Beware Debt-Relief Scams

The Government of Canada released a notice to make the public aware of debt-relief scams.

We want to protect Canadians and relay the message from the Government of Canada. See the tips suggested below to protect against Debt-Relief Scams.

Unregulated debt advisors are targeting indebted Canadians with promises of a quick fix, charging unnecessary fees for debt-relief services they are not authorized to provide.

Here are The Five Main Indicators of Debt Relief Scams:

1. Making unrealistic promises or forcing hasty decisions. Unregulated debt advisors might assure you they can wipe out your debt, without fully comprehending your financial circumstances. They might rush you into making decisions without considering all alternatives.

Only Licensed Insolvency Trustees (LITs) in Canada are legally obligated to provide a comprehensive financial assessment and clarify all debt relief options. Only after a detailed evaluation of your personal finances will they offer specific advice on financial difficulty resolution. They are legally and ethically bound to provide precise, impartial debt guidance and are routinely reviewed, audited, and inspected to ensure practice standards and legal compliance, including adherence to an extensive Code of Ethics.

2. Demanding advance payments or asserting they can secure you a “superior deal”. Asking for payment before meeting with you or providing a service is a warning sign. They might falsely claim they can negotiate a “better deal” with your creditors or represent your interests more effectively.

LITs typically offer free consultations without any obligation or upfront charges, providing a realistic overview of the debt relief options suitable for your situation. They are legally and ethically obligated to impartially safeguard your rights and those of the creditors. The fees LITs charge for consumer insolvencies and bankruptcies are federally regulated.

3. Imposing unnecessary charges masked as “referral fees” or “administration fees”. They might charge for services that are unneeded and don’t offer debt relief, leaving you in a worse financial state. For instance, they might assert they can provide you access to more debt-relief options through a referral to an LIT, sometimes for an additional fee.

If you have decided you need help with your debt, you should consult with a LIT first. A referral is not necessary to speak with a LIT. If it’s decided that the services offered by an LIT are not suitable for you, they might suggest non-insolvency options such as negotiating with your creditors, consolidating your debts, budgeting, or entering into a Debt Management Plan (DMP). If necessary, they can refer you to a reputable credit counseling agency, for example, to access DMP services. LITs do not charge fees for referrals.

4. Advising you to cease communication with, and/or payments to your creditors or asserting they can negotiate on your behalf. Some debt advisory companies might suggest you sever ties with your creditors and assert they can represent you and negotiate on your behalf. Creditors are not legally obligated to deal with them, so you might pay upfront fees for this service even if they fail to reduce your debt, leaving you further in debt.

LITs are the only federally regulated debt professionals legally authorized to negotiate binding agreements with creditors on your behalf. Only LITs can offer consumer proposals or bankruptcy services which legally require creditor actions, including collection calls and wage garnishments, to cease.

5. Offering only online services without the option for in-person service. Be cautious of debt advisory firms that only offer online services, don’t have a legitimate address or a location in Canada, or provide limited information about their identity on their website. If a debt advisory firm operates solely online without any indication of in-person service availability within Canada or your province, it is prudent to seek help elsewhere.

As Licensed Insolvency Trustees (LITs), we are federally regulated professionals who provide a full range of debt relief options. We’re here to provide you with comprehensive, compassionate guidance tailored to your unique situation. We understand that every individual’s financial situation is distinct, and we take the time to fully understand your circumstances before advising on the most suitable debt relief options.

If you have any questions that are in need of assistance, contact us today.