Debtor Warning – Debt Consultants sometimes not what they appear


Consultants are not always what they appear

Dear Editors of Business Examiner,

I attach for your reference a copy of an article from your publication regarding Four (4) Pillars Consulting.  As a licensed trustee in bankruptcy and a Chartered Insolvency and Restructuring Professional, I take great exception to the information contained in this article that ran next to the ad placed by Four Pillars of Victoria, BC.

The article indicates that 4 Pillar’s clients include those who are struggling with student loan debt and debts from the Canada Revenue agency, implying that they could help debtors compromise these debts.  This is misleading as neither agency has the legislative authority to compromise these types of debts outside of the Bankruptcy and Insolvency Act.  Both agencies in some limited circumstances, can offer some reprieve on the interest charged, but this is not a compromise of the principle amount.

Further, the article claims that the company in question offers several ways to deal with debts including “consumer proposal or bankruptcy”.  This statement is also misleading as 4 Pillars is not a bankruptcy trustee but rather simply a franchise where the individual owner can hold themselves out to be a “debt consultant” once they have paid the franchise fee.  The only firms or individuals licensed in Canada to oversee either a consumer proposal or bankruptcy is a federally licensed trustee in bankruptcy and any claims that this firm can legally offer these services, is false as they are not licensed trustees.  

The Office of the Superintendent of Bankruptcy under Industry Canada oversees the licensing of trustees and can refer cases to the RCMP for investigation and recommendation of charges for those who commit any offence under the Bankruptcy and Insolvency Act including those who falsely represent themselves as a bankruptcy trustee.  A copy of this article and ad has been sent to them for their review.

On an anecdotal  basis, I personally have been informed that some local so called debt consultants will refer unsuspecting debtors to a bankruptcy trustee for a “fee” of upwards of $1,500, wherein, in truth, this process is free.  Every bankruptcy trustee that I know offers a free initial consultation where the personal situation of each debtor is considered and the personal options are outlined in detail, be it either a consumer proposal or a personal bankruptcy.

The Canadian market is flooded with misinformation about so called debt consultants.  Unfortunately, the terms debt consultant, debt counselor, or credit counselor are unregulated in Canada such that anyone, without any training, authority, education, professional qualifications, or even a governing professional body overseeing ethics or standards of care can operate without any oversight or expectation of service. The harm caused to debtors is of such concern that the Canadian government under the Financial Consumer Agency of Canada issued a Consumer Warning about the issues surrounding debt settlement companies.  I refer you to:  – for a discussion surrounding these issues.

I hope that in future cases, a little more attention is paid to factual content within the pages of your publication.   Colleen Craig, CA, CIRP

Related topic

Update 2018
Class Action Lawsuit Information

Other Related Reading and Links


Debtor Warning About Debt Consultants

Debt Consultants – A Warning to Debtors, Understand What You Are Paying For

Debt Consultants – OSB investigates Debt Consulting Industry

Debt Consultants Taking Advantage of Consumers Bankruptcy Canada Post

Other Trustees with Similar Concerns

Debt Consultants: Some Horror Stories


  1. Barry 4 years ago

    Is 4 Pillars a good company? Or do not use them? I wanted some help with debt. They charge a fee is that legal?

    • Author
      colleen 3 years ago

      Sorry for the delayed response. Your best best is to become well informed of who are the players are in the “debt consulting and restructuring” world. Generally, if you enter into a business relationship with anyone for an unregulated service, they can charge whatever they want under any agreement with you. If you agree to pay, then they can charge you. If I say that for $1,000 I will cut your lawn, and you agree to pay, if I then cut your lawn as per our agreement, then you owe me $1,000. That was the agreement. Insolvency Trustee’s are federal government regulated and any repayment plan, either a consumer proposal or personal bankruptcy, we can only charge what is legislated by the government. Sometimes “debt consultants” will charge you a fee to refer you to a trustee as a “consulting service”, but these services are in addition to what the trustee charges under the consumer proposal or personal bankruptcy. So if you pay someone for consulting advice, who then simply refers you to a trustee, you may end up paying twice for the same service so be sure you understand what you are paying for both with a Trustee and a Debt Consultant. If you need a consumer proposal or personal bankruptcy, just go directly to a trustee. We offer a free consultation where we outline all of your options so you can make your own decisions.

