Debt Consultants or Licensed Insolvency Trustees? Who to Trust?

Posted in Bankruptcy Trustee
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

debt-consultants-vs-licensed-insolvency-trusteesAs I blogged about last week, the Office of the Superintendent of Bankruptcy has released a review of consumer proposals involving debt consultants.

I’ll start with an important reminder: a consumer proposal is a legal debt settlement process available through the Bankruptcy and Insolvency Act. This process can only be administered by a Licensed Insolvency Trustee.

Unfortunately it’s often difficult for a consumer, already under stress as a result of their financial situation, to decipher who they are dealing with when looking for debt relief. I recently came across a typical website someone looking for debt solutions may stumble across – credit720.ca. If you will notice from this screenshot, under their services tab they advertise consumer proposals and bankruptcies.

debt-consultant-credit720

Telltale Signs

This website advertises consumer proposals and bankruptcies, yet no where on their site does credit720.ca identify itself as a Licensed Insolvency Trustee. All Licensed Insolvency Trustees and firms are required to identify themselves as an LIT under directive 33 governing advertising for Licensed Insolvency Trustees.

If you use their debt calculator you are provided with a cost comparison of different debt relief options. Theirs includes a consumer proposal, which is not unlike our own debt relief calculator on hoyes.com.

What We Found

To understand who the company was, and who potential debtors would be dealing with, we decided to inquire about their services through their online chat. Below is a reproduction of our live chat dialogue, which took place on March 22, 2017 (You in this conversation is Hoyes Michalos).

You — Please update your info

Who are you

Credit 720 joined the chat

Credit 720

Hi, how can we help you today? =)

You — Please update your info
what type of services do you offer?

Credit 720
we offer credit counseling, debt management, consumer proposal and bankruptcy.

You — Please update your info
oh – are you a bankruptcy trustee then?

Credit 720
we are a credit counseling firm.
we have trustees working with us.

You — Please update your info
will I see a credit counsellor or trustee?

Credit 720
initially you’ll be seeing a credit counselor and if required you may see a trustee later on in the process

You — Please update your info
how will you know if I have to see a trustee?

Credit 720
Depending on your situation and your file the counselor you in meet in our office will decide
would you like to book an appointment in any of our nearest office?

You — Please update your info
I’m not sure, I’m still not sure who will help me. Do the trustees work for you or are they another company. I’ve already run into this before

Credit 720
trustees are independent license holders. They work with us

You — Please update your info
OK I understand. What do you charge?

Credit 720
we don’t charge for the consultation.
after we go through the complexity of your file the counselor will decide on the fees.

You — Please update your info
What would he be charging me for?

Credit 720
The work required to get your file go through and to administer you file.

You — Please update your info
Go through who – the trustee? What if I don’t need a trustee?

Credit 720
There are other options available other then trustee
i would suggest that you come and our counselor so they can respond to your queries in an appropriate & satisfactory manner

You — Please update your info
Still uncertain – if the counselor is not a trustee what they will do for me. What kind of education do they have?

Credit 720
credit counselor are BIA licensed holders and trustee are CAIRP & LIT.

You — Please update your info
??? – the person I will meet with is a BIA licensed holder? What is that?

Credit 720
yes they are BIA License holder. BIA stands for Bankruptcy and Insolvency Act
you can ask your questions when you see them in person

You — Please update your info
OH so bankruptcy again. They BIA person works for you? And that’s who I would meet with?

Credit 720
All licensed credit counselors working in any credit counseling company or trustee firms are BIA accredited.
yes they work for Credit 720

You — Please update your info
OK I still am not sure as I want to file bankruptcy and that seems like all you are going to do is refer me to a trustee. So I’ll think about it

Credit 720
BIA license is not just limited to bankruptcy. As said earlier in the chat it includes debt management, consumer proposal and orderly payment of debts programme
once you decide you’re more than welcome to book your appointment with us.
Is there anything else i can help you with?

End chat.

As you can see, these companies advertise the services of a Licensed Insolvency Trustee, but are somewhat unclear when it comes to stating who will be working on your case, and how fees will be charged for the services. They advertise services that can only be administered by a Licensed Insolvency Trustee, and they are not Licensed Insolvency Trustees. This is very confusing to the public and can prove costly for consumers. Without the right knowledge, the debtor ends up paying unnecessary, and often very high, consulting fees.

We strongly recommend that anyone looking for debt help investigate the company, and individual they are dealing with before entering into any payment agreement. Confirm that you are working with, and only making payments to, a Licensed Insolvency Trustee, and not an unlicensed debt consultant.

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