When it comes to dealing with financial crisis, not all debt management companies are equal.  In fact, the Ministry of Consumer Services  (“Ministry”)recently announced that they were looking at implementing restrictions against Debt Settlement firms.  The Ministry receives up to 70 complaints per month from consumers, some who have paid out thousands of dollars only to find out that their creditors have not agreed to the offered settlement, and their credit situation has gone from bad to worse.

There are different types of debt settlement companies available to consumers.  Some companies charge large up front fees to review your situation.  After this review, if a consumer proposal is the best option they will refer you to a licensed trustee to administer the consumer proposal.

Other debt settlement companies will advise you to deposit a set amount of money into a bank account until a lump sum is available to offer your creditors.  This process will continue until eventually all your creditors have been paid off using a lump sum settlement offer.  The downside to this option is that while you are saving your monthly payments, you have no protection from collection action.  The creditors are not getting their monthly payments and as a result often continue to call and can even take legal action.

Credit Counselling organization are often non-profit and provide budget counselling and can offer a debt settlement option that works well for a lot of consumers.  The down side to this option is that they are not licensed to administer consumer proposals.  As a result, while they can work with your creditors to reduce the interest rates, and reduce you payments, they cannot guarantee zero per cent interest.  Also, creditors can choose to opt out of their debt management programs.

A licensed trustee can offer you a consumer proposal or a bankruptcy.  Both of these are legal filings that stop the collection activity and are governed by specific legislation.  When you meet with a trustee, they will assess your situation and will determine the best option for dealing with your debt problems.  If there are better options for you, they are ethically obligated to explain them to you.  If a consumer proposal or bankruptcy is the best option for you they will walk you through the process step by step.

The first step on the road back to financial wellness is making sure that you get help from a licensed Trustee in bankruptcy- an advisor who is a qualified, certified professional with the insight and experience to help you make the right choices to get back on track.

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