Be cautious if you are considering using a Credit Counsellor

Please refer to this report on credit counsellors funded by Canadian Consumer Affairs. The report raises concerns about poorly trained credit counsellors and the conflict of interest “non profit” credit counsellors have because they are funded by credit grantors.

 

Credit Counsellors - What they are and how they operate

More and more credit counselling firms have opened up for business in Canada in the last ten years, fueled by the debtors’ desires to do almost anything to avoid going bankrupt. Credit grantors, in an attempt to dissuade people from filing bankruptcy, have also joined in with financial support of “non-profit” credit counselling companies.

Credit counsellors have you make regular payments under a debt repayment plan, to them and they in turn make payments to your creditors. Credit counsellors get paid by holding back a certain percent of your payments for their fees.

There are two types of credit counsellor; independent credit counsellors and ones who advertise as "non-profit". The two types of credit counsellors have similar services. The main difference is that the "non-profit" Credit Counselling firms get funding from various credit grantors such as banks, credit card companies, and department stores.

 

Trustees - What they are and what they do.

Manitoba Bankruptcy Trustees are regulated by the federal government and have a number of ways to help people suffering a financial crisis. These can include credit counselling, refinancing, budgeting and making settlement offers or proposals.

Bankruptcy Trustees are the only debt professionals in Manitoba who offer a full range of debt relief solutions, and the only debt professionals who can guarantee protection from your creditors.

Trustees in bankruptcy are highly trained professionals with a stringent code of ethics who will give you the best advice they can, even if it means you do not use their services. All trustees have at times:

• advised people not to go bankrupt because they were judgment proof;

• advised people on how to make an informal proposal without the services of a trustee in bankruptcy;

• advised people on how they could get compassionate relief from their debts without the services of a trustee in bankruptcy;

• referred people to other professionals where it was in the best interest of the debtor;

• advised people on how they could avoid bankruptcy and get control of their debt by better budgeting and discipline, without the services of a trustee in bankruptcy.