What a debt counsellor does for you

May 16, 2012 by
Filed under: Bankruptcy, Debt Management, debt relief, Proposal, rebuilding credit 

We understand that many people who are in financial crisis struggle with getting the right information. Not because they lack intelligence, but rather because they lack experience and simply don’t know where to begin looking for help. After all, financial crisis is not a common occurrence in one’s life: it’s an anomaly, an unusual, one-time event.

And since financial crises are often shrouded by shame, reaching out becomes really hard to do. This page is our attempt to help you begin your research, and start you moving towards whatever financial-restructuring solution that is best for you.

Overview of services
 Category Debt Counsellor Trustee
Financial compensation
  • Financial compensation is from the client. It is typically a set price, predetermined between the client and the debt counselling agency.
  • Financial compensation is from the client. While financial compensation is government controlled, it is ultimately based on what option the client selects. If that option is a consumer proposal, then it is a percentage of how much they can extract from the debtor. The more a trustee extracts, the more they earn.
Who they work for
  • Works for you.
  • Trustees legally must equally represent all three parties: The creditors (the banks), the Superintendent (government), and you, the debtor. Since their income is determined by how much they can extract from the debtor, and since they must ultimately administer any recommendations put forward by the Superintendent, their personal ability to stand completely in the debtor’s corner may be compromised.
Comprehensive presentation of all options and strategies
  • Recommends the strategy that is in your best interest, and if contracted, will work with you no matter what option you select.
  • Since trustees stand to earn more when they file a consumer proposal (over bankruptcy), and since they stand to earn nothing if they recommend an option outside of the trustee’s office, their recommendations may be influenced. If the client presents no income potential, a trustee may recommend an outside service in your one free session, like loan consolidation or credit counselling. They typically don’t continued support while you navigate these external options.
Comprehensive time and obligation management
  • If you need support with time management, a credit counsellor can help you manage your commitments by reminding of deadlines and meetings. In bankruptcy, failure to meet the commitments can result in an extension a bankruptcy. In a consumer proposal, failure to meet a payment can result in the cancellation of the process, re-subjecting you to creditor harassment.
  • Trustees are typically too busy to send out reminders when monthly reports are due. They inform you of your dates from the onset and then expect you to meet the commitments.
Facilitates your entry into a selected process
  • Helps you “plan” your financial restructuring, and gives you the time to examine all options.
  • May usher you directly into the process.
Legal protection from creditors
  • Provides no legal protection from your creditors.
  • Provides legal protection from your creditors.
Regulation
  • Unregulated, no credentials required.
  • Regulated, licensing required.
Advanced preparation
  • Prepares you for the next step in the process (be it a meeting with your creditors, a meeting with your superintendent, an appearance in court, and what to expect from the mandated counselling sessions).
  • Informs you of the next step in the process.
Documentation
  • Assists you through the process of gathering the documentation required to submit to the trustee.
  • Helps you present your story. Your story is critical, as it can impact how long you are in bankruptcy, and whether or not you will be requested to have an interview with your creditors and/or the Superintendent.
  • Gives you the forms to fill out.
  • Listens to (or reads) your story.
  • Provides emotional support and counselling along with helping you handle your financial affairs while you are in “the process” (“the process” being whatever option you selected).
  • Handles your financial affairs, and administers the two mandated counselling-sessions.
  • Upon completion, continues support by helping you re-establish your credit and get back on your feet after the process has been completed.
  • Upon completion, sends you your release documentation.
CAUTIONARY NOTES
Watch for ads that are simply a referral service for trustees. These are the ads that scream, “Government program will reduce your debt; call now, our operators are standing by.” Typically, the information you submit gets transferred to an out-of-country call center, who will then refer you to a certain trustee. Please refer to the consumer alerts section on this website.
It is absolutely essential to us that you know the pros and cons of what services you ultimately select. Since ethics is paramount to us, we will also direct your attention to some articles that advise against seeing a debt counsellor (typically referred to as a debt consultant). Note, that trustees typically advise against debt consultants; and that debt consultants are typically weary of a trustees financial motivations. We recommend the following articles:

Please also refer to the consumer alerts section on this website, as we happen to agree with many of the (scam-based) objections and concerns of these trustees.
One final note

We identify ourselves as “Debt Counsellors” as opposed to “Debt Consultants” as counselling is a paramount component of our services. Our debt counsellors have:

  • Over five (5) years experience counselling, and have received education and training in this field;
  • A university degree (minimum BA); and,
  • Received (or are in the process of receiving) certification as Insolvency Counsellors from CAIRP, the Canadian organization that ultimately oversees the regulation and licensing of trustees in Canada.

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