Continuing with last week’s article concerning debt consultants who are now advertising “Credit Relief Programs” to Canadians plagued with credit card debt – we are going to take a closer look at exactly what legal protection they can offer you against your creditors.
The complex, in-depth analysis can be summed up in one word: NONE
Debt consultants themselves will meet with you, promise you fantastic solutions to your debts and will tell you everything you want hear.
However their plan doesn’t really afford you any legal protection from your creditors. Your creditors will continue to call and harass you at home (and possibly place of employment), send you to collection agencies, garnish your wages and even go as far as to try and put a lien on your home.
After you spend a few thousand dollars on a debt consultant and they finally agree that they are no longer in a position to “help” you, they’ll refer you to a trustee in bankruptcy to undergo a Consumer Proposal (or a personal bankruptcy). The trustee will most likely pay a fee to the consultant for a referral.
At Hoyes, Michalos & Associates Inc. we do not have any referral agreements with debts consultants because they offer no real service and we feel what they do is quite immoral and almost pseudo-illegal.
By speaking with a Trustee in Bankruptcy, you do not pay us any consultation fee, or upfront fee. Whatever settlement we negotiate with your creditors (typically 35-40% of what you owe) that’s all you pay and you are legally protected. A consumer proposal cannot exceed 5 years, and if you pay it off sooner you’re out of it sooner.
A consumer proposal will protect you from the following:
- Wage garnishments or assignments (Stay of Proceedings is put in place right away)
- Threatening phone calls from collection agencies stop
- Any liens on your home would be removed as a result of the proposal (unless CRA has the lien)
- Includes tax debts to Canada Revenue Agency
- Process licensed by the Federal Government of Canada
At Hoyes Michalos & Associates Inc. we never charge any fees for consultations (some trustee firms do). If you feel you need some genuine financial help and are unsure where to turn, give us a call at (866) 747-0660 or e-mail us and we’ll be happy to arrange a free consultation which most people find very helpful.