How To Identify Trusted Debt Relief Resources in BC

successful negotiate and handshake concept, two businessman shake hand with partner to celebration partnership and teamwork, business deal

As part of Financial Literacy Month last November, the Office of the Superintendent of Bankruptcy (OSB) and the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) worked together to distribute a warning to Canadian consumers about the increasing dangers in the debt advisory marketplace. Together, they released a Consumer Alert focusing on Debt Help, Debt Tips, and Debt Traps, with their main mission centered around helping Canadians who are facing financial hardships identify trustworthy resources for debt relief and assistance.

With the objective of reaching as many consumers as possible, the OSB has asked Licensed Insolvency Trustees, like Smythe Insolvency, for some help to amplify the message and get these resources in the hands of Canadians.

Where to find trusted resources.

The Office of the Superintendent of Bankruptcy has since released a Debt Solutions Portal in their continued efforts to warn Canadians about unregulated debt consultants and to point consumers in the direction of a Licensed Insolvency Trustee (LIT) for honest, unbiased advice.

If you’re struggling with debt, please visit the Debt Solutions Portal or book a free debt consultation with one of our Licensed Insolvency Trustees.

Why was a consumer alert issued by the OSB?

Now, let’s talk about why the OSB felt compelled to issue these warnings and why it is imperative to avoid unlicensed debt consultants and work directly with a Licensed Insolvency Trustee in BC.

The rise of unlicensed debt consultants.

The rise of unlicensed debt consultants has become a concerning trend, posing significant risks to consumers seeking financial assistance in BC. These individuals or companies often operate without the necessary regulatory oversight or professional credentials, luring vulnerable individuals with promises of debt relief and financial solutions.

Their lack of oversight can lead to fraudulent practices, such as charging exorbitant fees, making false claims about their ability to reduce debt, or neglecting to provide accurate information about the potential consequences of their services.

Consumers who turn to unlicensed debt consultants may find themselves deeper in financial distress, facing legal actions, and even further indebted. To protect themselves, consumers are strongly advised to seek assistance from Licensed Insolvency Trustees that adhere to strict ethical and legal standards.

Top reasons to avoid unlicensed debt consultants.

When you start looking online to find some help with your debt, you’ll come across individuals claiming to be Financial Advisors, Debt Consultants, Debt Advisors, Debt Counsellors, or Credit Counsellors – but you need to understand that they are not regulated at all. They don’t have a set of ethics to follow, no one oversees them, and they don’t even need a license. That means they can charge whatever they please, which often ends up costing you more when you could get the same service for free.

1. Not licensed to provide insolvency services: Unregulated, unlicensed debt advisors are simply not licensed to provide the services they are promising, such as helping you file for bankruptcy or a consumer proposal.

2. Lack of regulation and oversight: Another significant risk associated with unlicensed debt consultants is the lack of regulation and oversight. Licensed Insolvency Trustees are held to strict standards and are subject to supervision by the Canadian government. In contrast, unlicensed consultants often operate in a regulatory gray area, making it easier for them to engage in unethical practices without fear of legal consequences.

3. Potential for exploitive practices: Unlicensed debt consultants may prey on vulnerable individuals, charging exorbitant fees for services that are available for free or at a nominal cost through reputable channels. Their primary goal is often to maximize their own profit, rather than genuinely assisting clients in resolving their financial issues. The OSB warns in their Consumer Alert that “…some charge hundreds or even thousands of dollars for services they are not licensed to provide, or for unnecessary services offered before, during or after a consumer proposal or bankruptcy filing.”.

4. Inadequate knowledge and expertise: Licensed Insolvency Trustees are professionals with extensive training and experience in debt management and insolvency proceedings. They possess the knowledge required to provide accurate, tailored advice and explore all available debt relief options. In contrast, unlicensed consultants may lack the necessary expertise, potentially leading clients down the wrong path.

5. Limited access to creditor protection: When you work with a licensed insolvency trustee, you benefit from the legal protection provided by the Bankruptcy and Insolvency Act (BIA). This protection includes a stay of proceedings that prevents creditors from taking legal action against you and prohibits collection agencies and creditors from contacting you. Unlicensed consultants cannot offer this crucial safeguard, leaving clients vulnerable to creditor actions.

6. Promising to advocate for your rights more than a licensed trustee

Some companies will simply charge you a fee to refer you to a trustee and offer to be “your representative” and fight to get you the best “deal”. At the end of the day, the creditors decide how much they are willing to negotiate, and Licensed Trustees are dual representatives, which means they are required to protect your rights and your creditors rights in accordance with the law.

The role of a licensed insolvency trustee.

Here’s how working with a Licensed Insolvency Trustee is different compared to working with an unregulated advisor:

  1. We can protect you from legal action by your creditors while negotiating your debts.
  2. We don’t ask for a huge upfront payment, making the process quicker and less stressful.
  3. We can include government debts in our programs, with a few exceptions.
  4. We avoid high-interest loans that can dig you into a deeper financial hole.
  5. We’re the only ones licensed and regulated by the government for debt solutions.

In the pursuit of financial stability and debt relief, it is paramount to exercise caution and to do your research when seeking professional assistance. The recent consumer alert issued by the Superintendent of Bankruptcy serves as a reminder of the risks associated with unlicensed debt consultants and the importance of working with licensed insolvency trustees. These qualified professionals not only possess the expertise and experience required to address debt-related challenges but also operate within a framework of ethical standards and legal protections.

Additionally, the debt portal launched by the Superintendent of Bankruptcy offers a trusted resource for consumers to access reliable information and make informed choices on their path to financial recovery. By avoiding unlicensed debt consultants and embracing the guidance of licensed insolvency trustees, individuals can take the first steps toward a brighter financial future.

Our very own, Chris Sinclair, sat down with Financial Coach, Lindsay Plumb, to discuss this recent consumer alert and the importance of working with a Licensed Trustee.

Click here to check out their very informative discussion and please feel free to reach out to our team of licensed professionals if you have any questions about filing a consumer proposal or filing for bankruptcy in BC.