Question: My Husband and I are considering going through a consumer proposal. We originally went to a Debt Settlement company. Although the rep has been very helpful, there is a fee of $900.00 for their services. He said that although they are not licensed trustees, they look for the best interest of their client, Trustees don’t. Would we get a better results by paying the fee and going for the consultants or going directly to a Trustee or a company such as BDO Canada? Please help us!
Debt settlement companies work for themselves, and in many cases are not qualified to provide financial advice.
Here are some facts you need to know:
First, all companies exist to make a profit. Whether you go see a debt settlement company, or a trustee, they exist to make a profit. They are private businesses. For a debt settlement company to suggest that “they look out for the best interest of their client and Trustees don’t” is ridiculous. They both exist to make a profit.
In addition, a debt settlement company is not required to follow any specific rules. Many debt settlement companies are based in the USA, and they only operate in Ontario by telephone, so they are not regulated in any way. In contrast, a trustee is required to be licensed by the federal government, and is required to follow all rules. They are required to discuss all of your options, including debt consolidation, consumer proposals, and bankruptcy. A debt settlement company is not required to tell you anything other than what they want you to hear. It is therefore the licensed trustees who act in the best interests of their clients, because they are required by law to do so.
Third, most debt settlement companies charge a lot more than $900, so be sure you fully understand the full cost you are paying.
Fourth, a trustee, by law, can only charge you money after you have filed your consumer proposal or bankruptcy. A debt settlement company can charge you $900, or whatever, up front, and then do nothing. At least with a trustee you know that your procedure has started before you start paying.
Fifth, you refer to “a Trustee or a company such as BDO Canada”. BDO is a trustee firm.
Here’s my advice: do your research. There are lots of debt consultant horror stories, so be sure you understand who you are dealing with. Talk to at least two different companies before you make a decision. By all means talk to the debt settlement company, and ask them what they can do, and what it will cost, and what are the chances of success. Then, talk to a licensed trustee (here’s a list).
Be sure that you meet with them in person; don’t do it solely over the phone, because a face to face meeting is the only way you can “look them in the eye” and know who you are dealing with (and you know then that they are actually based on Ontario).
Finally, here is a link to an article that answers the question Canada bankruptcy trustees work for the creditors, right? which addresses your question about whether or not the trustee works for you.