Since publishing my last post about The Problem with Debt Consultants I’ve been inundated with stories about debt consultants.
Before we start telling stories, what exactly is a debt consultant? As Joel Sandwith explains it, a debt consultant is often someone who is suggesting a solution that is “too good to be true.” In Rebecca Martyn’s experience as a trustee, a debt consultant is often simply someone who charges a large fee, and then refers you to a trustee.
Sadly, these opinions are based in real life stories.
The Call Centre Consultant
Ian Martin tells the story of Carl (not his real name), who talked on the phone for a while with a debt consultant, only to discover he was talking to someone in California. Ian’s advice: ask who you are dealing with don’t sign up for debt relief services over the phone.
The Administration Consultant
Benny Mendlowitz met with a woman in his Scarborough office who met a debt consultant who’s office is on the same floor as Benny’s office. The debt consultant said they would work on her behalf to administer her file. She said to the debt consultant “why would I pay you $1,500 to hook me up with a licensed insolvency trustee when I can do that myself?” At that point, she got up and left, found Benny, and Benny filed her consumer proposal (and he didn’t charge her any upfront or extra fees).
The Referring Consultant
Rebecca met with a couple who offered to help them on the phone with their options. After a sending in some information and making some processing payments, the consultant referred them to another trustee. This is such a concern right now that even the Office of the Superintendent of Bankruptcy has raised concerns about unlicensed debt consultants.
If you want to meet a trustee, contact a Hoyes Michalos bankruptcy trustee, and we’ll meet with you to discuss your options for free.
So why do people go to debt consultants? Because they advertise a lot, particularly in the Toronto area. Julie Wildman in our Toronto office tells the story of the debt consultant ads “snaring” an unsuspecting couple who paid the debt consultant $1,000, and never heard from them again. That’s sad, and that’s why I’m writing this article as a warning to others.
I won’t go so far as to say every debt consultant is a scam artist, but I will say this:
- only licensed insolvency trustees can file a consumer proposal on you behalf.
- only a licensed insolvency trustee can offer creditor protection and stop a wage garnishment.
All an unlicensed debt consultant can do is charge you a large fee, and then refer you to a licensed trustee.
So, for legal protection, bypass the middle man, and don’t pay any extra fee. Contact us, and arrange for your free consultation where we will explain all of your options.