It seems everyone is offering advice these days. Self-professing experts are everywhere, and the world of debt is no different. Many companies, non-profits and individuals offer options to deal with debt, including unlicensed debt advisors. Before reaching out to use their services, knowing who they are, what they do, and the other options available is essential.
Debt Advisors – What You Need to Know
With debt levels soaring in Canada, there is no shortage of debt advisors offering their services to help you get out of debt. However, not everyone who offers help or advice is qualified to do so. There are legitimate advisors that have helped many Canadians deal with their unmanageable debt. But knowing if you’re getting the best advice or the right help is difficult if the service provider has no licensed qualifications.
Who are unlicensed debt advisors?
They can be individuals, small firms or large companies. Debt advisors may call themselves financial advisors, debt counsellors, credit counsellors or debt consultants. They are not licensed or regulated by the government. Due to this, they do not necessarily have the correct training to give full debt advice.
Some professionals who offer these services may have extensive qualifications and may have completed courses related to personal finance. Credit counsellors may have completed the Accredited Financial Counsellor Canada Program and are members of Credit Counselling Canada. However, in Canada, credit counsellors have no mandatory educational requirements.
Why do people use unlicensed debt advisors?
You might be desperate for a solution when you’re deeply in debt. Businesses offering debt help often have a friendly, non-judgmental demeanour that can put you at ease. They offer to work on your behalf with your creditors and collection agencies. You may also work with a debt service provider because you believe they offer quicker options other than filing a Consumer Proposal or Bankruptcy.
What services do they provide?
Debt advisors offer to help their clients reduce their debt by offering to negotiate a debt settlement with your creditors. A debt settlement allows you to pay less than you owe to your creditors in a lump sum payment. They may negotiate a repayment plan with your creditors or refer you to a Licensed Insolvency Trustee (LIT) to deal with your debt.
While their services sound great, there are many disadvantages of dealing with an unlicensed debt advisor:
- Your creditors are not required to work with them.
- They cannot stop your creditors from taking legal action, garnishing your wages, or collecting calls.
- They may charge referral fees if they refer you to a LIT.
- They cannot negotiate a settlement for government debt.
- They may suggest a high-interest loan to consolidate your debt, which can worsen your situation.
- A debt consultant cannot repair your credit rating.
- In most cases, they are a middleman, offering services you can get yourself without paying unnecessary fees.
- It can be challenging to file a complaint if they don’t handle your case correctly.
Alternatives to Unlicensed Debt Advisors
Unregulated, unlicensed debt advisors charge fees and typically only offer partial solutions to your debt problem. They often have to refer you to other professionals who offer debt services. Working with a Licensed Insolvency Trustee is a much better option to help you deal with your debt.
Who are Licensed Insolvency Trustees?
A Licensed Insolvency Trustee (LIT) is an expert licensed and regulated by the federal government in Canada. LITs help people and businesses manage their debt problems. The Office of the Superintendent of Bankruptcy (OSB) licenses and regulates LITs. It also oversees the administration of Bankruptcies.
Why do people use a Licensed Insolvency Trustee?
LITs offer a range of services that can benefit you. The initial consultation is usually free. They will work with you to understand your financial situation. LITs have a duty to act in your best interests when they recommend a solution to you.
There are many advantages to working with a Licensed Insolvency Trustee:
- They’ve completed in-depth training and are licensed by the federal government
- They must act according to the Bankruptcy and Insolvency Act and act in your best interests.
- They are the only professionals able to file a Consumer Proposal or Bankruptcy that will stop wage garnishments, collection calls and legal action.
- Creditors must abide by the agreement.
- LITs don’t charge upfront fees.
- If you have a complaint, you can contact the OSB or the Canadian Association of Insolvency and Restructuring Professionals (CAIRP)
What do LITs do?
LITs offer solutions for people who are insolvent. Being insolvent means you don’t have enough income to pay your debts. First, they meet with you and take a deep dive into your finances. They look at your assets, your income, the amount of debt you have, whether your debt is secured or unsecured and any other information that might be relevant.
Your LIT will offer solutions based on your circumstances. They offer credit counselling, which may be enough help to turn your finances around. They may also recommend filing a Consumer Proposal or filing for Bankruptcy. Together, you and your LIT will find the solution that is in your best interests. While you may be concerned they only offer Bankruptcy, this is often the last option they recommend after reviewing your financial situation.
Your LIT will help you understand your options so that you can make an informed decision. They will help guide you through the process and will complete the paperwork for the appropriate filings. Filing your Consumer Proposal or Bankruptcy will both stop collection calls, legal action and wage garnishment by your creditors. You’ll have a plan to be debt free within a specified period.
Choosing a Licensed Insolvency Trustee
Working with a LIT gives you access to the best solutions for your debt. You’ll have a licensed, regulated professional who can help you make the best choice for your situation without paying for a middle-man.
Our LITs at Allan Marshall and Associates offer caring and professional advice to help you get back on track financially. Reach out to us today for a free consultation at 1-888-371-8900. You don’t need to pay extra fees or waste precious time with unregulated debt advisors. We’ll work with you to review your options and eliminate your debt for a fresh new start.