      Update 2018
      Class Action Lawsuit Information

  2. rose 3 years ago

    I want to know if 4 pillars is not a scam

    • Author
      colleen 3 years ago

      I think that all people should make up their own mind. A great article was written just recently in Focus Magazine in Victoria (March 2016 issue) and I think everyone should read it to help themselves become more informed in this area. It is very well done and in my opinion paints a fair picture of what some Debt Consultants actually do for debtors. Clearly there are some very disgruntled people who have wanted to file a consumer proposal. However, 4 Pillars cannot file consumer proposals, they have to refer this work out to licensed insolvency trustees. Only a licensed insolvency trustee can assist you with filing a consumer proposal and this process is governed by federal legislation. The fees that are charged for a referral to a trustee, or for consulting advice like 4 Pillars, are not governed by any legislation. Here is the link. I hope it posts properly, if not copy and past in your browser.

      Update 2018
      Class Action Lawsuit Information

  3. Jad 3 years ago

    4 Pillars works for you to save you as much as possible; Trustees work for your debtors to get as much from you as possible. Trustees must do this as it is the Law. 4 Pillars will charge a fee for their services and do negotiate with Trustees for the Proposal, but will ultimately save you money in doing so. Just my opinion.

    • Author
      colleen 3 years ago

      Hello Jad
      I suggest you become fully informed about the consumer proposal process before you decide what works best for you. Consider carefully the money you are paying for which service.

      If you are looking to file a Consumer Proposal, then you must seek the services of a licensed insolvency trustee (formerly a trustee in bankruptcy) as they are the only ones who can file a consumer proposal in Canada.

      Please know that all trustee’s offer a FREE initial consultation, so if you haven’t had the opportunity to meet one yet, I would encourage you to go for your free interview for your own protection and for information gathering purposes. Clear and accurate information is the key to making sure you are making informed choices. If you decide that you want to file a consumer proposal, then the Trustee will give you forms to fill out. Once completed, give these forms back to the Trustee along with any backup documentation requested, who will in turn use this information to prepare your legal consumer proposal documents. The application form process is part of what Trustees are required to do, so if you need assistance, your trustee will help you.

      The proposal that you ultimately file, is YOUR proposal. It can be anything that YOU want. The Trustee can make recommendations as to which offer they think will be accepted, but the ultimate decision belongs to the creditors as to whether or not to accept YOUR offer. It is not the Trustee’s offer or anyone else. There are certain rules, (like it cannot be longer than 5 years) , but other than that, it is up to you. If you want to offer less, then you are free to do so. In our review process we look at all of your options, (bankruptcy as well) and family obligations and try to come to some idea of what you, the debtor, feels that they are able to pay each month. This is part of the initial interview process. Proposals must always be compared to a bankruptcy, because under Law a Consumer Proposal must offer more to the creditors than they would have received in a bankruptcy situation. A Consumer Proposal is YOUR negotiation with your creditors – not your consultant’s or the Trustee’s offer. And once again, the creditors decide if they will accept your offer as filed, or they quite often, counter your offer. Trustees are the only legal conduit for this process. Period.

      It is important to understand the process of filing a consumer proposal. The initial interview with the trustee is free where your financial options are outlined. You then make a choice as to how to proceed, if you want go forward with either a bankruptcy or consumer proposal. If you want to file a consumer proposal, the trustee will outline which information must be provided to the Trustee so that they can prepare the legal forms for you to sign. Also, the Trustee will outline for you the fees associated with filing a consumer proposal. Under the Bankruptcy and Insolvency Act (“BIA”), the fees that a trustee can charge under a consumer proposal include;

      Pursuant to Rule 129 and Rule 131 of the BIA, fees that the trustee can charge include the following;

      a) $1,500 prescribed fee;
      b) $100 Registration fee,
      c) $170 per counseling (upon completion), and
      d) 20% of all distributions made to unsecured creditors,
      plus applicable taxes to the forgoing.

