I'd like to tell you about someone who came to talk to me about filing a consumer proposal. I'll call him Paul (not his real name). What makes this an interesting story is that at his initial consultation meeting Paul had some very good questions about what we do, in particular how a consumer proposal administrator compared to other debt advisors. Quite frankly I could tell that he had done his homework. It was a good lesson in how to interview anyone who you are considering talking to for advice about managing your debt.
What is a Consumer Proposal Administrator?
A consumer proposal administrator is someone who is responsible for the administration of a Consumer Proposal, a procedure to settle your debts filed under the Bankruptcy and Insolvency Act. No-one else can file a consumer proposal in Canada. Other agencies may advertise consumer proposals, but they would have to refer you to a consumer proposal administrator to file one. All proposal administrators in Canada are also trustees in bankruptcy.
How Are Proposal Administrators Licensed?
Paul first asked if I was registered with OACCS, an Ontario association for credit counsellors. I explained that no, as consumer proposals administrators, we are licensed by the Office of the Superintendent of Bankruptcy. I told him he could find the name of our firm, Hoyes Michalos & Associates Inc, and my name as a trustee in their directory and that the same applied to any firm or trustee licensed to administer proposals.
Is Your Consultation Free?
He then asked how much his first meeting was going to cost and what he had to pay upfront if he decides to file a consumer proposal. I explained that the meeting was no charge, and he does not make his first payment until after signing, and filing his proposal documents with the government.
I also explained that the fees we are allowed to charge are set by the government. All licensed consumer proposal administrators work this way, but not all debt advisors do. You should not have to make any payments before a solution has been reached.
Check Referrals and Reviews
We then discussed the Better Business Bureau. He noticed that while we had an A+ rating, we had 1 (that is right 1) complaint filed. I knew about the complaint, so I let him know that someone who had filed a consumer proposal filed the complaint when he was unable to get credit after completing his consumer proposal. The complaint was not really about our service or about the consumer proposal, but rather the fact that they were having trouble getting credit afterwards because they had not yet re-built their credit history. We responded with the Better Business Bureau who received no reply to our comment from the complainant. Again, I was impressed that Paul looked, and asked the right question.
Check Government Warnings & Don't Be Pressured
He let me know that he spoke with 2 debt consultants and I gave him my usual warning and directed him to read the government warnings about debt settlements. I found it interesting that he told me that one such company was calling him every few days asking him if he was getting in more debt and if he had made a decision. Talk about a pressure tactic! I told him I normally send one follow-up email just to make sure he doesn't have other questions but that you should never feel pressured to sign up for any procedure.
If Necessary, Get A Second Opinion
Paul then told me he had a meeting with another company before making a decision. I don't know who he is meeting with, but I told him to make sure he is dealing with a licensed consumer proposal administrator and I told him again how to search the government database. Second opinions are good, but they should come from someone reputable.
It took a few days before I heard back from Paul. That is normal, most people take around 3 weeks to make a decision. I am glad he did his research and I know he will be making a well informed decision.
It's important to feel comfortable with the decision you make about how to deal with your debt. Paul took advantage of the fact that as trustees we offer a free no, obligation consultation and asked all the right questions. Visit our list of commonly asked consumer proposal questions for additional information.