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Debt Assistance Companies – Can They Help?

Looking up debt helpAndy and Cynthia are a smart young couple, but they’ve gotten into trouble with consumer credit.

Like most people, they certainly didn’t see money troubles around the corner when they started their small business. They were filled with optimism! And, things went well for a couple of years. Sales were actually better than they had projected.

One problem began to loom, however. They had used credit cards to finance their business start-up. Sometimes when sales were low, they’d had trouble making their payments. Efforts to pay down the cards had stalled as well. They even accepted offers of new credit cards, to ease the strain. You can see where this is going…

To help pay the bills, Cynthia got an office job, but her absence from the business caused sales to decrease. Three years after starting their business, Cynthia and Andy were in crisis. All of their available money, after basic expenses, was going into credit card payments – and some of their payments were now chronically late.

They were too embarrassed to talk to their friends or families, who were proud of them as entrepreneurs. So, Andy looked up “debt help” on Google.

Non-Profit Debt Counselling Services

Among the top results on Google were non-profit debt counselling services. Andy felt some relief looking at the companies’ pages, which suggested there were ways out other than declaring Bankruptcy.

In fact, many of these services offer sound advice about debt management, and will explain possibilities such as better household budgeting, working to qualify for a consolidation loan from your bank, using home equity to pay off debt, and the pros and cons of Consumer Proposal or Bankruptcy (for which they will refer you to a Licensed Insolvency Trustee). In some cases, they can arrange to have interest lowered or eliminated, and set up a payment plan for debtors.

Andy was tempted to email one of these organizations right away, but he scrolled a little further. He was quite sure that he and Cynthia were beyond qualifying for a debt consolidation loan, and paying the principal amount of their debt would likely be impossible for them as well.

Next, he found listings for debt management companies. Reading between the lines, it looked as if they charged a fee for services.

Debt Management Companies

Although most of these companies offered a free first appointment, their other promises seemed vague. The sites bragged quite a bit about what nice people their counsellors are, but didn’t say much about exactly what they could do for people struggling with debt.

What Andy didn’t know was that In Ontario, the rules (Collection and Debt Settlement Services Act) governing these companies changed on July 1, 2015. Prior to these changes, companies like these could (and did) charge high up-front fees, sometimes in the thousands of dollars, before even approaching creditors to try to negotiate on behalf of the debtor.

With the amendments, such companies can now only charge a $50 set-up fee, and a maximum of 15% of the debtor’s payments into the debt settlement plan. The employees of these companies are not required to undergo any specific training before they counsel customers.

Not surprisingly, many such companies folded once the 2015 changes were enacted.

Andy wasn’t impressed in any case. But he did notice that these websites often mentioned a repayment plan that lasted “60 months or less.” He skimmed a few more sites and learned that the “60-month” option was probably a legal process known as Consumer Proposal, which only Licensed Insolvency Trustees can administer. So, why not go directly to a Trustee?

Licensed Insolvency Trustees

Indeed, Andy was correct. Consumer Proposal is a popular insolvency solution that only a Trustee can set up.

Andy actually found the website you are reading now,, and learned quite a bit about Consumer Proposal and Bankruptcy right here. Armed with this information, he then used this site to contact a Trustee.

Trustees, by law, undergo extensive training. Andy and Cynthia’s Trustee was very understanding of how they had become enmeshed in debt, and told them it often happened to intelligent, responsible people like themselves. She reviewed several options with them and was truly happy to help.

The couple felt great relief after their first appointment. It turned out that Consumer Proposal was a good fit for their situation. With a reasonable 60-month payment plan, they were able to organize their household budget, keep their business, and plan for the future.

If you are in a similar situation, I encourage you to do as Andy and Cynthia did – and as I myself did in 2009.

Make a free first appointment with a Licensed Insolvency Trustee. It’s risk-free, no obligation, and is the first step to a brighter future.