      This is the maximum that any trustee under a consumer proposal can charge. Generally, a portion of this fee is due to the trustee up front to pay for the document preparation. We generally charge $450 in our office as an initial fee if someone decides that they want to file a consumer proposal. I understand that there are some “debt consultants” who charge a fee to debtors to help them with the document preparation such as filling out the application form or other matters surrounding consumer proposals, but any fee you pay to a third party will not reduce the fees charged by the trustee. If you pay someone to help you fill out the application form, you will still have to pay the trustee the fees outlined above for their time. The fee that we charge up front covers all aspect of preparation of the consumer proposal including assisting debtors with filling out the application form, information gathering such as a valuation of assets etc., as well as a detailed discussion outlining all of the documentation, information and legalities of the consumer proposal process. This is a proscribed fee under the BIA.

      A licensed insolvency trustee is the only one licensed in Canada to act as an administrator under a consumer proposal, which is a formal arrangement with creditors to pay back a portion of a person’s debts. However, there are many “debt consultants” or “credit consultants” out there (as these terms are unregulated and anyone can use them) who charge fees for things that are not regulated, so if you run into problems, you have no governing authority to whom you can complain to about the process?

      If you deal with a licensed trustee, then any issues with the process would be governed by the Office of the Superintendent of Bankruptcy as they are the federal regulator and issue the licenses to trustees and are one of the governing bodies that oversee conflicts or complaints. In Canada most trustees also belong to the Canadian Association of Insolvency and Restructuring Professionals which also oversees trustees code conduct, ethics etc.. And in my case, I am also a Chartered Accountant, as are many other trustees, so any issues can be pursued by a debtor to the various governing bodies if they run into issues with the process. However, if you dealt with someone that is unlicensed and unregulated, then your only option is to go back to them directly to deal with any fees they have charged or issues with their service.

      If you decide to proceed with a formal process with a trustee, as part of the consumer proposal process, you will also be asked to complete two counselling sessions with a licensed counsellor under the BIA. These sessions are mandated by the BIA. The fees for these sessions are also set out above.

      At the first counselling session, we cover;

      a) money management skills;
      b) your shopping and spending habits;
      c) consumer warning signs of financial difficulties; and
      d) proper use and obtaining and using credit.

      The second stage is to determine the budgetary and / or non-budgetary causes of insolvency or bankruptcy and requires that the qualified counsellor:

      a) follow-up on the application by the debtor of the principles presented in the first stage to assist the bankrupt and / or relative, or the consumer debtor, to better understand his/her strengths and weaknesses with regards to money management and budgeting skills;
      assist, where appropriate, the bankrupt and/or relative, or a consumer debtor:
      b) to identify the non-budgetary causes (such as gambling abuse, compulsive behaviour, substance abuse, employment and marital or family difficulties) that may have contributed to his / her financial difficulties;
      c) to better understand his / her behaviour in financial management and consumption habits; and,
      d) to make him/her aware of the existence of resources that will help him/her achieve and maintain economic stability; and
      e) cooperatively with the bankrupt and/or relative, or a consumer debtor, develop recommendations and alternatives for a financial plan of action which, if appropriate, may include referral for specialized counselling to deal with non-budgetary causes of insolvency.

      All of the foregoing is covered by the fees outlined under the Bankruptcy and Insolvency Act if you opt for either a consumer proposal or personal bankruptcy.

      I also attach an article about this issue for your review –

      I also attach an expert from a previous blog

      If you would like to have a chat with a trustee in your area, I can recommend one to you.

      Hopefully this helps in your decision making.

