advertising on TV are for-profit companies, and they are either debt consultants or people offering deb settlements. They’re not necessarily regulated by anyone in particular. They don’t necessarily have any particular education background or qualification. What they’re going to do is attempt to negotiate something with your creditors. Whether they can do it or not, who knows. Problem is you’re going to end up paying them a bunch of fees before you really find out what’s going to happen.
Ted: Bankruptcy trustees are licensed by the federal government, we’re officers of the court, So, right from the get-go we’re different from just about any other professional you’re ever going to meet. Lawyers are officers of the court, but they can’t serve in this kind of capacity. The analogy I usually give people is think of a bankruptcy trustee as a referee. So, the bankruptcy laws set out a specific way that things are to be administered, the trustees are the ones that make sure everyone follows the rules
Doug: That’s what makes us different, we’ve actually got legal authority to do this. We are using federal law to bring about the settlement. So, when a consumer proposal is filed, all unsecured creditors, people like credit cards, income tax, bank loans, payday loans, are all treated exactly the same.
Ted: Chartered accountants were originally the only ones that were trustees, and you had to train the next generation. So chartered accountants trained the next generation of chartered accountants. It’s only been in the last 10 years when non-accountants have become trustees. And in fact, in our firm, 1/3 of our trustees are not accountants. And the reason we did that is it gives us a broader spectrum, a better appreciation of individuals backgrounds and their experiences. We’ve got someone who’s got a health background, someone with an insurance background, one that used to be a teacher. The idea being that we could better relate to people because we’ve got this breadth of experience, as oppose to all being boring accountants.
Doug: We’ve got the hammer. I don’t need to get every single person to agree, I just need the majority to agree because that’s how the federal law works. So, if you’re not licensed by the federal government under federal law, you can’t do that. And that is the ultimate difference between a Licensed Consumer Proposal Administrator, a Licensed Bankruptcy Trustee, and everyone else.
I’ll start with an important reminder: a consumer proposal is a legal debt settlement process available through the Bankruptcy and Insolvency Act. This process can only be administered by a Licensed Insolvency Trustee.
Unfortunately it’s often difficult for a consumer, already under stress as a result of their financial situation, to decipher who they are dealing with when looking for debt relief. I recently came across a typical website someone looking for debt solutions may stumble across – credit720.ca. If you will notice from this screenshot, under their services tab they advertise consumer proposals and bankruptcies.
Telltale Signs
This website advertises consumer proposals and bankruptcies, yet no where on their site does credit720.ca identify itself as a Licensed Insolvency Trustee. All Licensed Insolvency Trustees and firms are required to identify themselves as an LIT under directive 33 governing advertising for Licensed Insolvency Trustees.
If you use their debt calculator you are provided with a cost comparison of different debt relief options. Theirs includes a consumer proposal, which is not unlike our own debt relief calculator on hoyes.com.
What We Found
To understand who the company was, and who potential debtors would be dealing with, we decided to inquire about their services through their online chat. Below is a reproduction of our live chat dialogue, which took place on March 22, 2017 (You in this conversation is Hoyes Michalos).
You — Please update your info
Who are you
Credit 720 joined the chat
Credit 720
Hi, how can we help you today? =)
You — Please update your info
what type of services do you offer?
Credit 720
we offer credit counseling, debt management, consumer proposal and bankruptcy.
You — Please update your info
oh – are you a bankruptcy trustee then?
Credit 720
we are a credit counseling firm.
we have trustees working with us.
You — Please update your info
will I see a credit counsellor or trustee?
Credit 720
initially you’ll be seeing a credit counselor and if required you may see a trustee later on in the process
You — Please update your info
how will you know if I have to see a trustee?
Credit 720
Depending on your situation and your file the counselor you in meet in our office will decide
would you like to book an appointment in any of our nearest office?
You — Please update your info
I’m not sure, I’m still not sure who will help me. Do the trustees work for you or are they another company. I’ve already run into this before
Credit 720
trustees are independent license holders. They work with us
You — Please update your info
OK I understand. What do you charge?
Credit 720
we don’t charge for the consultation.
after we go through the complexity of your file the counselor will decide on the fees.
You — Please update your info
What would he be charging me for?
Credit 720
The work required to get your file go through and to administer you file.
You — Please update your info
Go through who – the trustee? What if I don’t need a trustee?
Credit 720
There are other options available other then trustee
i would suggest that you come and our counselor so they can respond to your queries in an appropriate & satisfactory manner
You — Please update your info
Still uncertain – if the counselor is not a trustee what they will do for me. What kind of education do they have?
Credit 720
credit counselor are BIA licensed holders and trustee are CAIRP & LIT.
You — Please update your info
??? – the person I will meet with is a BIA licensed holder? What is that?
Credit 720
yes they are BIA License holder. BIA stands for Bankruptcy and Insolvency Act
you can ask your questions when you see them in person
You — Please update your info
OH so bankruptcy again. They BIA person works for you? And that’s who I would meet with?
Credit 720
All licensed credit counselors working in any credit counseling company or trustee firms are BIA accredited.
yes they work for Credit 720
You — Please update your info
OK I still am not sure as I want to file bankruptcy and that seems like all you are going to do is refer me to a trustee. So I’ll think about it
Credit 720
BIA license is not just limited to bankruptcy. As said earlier in the chat it includes debt management, consumer proposal and orderly payment of debts programme
once you decide you’re more than welcome to book your appointment with us.
Is there anything else i can help you with?
End chat.
As you can see, these companies advertise the services of a Licensed Insolvency Trustee, but are somewhat unclear when it comes to stating who will be working on your case, and how fees will be charged for the services. They advertise services that can only be administered by a Licensed Insolvency Trustee, and they are not Licensed Insolvency Trustees. This is very confusing to the public and can prove costly for consumers. Without the right knowledge, the debtor ends up paying unnecessary, and often very high, consulting fees.
We strongly recommend that anyone looking for debt help investigate the company, and individual they are dealing with before entering into any payment agreement. Confirm that you are working with, and only making payments to, a Licensed Insolvency Trustee, and not an unlicensed debt consultant.
