If you’re struggling with debt and exploring your options in Canada, it’s important to know how to navigate the “debt-relief” marketplace safely. A recent regulatory intervention by the Office of the Superintendent of Bankruptcy (OSB) and the Service Alberta and Red Tape Reduction (SART R) shines a light on the kinds of pitfalls you should watch for and helps you protect yourself.
What happened: What the regulators found
- The OSB posted a notice that Service Alberta imposed a Director’s Order on Credit720 Inc., a debt advisory firm, requiring it to stop using any wording in its advertising that suggests it “files proposals” (i.e., suggesting it is carrying out the formal legal process of a consumer proposal under the Bankruptcy and Insolvency Act when it is not a licensed insolvency trustee. Open Alberta+2Open Alberta+2
- The Director’s Order is public: the Government of Alberta’s open publications portal lists the Order. Open Alberta
What it means for you as someone in debt
This regulatory action is a good warning: even when a debt-advisory or debt-relief firm sounds appealing, you need to be cautious. Here are key risks and things to check:
1. Misleading advertising or claims
- If a firm says things like “we will file your consumer proposal” or “we’ll handle your bankruptcy” but the firm is not a licensed insolvency trustee, that can mislead you. In this case Credit720 was ordered to stop implying they do filings of consumer proposals.
- Always ask: who will legally file the proposal or bankruptcy? Is it a trustee licensed by the OSB?
2. Understanding what you’re actually getting
- A “consumer proposal” is a legal process under the Bankruptcy and Insolvency Act, only a licensed trustee can administer it.
- Many firms offer debt-counselling, consolidation, negotiation services, but those are different than formal insolvency filings. If advertising blurs the difference, you may pay for something that isn’t what you intended.
3. Cost, quality and protection
- You may be charged fees for “debt relief” or “proposal filing” when the service is really debt counselling or negotiation only.
- If the firm’s promise sounds too good (e.g., “reduce debt by 70%”, “we’ll erase your obligations”), ask for proof, ask for licensing, ask for full disclosure of what they will and won’t do.
4. Check licensing and credentials
- In Canada, a licensed insolvency trustee (LIT) is the only person who can file bankruptcy or consumer proposals. Ensure you’re dealing with an LIT if that’s what you need.
- If the firm is only a “debt-adviser”, ask what their exact role is and whether you also need a trustee.
- You can check the OSB website for trustee licensing. The OSB explains its role is “to contribute to a fair and efficient marketplace by protecting the integrity of the Bankruptcy and Insolvency system for the benefit of… consumers.” ISED Canada
5. Referral and Trust
- If you are being referred to a debt-relief firm, ask about the referral firm’s oversight and whether the trustee (if needed) will be involved.
- Be aware of firms that primarily market debt-relief “packages” but may not deliver what you expect.
Practical checklist for you
Before engaging a debt-relief or debt-advisory firm check the following:
- Does the firm clearly say whether they are a licensed insolvency trustee or are working with one?
- Are you being told that the firm itself will “file the proposal” or “arrange bankruptcy”? Ask for clarity.
- Ask for a written agreement detailing what services will be provided, what the costs are, who performs which steps, and what the expected outcome is.
- Compare your options: an LIT will provide an assessment of your full picture (debt, income, surplus, alternatives) and explain pros and cons with no upfront fees.
- Check the OSB website (for federal insolvency matters) and provincial consumer-protection resources (for your province) for complaints or alerts about the firm.
- If something feels “too good to be true” (huge debt reductions, “erase your debt” slogans) pause and verify.
Why the System Cares
The intervention by the OSB and SART R signals broader concerns:
- When debt-advisory firms imply they perform formal insolvency filings, it can confuse consumers about their rights, obligations and what process they are entering.
- The insolvency system (bankruptcy, proposals) has legal safeguards and is regulated for a reason. If non-trusteed firms sidestep that, consumer protection is eroded.
- As the OSB notes, it encourages stakeholders with knowledge of non-compliant behavior to file complaints. ISED Canada
At C.E. Craig & Associates Inc., as Licensed Insolvency Trustees, we are pleased to provide services under the Bankruptcy and Insolvency Act and have been providing financial advice to debtors in BC for over 20 years.