      Kind regards,

      Colleen Craig, CPA CA, CIRP
      C.E. Craig & Associates Inc.
      Licensed Insolvency Trustee
      204-2736 Quadra Street
      Victoria, BC
      V8T 4E6
      Phone: 250-386-8778
      Fax: 250-386-6864

      Solving Your Debt Puzzle

      Update 2018
      Class Action Lawsuit Information

      • Jamie 1 year ago

        All very well but the fee structure is set up that the more a Trustee collects in Proposal Payments the more they earn in fees. Most debtors have no clue as to what is an acceptable offer to creditors so they leave it up to the Trustee to make the recommendation. In all honesty, how can a Trustee be counted on to make a fair offer when they are materially biased, the more they collect the more they earn. Debt Consultants can educate the debtor on how to stucture the offer that is in the debtor’s best interest.

        • Author
          colleen 12 months ago

          Indeed. I couldn’t agree more – the solution to this issue is public education for debtors to make sure that they are well informed of their choices. Debtor’s should be aware that its their choice as to what they want to offer to to whom they are willing to pay a fee and for what service. The system is set up so that Trustees are paid for their services. As are debt consultants. But what the trustee is paid as a fee is set by the Bankruptcy and Insolvency Act and does not change or vary with each client. If you want to make an offer to creditors such as a consumer proposal, you must pay the Trustee fee. Its set by the BIA and the courts. If you decide to go to a debt consultant first, then you will pay two sets of fees. Why pay an extra sets of fees to access a solution? If you are going to offer your creditors $10,000, why would you offer $10,000 plus a few extra thousands to a debt consultant??
          And if a debtor has issues with the process, because the trustee is licensed, debtors will always have place to turn (like the federal government) to sort things out. It all goes back to what the debtor can afford to pay and what the creditors are willing to accept.

          Information about Class Action Lawsuits against Debt Consultants

    • Ian M 1 year ago

      Yes and the fees that people like DEBT CONSULTANTS charge and have to pay before they even submit paperwork can be high. They wanted 1500 upfront.

      Also when their offer is submitted their is a chance that it will not be accepted as it’s too low. More stress

      • Author
        colleen 12 months ago

        Yes, the best bet is to be informed. Know what you can afford to offer, can know what you are paying for – If you want to file a consumer proposal, go directly to the person who is licensed to oversee the process. Don’t pay two sets of fees and don’t get advice from someone who is not licensed.

      • Author
        colleen 12 months ago

        Yes, the best bet is to become informed. Figure out what you can afford to offer to your creditors, and go directly to the person who is licensed to oversee the consumer proposal process. Understand your options – always get your information from someone who is licensed. I removed the name of debt consulting company – trying to not signal out one specific debt consulting company

        Information about a class action lawsuits

  4. Clarence 3 years ago

    If you file for consumer proposal, what are the remifications on your credit? Is it a form of bankruptcy? How long will it takes to get back on track: that is to be able to buy car or own a house?

    • Author
      colleen 3 years ago

      A Consumer Proposal is an option that is an alternative to bankruptcy. Although it is governed by the same federal Act that governs bankruptcy, it is a completely different option. One of the big differences is that while under a Consumer Proposals a debtor has the ability to use credit. This is also partially true in a bankruptcy, especially for ongoing charges like your cell phone bill, or secured charges like a vehicle purchase. Under a Consumer Proposal you may maintain certain types of credit such as credit cards, a bank loan and phone bills or even apply for new sources of credit. At one point a debtor was specifically prohibited form applying for new debt in a bankruptcy, however, this legislation has been relaxed over the years. It is true that immediately upon assignment into bankruptcy you have to turn over all of your credit cards to the trustee, however, in a consumer proposal, this is not the case.

