Most Canadians when faced with hard to manage debt issues will visit the internet seeking a solution to their problems. What they’ll find is a confusing array of messaging that all sounds similar – promising to reduce debt, start fresh, become free of debt sooner etc…
What you need to know is the majority of debt solution website are actually owned by Debt Counselling firms, who are absolutely not offering the same types of solutions as Debt Restructuring Specialists (such as 4 Pillars), or even Trustee`s in bankruptcy…not even close.
Here’s Important Facts about Debt Counsellors:
- Debt Counsellors are funded by banks and other major creditors. This means they work for these creditors – not the debtor (which is you).
- The use of the term “non for profit” is a misnomer as these creditors pay expenses, salaries and bonus payments that are part of the structure that is used to encourage performance by the counsellors. They use this term to make it sound like they`re a relief agency of some sort.
- Debt Counsellors typically do not reduce the principal debt. They will however lower the interest rates which lowers the minimum monthly payment requirements to keep the debtor from defaulting. This interest rate reduction is based on what the debtor can actually afford; therefore a budget is usually formulated by the counsellor to determine the level of interest rate reduction.
- Once the interest rate is reduced, the debtor’s credit rating becomes an R7, which means they are ineligible to receive additional credit from any sources for an indefinite period of time.
This type of interest reduction solution mostly benefits the creditors as it increases the odds of them eventually receiving all of their principal money back.
The debtor gets a break on the interest, so in theory it’s a somewhat “win – win” situation, but pales in comparison to what 4Pillars or even just walking into a Trustee’s office unprepared can provide.
Before visiting a Debt Counsellor – do yourself a huge favour and contact myself or any of the 4 Pillars offices in Canada to get the straight goods on what your options are.
I promise that once you are properly educated, your decision on how best to resolve your debt issues will be much easier to make.
Thanks,
Frank Eichinger
4 Pillars Etobicoke
Direct Line: 647-403-4992
