Credit Counsellors and Debt Consultants – Who can you trust?
When people are in a lot of debt, their finances are constantly on their mind. Often times they hear commercials on the radio form Debt Consultants or Counsellors promising to reduce their debt by 70%. The thing is, before you decide to contact a debt consultant, it’s important to know what you are really dealing with.
Anyone can be a debt consultant. Anyone. They do not require a license or any training, which makes it easy for them to open their business and start collecting your money. They charge huge upfront fees and they don’t provide any legal protection from your creditors. They simply contact your creditors for you (which you can easily do yourself) and try to negotiate your debt. The thing is, they have no authority to actually negotiate with your creditors.
Believe it or not, many of them are simply an expensive referral service for bankruptcy trustees! When they finally come to terms with the fact that they can’t help you, they refer you to a trustee in bankruptcy. Whereas, if you would have contacted a licensed trustee in bankruptcy from day one, you won’t make any payments until your proposal or bankruptcy is filed with the government.
If you’re not ready to file bankruptcy or make a consumer proposal but you aren’t sure what to do, I would recommend you visit a not-for-profit credit counsellor before talking to a debt consultant. I have personally worked with several debt counsellors in SW and would recommend their service. You can find a link to these counsellors here. These debt counsellors can help you with budgeting and money management, and if you are able to repay your debts in full they can prepare a debt management plan.
However, they cannot work out a deal where you pay less than the full amount owing and they cannot deal with certain debts, like tax debts. For this reason, they are not the solution for everyone.
The reality is, consultants and counsellors have no greater ability to negotiate with your creditors than you do. This isn’t a fact that they advertise or tell you when you meet with them. All they can do is contact your creditors and ask them to reduce interest or change your payment terms. This is something you can do yourself. This doesn't mean there aren't any good credit counsellors out there - because there are (see link above).
If you’re looking to get out of debt but can’t do it on your own, contact our office today. We offer free, no obligation consultations where we discuss all options that suit your situation.