How much should debt relief cost?

Wednesday, March 21, 2018 - 23:21

Consumer Proposals, Bankruptcy

I usually advocate for shopping around when it comes to purchasing items at retail stores or online. It’s a simple way to save money and it doesn’t take much time (now that most prices can be found online). When it comes to the world of debt relief, it’s also important to “shop around” as you might end up paying a LOT more for the same service if you’re not sure what to look for.

I’ve seen many people turn to payday loans in order to try and gain immediate debt relief. This is always a short-term solution that may provide debt help today but ultimately leads people into a never-ending cycle of debt problems. Interest rates at payday loan stores aren’t just high, but they are expected to be paid more frequently than any other establishment.

Banks can provide debt help through a consolidation loan if the monthly payment isn’t too big to fit your budget. But you should ask the question, “how much will I have paid by the time I have paid back this loan in full?” It may shock you and therefore lead you to another solution.

There is no shortage of debt consultants and credit counsellors offering to provide debt help for a fee. Because there is no regulation in this area it is very much buyer beware. Again, ask questions. If you cannot ask those questions face to face then be extra careful. Since there is a wide range of debt consultants and credit counsellors, it’s easy to run into one that doesn’t have your best interest at heart. Some can be helpful. Others can be very hurtful. Ask how much it costs and what will you get for what you are paying. Will you get immediate debt relief? Will creditors still be able to contact you? Can you get debt relief from income tax debt? How much will you have to pay by the time you are totally finished? Often times when you seek help form a debt consultant, they end up charging a fee up front and then end up recommending a consumer proposal or bankruptcy with a Licensed Insolvency Trustee (which if you would have just gone to a Licensed Insolvency Trustee in the first place, there isn’t a fee).

A Licensed Insolvency Trustee is licensed and regulated by the Federal Government. If you decide to file a consumer proposal or file bankruptcy with a Licensed Insolvency Trustee, there is a cost to do this which is regulated by federal law. This is for the protection of the public. Licensed Insolvency Trustees are the only professionals in Canada that can file a consumer proposal or file bankruptcy on your behalf. In the vast majority of situations the payment is easily affordable because you also receive immediate debt relief and don't have to make payments on your unsecured debt. Payments are also a function of what your monthly income is and how many people are in the household, among other factors. It is difficult to generalize what the cost will be so it is important to take advantage of the free initial meeting that we offer and ask that most important question: how much will it cost?

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