Why see a Trustee First?

debt-piggy-bank-iStock_000007403861_300pxCanadian household debt is at an all-time high. This means that the average Canadian is struggling, not only to meet their basic living expenses, but also struggling to meet their ongoing debt payments.

There is a myth in Canada that there are government programs that exist that allow you to enter into payment arrangements with your creditors.  In reality, there are no programs.  The government does not have a program that will write a cheque and get you out of debt.  What the government does have is legislation that allows you to compromise your debts.  For consumers, that legislation is the Bankruptcy and Insolvency Act. 

The thought of meeting with a bankruptcy Trustee makes individuals uncomfortable.  The typical consumer is often unaware of the many roles of the Trustee and the options available for dealing with debt and subsequently they delay getting advice.  Or they contact non-trustee firms with the hope that their problems will be solved.  But in a lot of cases, their problems are only beginning.

Trustees do much more than just bankruptcy.  We are also Professional Debt Consultants and can make arrangements with your creditors on your behalf; provide debt counselling; negotiate settlement agreements and help you make a proposal to your creditors to avoid bankruptcy.  If a Trustee feels you need independent legal advice we will refer you to an insolvency lawyer.  In some cases the Trustee will be able to advise you of a solution that will cost you nothing and have you avoid bankruptcy.

Trustees are highly trained individuals who are licensed by the Office of the Superintendent of Bankruptcy (OSB) under the authority of the Bankruptcy and Insolvency Act.  The majority of Trustees also belong to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).  To help ensure that the rules are followed, the OSB is responsible for supervising the process and protecting the public interest.  The OSB is also responsible for issuing licenses to Trustees and for reviewing everything that the Trustee does to ensure that every debtor is treated exactly the same and fairly as outlined under the Act.

There is an abundance of misleading information about credit and debt repayment programs in the marketplace and on the internet.  Many non-trustee firms use words like “avoid bankruptcy” or “we can help reduce your debt to one monthly payment” and are a common theme that you read about all the time.  Other types of organizations that offer “credit or debt” consolidation, payment programs or some form of debt relief, are in the business of helping you organize your payments and thus charge a fee for their service whether they tell you up front or not.  Even the programs that are non-profit charge fees.  The fees each and every one of these firms charge differ from company to company and are not to be found anywhere in their promotional material.  Trustees’ fees in a consumer proposal and in a bankruptcy are set out in the Bankruptcy and Insolvency Act.  In other words, the OSB has set the rates and all Trustees get paid the same fee and it is public information.

Non Trustee firms offer to help you avoid bankruptcy.  In many cases all that is happening is the inevitable is being delayed or you will be put on a debt repayment program that is so onerous, that you will eventually default on and be worse off than you were when you started.  And if you owe Canada Revenue Agency a tax debt, or some other type of government debt (student loans comes to mind) none of these programs will work.  Remember, if it sounds too good to be true, it probably is.

As well, the majority of these companies have no government oversight, no professional association, no regulatory body and no code of ethics.  Trustees have all of these.

So if you are having debt problems, call us.  Your first consultation is free.  (604) 605-3335.