Things to know about Debt Advisors and/or Credit Counsellors

Debt Help, Debt Consolidation, Credit Counselling all mean different things to different people.  Not all people offering these services have professional accreditation, requisite education or experience and they definitely don’t have the ability to settle all of your debts.

These types of service providers are generally licensed under the Provincial Debt Collection Act or they have no license. Therefore, if you have a complaint against them, you have to deal with the provincial body that governs that legislation or worse, no one.  In BC that is Consumer Protection BC.

Licensed Insolvency Trustees (“LITs”) are licensed and regulated by the Canadian Federal Government through the Office of the Superintendent of Bankruptcy.  Most LITs also belong to the Canadian Association of Insolvency and Restructuring Professionals (“CAIRP”).  Both bodies investigate complaints against LITs and have a code of ethics that LITs must abide by.

A credit counselling program is sometimes called a debt management program.  This program will have the same impact on your credit rating and ability to obtain credit in the future as a Consumer Proposal.  They are both rated as an “R7”.

Under a debt management program, you will repay 100% of the amount owing to your creditors plus a monthly administration fee.  In a consumer proposal, you will only repay a portion. Most consumer proposals can settle your debts for less than 100% of the total amount owing.

Debt Advisors/Credit Counsellors cannot deal with government debt.  So if you owe any government agency debt, the debt cannot be included in any debt management program.  That would include taxes, student loans and even Medical Service premiums.  They will only deal with some of the debts and leave you on your own for government debt and banks that do not participate in the debt management program.

A credit counsellor cannot stop payroll garnishments, lawsuits, or creditor calls.   An LIT has the ability to stop garnishees, lawsuits and creditor calls.

So ask yourself.  What would you rather have?  A company that can provide you access to all your options, protect you from all your creditors, save you money and be totally transparent about fees, or one that can’t and have the same impact on your credit rating.

At Boale, Wood & Company, we will provide you with a no charge, confidential, assessment of your financial position.  You should never pay an up-front fee to obtain advice on how to deal with debt or a fee to be referred to an LIT.

Call us.  It’s not too late. (604) 605-3335

Licensed Insolvency Trustee vs Debt Advisor/Credit Counsellor

The following list shows the benefits of using a Licensed Insolvency Trustee, instead of a Debt Advisor/Credit Counsellor

 Licensed Insolvency TrusteeDebt Advisor/Credit Counsellor
Understand all your options to get out of debtLITs are required by law to discuss ALL your options for debt relief – not just repayment of your debt.Typically limited to just one approach. May not have the educational or professional background to advise on alternative approaches.
Stop creditors from pursuing collection actionAn LIT is able to use the full power of Federal law to protect you. Creditors are required, by law, to cease all collection action and are prohibited from starting any.Has no authority to stop collection or legal action.
Get full protection from your creditors and the courtsBy law, an LIT is the only one who can provide you with full protection from your creditors when you file a Proposal or BankruptcyDebt Advisors/Credit Counsellors have no legislative power over your creditors.
Be protected by a strict code of ethics & a wealth of experienceLITs are licensed by the Government of Canada and must follow a strict code of ethics and undergo many years of training and ongoing professional development.Debt Advisors/Credit Counsellors do not have to be licensed and are not independently regulated. Anyone can call themselves a credit counsellor!
Pay a fair feeTrustees’ fees are set by the Government of Canada and are set out in the Rules of the Bankruptcy & Insolvency Act. No upfront fees and a free consultation are offered.Many debt help firms charge large upfront fees, but do not have the power to enforce a settlement on ALL of your creditors. Consequently many of these settlements fail and you end up using an LIT anyhow and you don’t get your money back.