Beware of Unregulated, Unlicensed Debt Advisors

November 10, 2022 8:36 pm Published by Leave your thoughts

Consumer Alert – Beware of Unregulated, Unlicensed Debt Advisors

Where to Turn for Debt Advice – The Canadian Government has issued a warning to consumers about unregulated and unlicensed debt advisors.  The Canadian Association of Insolvency and Restructuring Professionals along with the Office of the Superintendent of Bankruptcy issued a joint press release warning Canadians about the debt restructuring market.  CAIRP and the OSB have told Canadian consumers to beware of unregulated and unlicensed debt advisors.  CAIRP has been collaborating with the OSB to update and re-issue a consumer alert on unregulated, unlicensed debt advisers/consultants published by the FCAC in 2019 https://www.canada.ca/en/financial-consumer-agency/services/debt/debt-settlement-company.html    CAIRP has been cooperating with the OSB on a joint consumer alert to better inform the public about the Debt Advisory Marketplace.

 As a result of these efforts, and as part of Financial Literacy Month 2022, the OSB and CAIRP have issued a joint Consumer Alert earlier today to help Canadians facing financial difficulties identify reliable sources of debt assistance. You can view the consumer alert here.

Additional Advice from the consumer alert includes

1) If it sounds too good to be true, it probably is.  Consider who is being paid for what advice.  The choice to make is up to you.  Don’t feel pressured to make a quick decisions and watch out for high-pressure sales tactics or unrealistic promises.  Solving you debt issue is unlikely to have a quick solution.  The same is true for fixing your credit score.   Debt Consultant behaviours to be concerned about include include high up front or hidden fees, high interest rates, and delayed payments.

2) Also be cautious about debt advisors encouraging you to take cash advances on your credit card or take out a high-interest loans to pay their fees.  Also, be aware of anyone who is selling you “debt insurance” as part of and restructuring plan – intertwining debt with insurance just complicates the issues and commits you to ongoing additional payments.

3) Be aware of fees and “service contracts” that are ongoing fee for a lengthy period of time for undetermined services like “debt counselling”.  If you enter into a formal consumer proposal or bankruptcy with a Licensed Insolvency Trustee, your credit score will improve as you eliminate your debt.  Your credit score will improve over time as you use consumer credit wisely and are no longer overextended.

Where to Turn to About Debt Advice?

4) The Advice from Consumer Credit alert also encourages all debtors to first meet with a Licensed Insolvency Trustee (LIT).  LITs are able to provide independent, unbiased advice about consumer debt options. LITs are part of their mandated duties under federal legislation provide a tailored review of everyone’s financial and personal situation. They discuss all options available for solving financial challenges.  These solutions include both including insolvency and non-insolvency options.

5) The formal options for consumer include consumer proposal or personal bankruptcy. Only a Licensed Insolvency Trustee can provide these government regulated services in Canada

6) Non-formal options may include:
– talking to your creditors on an informal basis to reduce your payments for a period of time,
– consolidating your debt into one manageable payment
– develop and follow a family budget or
– enter into a Debt Management Plan (DMP).

If needed, LIT’s are able to refer consumers to a reputable Not For Profit credit counselling agency, for example, to access DMP services.

5) If you are not sure where to turn, he OSB has a directory of LITs and LIT firms. LIT services are available across the country, even in remote locations.

At CE Craig & Associates, we offer a Free Consultation.  At your free consultation, we will outline all debt options available.  This ensures that those facing debt problems can get advice with no commitment and no upfront fees.

Additional Topics of Interest

Regulations Coming for Debt Settlement Companies

Change in Legislation Proposed to Protect Debtors from unscrupulous Debt Consultants and LIT

Credit Counseling Professional-  What are you Paying for?

 

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