      As far as you credit rating goes, a Consumer Proposal is slightly better than a Bankruptcy. You will likely have a rating of R7, rather than a Bankruptcy rating of R9. A Consumer Proposal is removed from your credit rating three years after completion of the proposal, whereas a bankruptcy is not removed for six years.
      However, you must compare the length of the specific proposal that you are filing vs. the length that you would be an undischarged bankrupt. For example, lets say that as a first-time Bankrupt can be discharged in as little of 9 months, while in contrast your Consumer Proposal is scheduled to last for five years. Your bankruptcy will be reported for 6 years 9 months on your credit bureau, while the Consumer Proposal will be reported on your bureau for 8 years (5 plus 3). So, depending on your financial situation, in some cases a Bankruptcy may clear your credit rating sooner than a Consumer Proposal would.
      Generally, in my experience, the best thing to do for your credit rating is to file a Consumer Proposal for three years and pay it off in two. Consumer Proposals are generally paid off faster than a Bankruptcy, and with careful budgeting you can often complete your payments ahead of schedule. At that point you should use two sources of credit wisely (a mortgage etc.) to show creditors that you can make payments in full and on time.
      Don’t become overly focused on your credit score. In the end, it means very little. Its like focusing on what your FitBit says you did for exercise today instead of the exercise itself. Anyone struggling with credit should focus on developing smart spending patterns and saving money. For example, if you wish to buy a home, start saving enough for a down payment. By the time you have saved up the money to be able to make a down payment on a home, your credit rating will be perfect. Apply this to other aspects of your life as well; don’t go into debt for a brand-new vehicle, save up to buy a non-financed used car that you can own without risking your credit.

      C.E Craig & Associates is a Licensed Insolvency Trustee, not a lawyer, and this can in no way be considered legal advice.

      Update 2018
      Class Action Lawsuit Information

  5. Nicole 3 years ago

    You seem to have a very vested interest in bad mouthing 4 Pillars and debt consultants Colleen. It really makes me wonder why…but given that you blatantly admit that you can take up to 20% of what is agreed to pay unsecured debts….one has to wonder even more why you would ever want to lower that amount…

    Those who serve the customers the best do not need to trash the competition. They let their actions speak for themselves. Your actions show exactly why I am weary of bankruptcy trustees.

    • Author
      colleen 3 years ago

      I am sorry that you are angry with my responses to questions. I not maligning anyone or anything. I merely answer questions that are asked of me with the knowledge that I have in hopes of providing clear options to everyone who is considering their debt repayment options. Trustee’s fees are mandated by the federal government and the Supreme Court of BC. If you want to file a Consumer Proposal, you must engage the services of a Licensed Insolvency Trustee.

      There is a detailed analysis of what a Consumer Proposal is so I have included links for your review, but, for clarity sake, lets go through a small example.

      Say you have $50,000 in consumer debt (credit cards, lines of credit, overdraft, an old student loan and some CRA tax debt) You make $2300 per month and live alone. All of your assets are considered “exempt” under the Court Order Enforcement Act. You can afford to pay $300 each month to your debts after your personal monthly expenses but this is not enough to reduce the principle amount of the debt because of ongoing interest charges, so your debt is ever increasing.

      Option A: Go to a debt consultant. They will discuss some options. They usually charge a fee for their services of, lets assume, $3,000. They may negotiate with your creditors for lower interest rates, but, each debt consultant is different. They may discuss a Consumer Proposal through a Licensed Insolvency Trustee (a different firm). But this also depends on the individual debt consultant. They may even help you prepare the Consumer Proposal forms and go with you to the Trustee’s offices. You offer $300 per month for 45 months through the Trustee. (Total of $13.500) It is accepted by your creditors. You pay the $13,500 to the Trustee over the 45 months, the balance of the debt is discharged. You have paid a total of $16,500

      Option B/C: Go Directly to a Licensed Insolvency Trustee. As a LIT I would discuss all options with you including, negotiating directly with your creditors, filing a bankruptcy (option C) or filing a Consumer Proposal (Option B). Everything else stays the same. You always have the option of filing for bankruptcy, however, after discussions with the trustee you opt for a Consumer Proposal of $300 per month for 45 months. Your offer is accepted by the creditors. IF you go directly to the us as your Trustee, you will have paid $13,500 if you choose a Consumer Proposal, and $1,750 if you choose a personal bankruptcy.

