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Stay Away from Unregulated, Unlicensed Debt Advisors & Unregulated Financial Advisors

Unlicensed Debt Advisors are popping up everywhere and consumers need to know who they are, what they do, and why they are not the best option for financial advice.

I am encouraged by the Office of the Superintendent of Bankruptcy (OSB) recently issuing a press release on the subject – Need help with your debt? Ask questions and shop around to avoid paying unnecessary fees. Consumers are the ones ultimately paying the price, literally, for a service that may not be necessary. 

Let me Explain

If I may start with an introduction, I am a Licensed Insolvency Trustee (LIT). I help individuals navigate through difficult financial situations. The process works like this. They call, we have a free consultation, once we understand the situation, we outline all of their options. Those options may include services we offer and they may not. 

I am regulated by the Office of the Superintendent of Bankruptcy (OSB) and I adhere to the ethical standard of our professional association, the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). 

You may refer to me as a Debt Counsellor or Credit Counsellor because ultimately that’s what I do. I provide debt help. What I don’t do is charge any unnecessary fees. I can’t. Our fees are regulated and clearly laid out to the consumer when we review the various options with them. 

As an LIT or Insolvency Restructuring Professional (IRP), we must complete a certain number of hours of Mandatory Professional Development each year to keep our licenses active and our skills sharp. My license is extremely important to me. I had to undergo an extensive education program and with examinations, both written and oral, to receive it. And I have to adhere to the ethical standards of my profession to keep it.

Beware and Be Warned

Unregulated, unlicensed debt advisors, sometimes referred to as Financial Advisors, Debt Consultants, Debt Advisors, Debt Counsellors or Credit Counsellors, are, well, unregulated. No one regulates them. They have no prescribed Code of Ethics or Ethical Standards. They report to no one. In addition, they are unlicensed. They are not required to obtain a license. Their fees are not mandated. They can, essentially, charge anything they want, provided the consumer is willing to pay it. Which, often they are, because they don’t realize they can get the same service (better, actually) for free.

A bit more about LITs like me. We are passionate about helping others find financial solutions that work for them and get them back on track financially. And when someone comes to see me and shares that they have paid hundreds or thousands of dollars to talk to someone else first, only to be redirected to a Licensed Insolvency Trustee, it upsets me. For them. They were already having financial difficulties and the unregulated, unnecessary fees, have not helped.

Here are some of the pitfalls I have seen debtors encounter with these unregulated, unlicensed debt advisors and how we differ:

  • They cannot offer you protection, while a settlement is being negotiated, from your creditors taking legal action against you which results in continued fear and stress (When dealing with an LIT, there is something called a Stay of Proceedings that goes into effect. It stops any legal action from being taken or from continuing).
  • They often require a large sum of money up front, before starting the process, leaving you to contend with collection calls, often harassing and humiliating, in the interim (LITs may require no initial payment or a small initial payment to start the process, speeding up the process to put the protection, noted above, in place).
  • Government debt cannot be included in the debt they are negotiating (LITs can include government debt in their program’s, with some exceptions that will be clearly explained to you during your free consultation).
  • Some of these companies offer high-interest loans to pay out your debt, leaving you in a worse situation than when you started (These are often referred to as “band-aid solutions” and something that LIT’s will want you to avoid, and instead, help you find a permanent solution to your financial difficulties).
  • There is often false advertising with these companies that states or implies they are part of a government program. They are not. (LITs are the only ones licensed and regulated by the government to provide debt solutions. You can find a list of those who are licensed and regulated here: Find an active Licensed Insolvency Trustee).
  • Some of these places are simply scams. There is no one to help you and the money you pay them will be lost with no recourse to recover it. (Licensed Insolvency Trustees are required to have brick and mortar offices and adhere to other standards in maintaining a presence for consumers)

o   There are some bona-fide Credit Counsellors with office locations who are ethical. (If this is a potential best solution for you, LIT’s will share that information when reviewing your options and provide you with contact details.)

  • Some companies will simply charge you a fee to refer you to a LIT and offer to be “your representative” (LIT’s are dual representatives, they are required to protect your rights and your creditors rights in accordance with the law)    

In Summary

Do your research. If you are going to consult with someone, ensure you know who you are consulting with. Look them up online. See if they are licensed, or regulated. Do they have a brick and mortar office location? Is it easy to identify who the employees are and how to contact them?

Licensed Insolvency Trustees are known in the industry as your go-to professionals who have the skill, knowledge and expertise to help you navigate your financial situation from the simplest hiccup to the most extreme case. And we will do it above board, with full transparency in accordance with the ethical standards of our profession.

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Mary-Ann Marriott

Mary Ann has been working in the insolvency industry for 25 years. In 2005 Mary Ann received her Chartered Insolvency & Restructuring Professional (CIRP) designation and attained her license as a Licensed Insolvency Trustee (LIT) in 2014. She is passionate about helping others become financially literate, and has been a guest speaker to various groups and organizations on the topic of Money Management. Mary-Ann also hosts a weekly radio show, as a volunteer in her community. Her tagline is “Helping you have happier, healthier finances”.