March 24th, 2011 by Questions
I’ve had discussions with a credit counselling agency re. consumer proposal vs. bankruptcy but I’m still skeptical about the information I’m hearing from them as well as what I’ve been reading on different related sites. One of the points that the agency stressed was that they were working ‘for me’ and my benefit whereas a trustee works to get the greatest sum back for ‘the bank and creditors’. The agency also mentioned that they have trustees that they’re familiar with who will typically accept the CP offers or bankruptcies they file. I understand that there is a responsibility to ones creditors and I’ve been trying to pay things down for the past 3 years but i barely take a bite out of the interest and I’m not getting anywhere. So i guess my question is (as trustees) ‘who do your loyalties lay with? the creditors or the debtors?
Posted from: Ontario
One Response to “Trustee obligations”
Please post a follow up comment below:
(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)
You must be logged in to post a comment.
March 24, 2011 at 7:15 am, A licensed trustee said:
You’ve hit the issue right on the head – who do you beleive?
Let’s start with the fact that I am a licenced trustee and therefore I am biased towards trustees. That being said, the reason that these debts consultants say you should use them is that “they represent you, while trustees represent your creditors”.
In response I offer these comments:
1) unless the debt consultant is a lawyer they cannot represent you after you have filed bankruptcy or a proposal – they have no legal standing in these procedures. Once you have signed with a trustee there is nothing the debt consultant/credit counsellor can do for you.
2) If you need to file for bankruptcvy there are very specific rules that trustees must follow – it is not a negotiation between the debt consultant and the trustee. The rules are the rules are the rules are the rules… If there is a disagreement on how to apply the rules the matter is referred to Court (and I already told you the debt consultants can’t represent you in Court).
3) if you need to file a proposal there are two simple standards that need to be met: you will have to offer to repay the greater of-
(a) the amount your creditors will receive if you were to file for bankruptcy, or
(b) at least 30% of your unsecured debt
Knowing all of this, what exactly is the debt consultant/credit counselor doing to help you? They might help assemble your paperwork (your trustee will do that for free) and they will refer you to one of the trustees they like to deal with (do you really want to deal with a trustee that lets you pay a fee to some one else when they would have met with you for free?). Do a google search or open the phone book and find a trustee yourself – it won’t cost you a penny…
I understand why people answer there ads – no one wants to go and see a trustee in bankruptcy (just like you don’t want to go and see your dentist when your teeth hurt), but does it make sense to pay somebody hundreds, perhaps thousands of dollars to be told to go and see a trustee anyway? You have go to have better things to do with the money…