If you’ve been considering filing bankruptcy in Ontario, chances are you’ve exhausted many other options to try and dig yourself out of debt. One way to take care of debt that many people look into is working with a debt settlement company. The problem with many of these companies is that their services aren’t very transparent. It’s hard for people to know exactly what is going on with their debt and money if they don’t have total transparency about the process. This is just one way that filing for bankruptcy and using debt settlement companies is different. Here are some other reasons to consider avoiding debt settlement companies if you can:

Debt Settlement Companies Tend to Mislead Customers

The only way to file bankruptcy in Ontario is through a Licensed Insolvency Trustee. They are licensed and regulated by the federal government Office of the Superintendent of Bankruptcy. However, debt settlement companies don’t have the force of law behind them. Some creditors refuse to work with the settlement through a debt settlement company because they don’t have to. They’d rather continue to try to recoup the full debt from you, or allow more interest to accumulate.

But debt settlement companies don’t tell consumers this fact. They’ll report to customers that all their debts can be settled, and may not even divulge the fact that some creditors aren’t working with them. This means that consumers can come out the other side of settling debts with more debts that they assume are all paid off.

Debt Settlement Companies Fees Don’t Make Sense

The way a debt settlement company works is by evaluating your debt, determining how much may be needed to settle that debt, and then dividing that amount into small payments that they begin charging you right away. You pay into what you believe is a fund that the debt settlement company is using to contact creditors and arrange for settlements. But the fact is that, because not all creditors will work with debt settlement companies, some of the money that you are paying into this fund is going to the debt settlement company. These companies don’t usually inform customers of what exactly their money is going, so you could be owed a refund but don’t know to ask for it.

If you skip the debt settlement company and go straight to a Licensed Insolvency Trustee, you will ever be asked for money upfront. Initial consultations are always free. All of your debts will be included (there are a few exemptions but we will be up front with those) and all creditor action will immediately come to a halt. 

If you’re considering bankruptcy, contact our office today to speak with a Licensed Insolvency Trustee and begin the process of getting out of debt immediately. 

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