      The foregoing is based on numerous assumption and it is important to remember that each person’s individual circumstances will vary. Please contact a Licensed Insolvency Trustee to discuss your personal situation. I have prepared a spreadsheet analysis of the different options as outlined above (Credit Counselling in BC) in a blog post for your review. I hope this helps clarify the situation for you

      Update 2018
      Class Action Lawsuit Information

      • Author
        colleen 2 years ago

        This issue with debt consultants continues to be a to be a controversial one. The Superintendent of Bankruptcy who is responsible for overseeing the legislation for both bankruptcy and consumer Proposals has recently released a Position Paper with respect to that practice of debt consultants like 4 Pillars “loaning” money to consumer debtors in consumer proposals to “pay off their proposals early” and offering a discount. In part the Superintendent has written

        The inclusion of a discount clause in a consumer proposal encourages the acquisition of new debt as means for the debtor to fulfill a consumer proposal’s requirements. Monitoring has shown that insolvent consumers are counselled to resolve their existing financial problems and attempt to improve their credit rating through new borrowing. Despite the decreased amount paid to creditors when a discount clause is exercised, the consumer will typically end up paying significantly more during the period of their loan than the original face value of their proposal to creditors, over periods which can greatly exceed 60 months. In such cases, a loan provider’s interest charges, fees and penalties represent an obstacle to the restoration of a debtor’s good financial health, particularly as compared to repayment at 0% interest under the terms of a consumer proposal.

        Further update
        Class Action Lawsuit information

        Other too find various industry practices in this area troubling as noted in the link below.

        We at C.E. Craig & Associates Inc. strive to make all alternatives available to all debtors seeking our assistance.

  6. […] An article on the website of Trustee, Colleen Craig, LIT Colleen writes regarding serious misinformation contained in an article about Debt Counsellors. […]

  7. Lisa 2 years ago

    My sister had a great experience with her consultant, however mine is a completely different experience… if I had to do it over again I simply wouldn’t!! The nightmare still continues after almost 2 years after the initial proposal was accepted.

    • Author
      colleen 2 years ago

      Hi Lisa
      Yes, there is certainly some people who are happy with their dealings with debt consultants (you can see comments on our site saying this). However, there are also some who have had terrible experiences. This issue is that the debt consulting industry is unregulated and debt consultants (or at least the larger ones in BC) are unlicensed. If you want to file a federally regulated consumer proposal or bankruptcy, it is always best to go directly to a licensed insolvency trustee to avoid the issue outlined in the Superintendent of Bankruptcy’s Report about LIT’s dealings with debt consultants.

      Class Action Lawsuit information

  8. rick 1 year ago

    i too came to this post because i wanted to see if XX Debt Consultant is a scam. I am going to try sands and associates or some sort of regulated company that has lawyers in hopes they do debt consolidation services. i know a lawyer cant lie to you so i rather go there. if it doesn’t work out i might have no choice but to go to Debt Consultant and risk loosing my money for the hope of something.
    (specific name of the debt consultant was removed before posting)

    • Author
      colleen 12 months ago

      Hello Rick
      Yes, if you want to file a consumer proposal, you must go through a Licensed Insolvency Trustee firm like you mentioned. Debt Consultants ARE NOT LICENSED to oversee a consumer proposal. They cannot put a consumer proposal together for you for your creditors. Become informed – understand your options – talk to someone who is licensed to perform the services that you want like a consumer proposal.

      Hopefully you haven’t paid any fees to anyone who isn’t licensed. Here is some class action lawsuit sites

  9. Rose 1 year ago

    Hi, I was satisfied with my experience with 4 Pillars. I paid $1500 to 4 Pillars to file a consumer proposal with a trustee. I was able to get my debt of $60,000 down to $10,000. So $1500 was a pretty reasonable fee for me. That’s all I paid.

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