It is a confusing time for people who are struggling to pay their debts. I say confusing because there is a wide assortment of people offering you advice to “deal with your debts” through advertisements on the radio and internet, myself included. The tricky part is that it’s hard to know whom you can trust. Some places are legitimate. Some places are not. Doug Hoyes and Ted Michalos discussed the problem with unregulated debt consultants on “Ask the Experts” in Waterloo Region.
The easy response from the less reputable places is that we speak negatively about them because they are competition for us. Here’s my retort. In January of this year, the Financial Consumer Agency of Canada (FCAC) issued a warning about companies offering to reduce your debts. The FCAC is a federal regulatory agency. From the FCAC website, here is the statement who they are and what they do. My point is, the FCAC is not “competing” with anybody for your business. What did the FCAC have to say in its alert? They say to be wary of: • Up front fees; • Aggressive sales tactics over the phone. Some places will call you like a telemarketer, without you having initiated contact; • Unrealistic claims about reducing your debt; • Misleading information about protecting your credit rating. Stopping payments or paying back less than the full amount of your debt will hurt you credit rating; and • False claims about government involvement or approval. If you have read about a consumer proposal, you might think that that is what I was just describing. Wrong. A consumer proposal is a legal proceeding under the Bankruptcy and Insolvency Act. A consumer proposal is administered by a licensed trustee in bankruptcy. A consumer proposal is for people who are unable to repay the full amount of their debts, but don’t want to file personal bankruptcy.
The role of a trustee is to provide you information about. That often means not using our services at all beyond the initial consultation. The consultation is free of charge.