FAQ: LIT vs. Debt Consultants
What You Need To Know To Protect Yourself, And Your Money, From Predators
Debt is scary, and when you are drowning in it, it’s easy to make the mistake of accepting help from “debt consultants”. However, these organizations do not exist to help you, they are primed to profit from your vulnerability. It is up to you to protect yourself from these organizations, and to ensure that you are treated fairly in accordance with federal regulations.
“Debt Consultants” are unlicensed individuals who will charge you upfront fees (ranging between $1500 to $5000!!!) only to act as a middle man between you and a Licenced Insolvency Trustee. This is not in your best interest. This is a practice of taking advantage of people who are overwhelmed by debt.
“Debt Consultants” cannot file bankruptcies or consumer proposals on your behalf. Only a Licensed Insolvency Trustee has the power to file for you, and will do so without any involvement from “Debt Consultants”.
So what do Debt Consultants attempt to sell you?
If you read through the webpages of prominent “Debt Consultant” organizations, you will see quotes such as
“we work for you, the debtor, while the trustee works for your creditors”
“get a better deal by coming to us first, before you talk to a trustee”.
But what does this type of promise really translate into? What could a “Debt Consultant” know about the insolvency process that a Trustee is unable, or unwilling to tell you? Not only are Trustees held to a firm have code of ethics, but they also have the educational backgrounds and professional obligations which prohibit them from engaging in anything that is fraudulent, dishonest, or unlawful. It is hard to say what unregulated, unlicensed consultants recommend. Certainly, if the advice given is inappropriate or fraudulent, an unsuspecting debtor would have nowhere to turn but the courts.
The Office of The Superintendent of Bankruptcy has provided this handy checklist to demonstrate the differences between Licensed Insolvency Trustees and “Debt Consultants”.
When you are experiencing financial hardships, the last thing that you need is to pay a “Debt Consultant” more money that you don’t have. Licensed Insolvency Trustees are held accountable by the federal government, which means that any fees charged by your Trustee are government regulated, fair and reasonable.
For more information on the differences between “Debt Consultants” and Licensed Insolvency Trustees, feel free to contact our office and receive a free copy of Consumed By Debt? Considering A Fresh Start? Information For Consumers On The Insolvency Process as provided by the Canadian Government’s Office of the Superintendent of Bankruptcy.
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*All images sourced from Consumed By Debt? Considering A Fresh Start? Information For Consumers On The Insolvency Process and the Office of The Superintendent of Bankruptcy.