Navigating The “Seize” Of Debt Help Companies
Would you agree with me if I said solving debt, no matter through what avenue, needs to be taken as a serious financial decision? That one needs to be informed about every option and what the best solution is for them? Debt solutions are never one size fits all. Although more and more people are coming into my Bracebridge office having done their research, many people are still making uninformed decisions when looking to solve their debt. Don’t get me wrong… I understand that people can be under great financial stress and need an immediate solution, but debt should not be dealt with abruptly. Instead, debt should be dealt with as part of a much larger financial turnaround plan and based on achieving long term financial goals. What I see us do every day for our clients at 4 Pillars Consulting Group, not only in Muskoka and Parry Sound but right across Canada, further cements my belief in our company daily. As I come across individuals who have made a poor decision as to how to solve their debt, or have come to see me after they have met with another “debt help” company to show me the solution they were given in contrast to what we can do, I can’t help but want to shout it from the rooftops. This is serious business! We are talking about people’s current and future financial lives. I see people getting into massive unsustainable repayment programs which take no pressure off and ultimately fail after they struggle to pay it for years. I also see people go bankrupt as they thought it was the only option. I come across people who are sending money to an online company only to find that their money isn’t going to their creditors, and I see people struggling for years after dealing with a “debt plan” due to things not being done optimally for them in the first place. Whenever dealing with debt has been done without a comprehensive plan keeping the client first in mind, it leaves consumers vulnerable for future financial failure and may exclude them from main stream banking/lending products for years to come due to bad credit, which could potentially negate all the hard work. The following is a very quick snapshot as to the different types of companies that say they can help you with debt.
Not for profit credit counselors
I always liked that one. “Not for Profit”. It makes me think that the person behind the desk is working for free, the office has been donated and that the power company doesn’t charge them to turn on the lights. Then of course that thought is fleeting. At which point it then hits me like a hammer… if you are not for profit, and I am not paying you… how do you get paid? Well the answer to the question is simple. Not for profit credit counselors usually get their funding from the creditors. That answers my question as to who they are working for. Generally you will pay back at least 100% of what you owe when dealing with a credit counselor. In Ontario, many times there is still interest attached to the debt and there may also be a monthly fee to be paid to the counselor. Depending on the client’s situation, the savings in monthly cash flow may not be sufficient and therefore the financial demands can still be quite intense. Another point to understand here is this type of program may be unable to help with tax debt and also negatively impacts your credit rating even though you are repaying all of your debt.
Trustee in Bankruptcy
I have some good friends who are bankruptcy trustees, which always makes for great conversation when we get together.
It is very important to know that a trustee in bankruptcy ‘is a person licensed by the Superintendent of Bankruptcy to administer proposals and bankruptcies. The trustee represents your creditors and is an officer of the court’. This is a quote from ‘Dealing with Debt’ guide created by the Office of the Superintendent of Bankruptcy Canada. We also need to understand how important the role of the trustee is, as a court officer who represents the creditors, they are there to make sure everybody (creditors and debtors) are “playing by the rules” so to speak, or else the system could be open to abuse. We work with a large number of trustees across Canada as it allows us to negotiate the proposal terms with them in order to present and offer to all the creditors as a whole vs negotiating individually with each creditor, this also provides clients legal protection from the creditors when they file the proposal.
Debt Pooler
With no disrespect to any debt poolers out there… this is probably the worst form of debt help that someone should never take. This type of debt help can cause a lot of problems. You pay the debt pooler for months while they stockpile your cash so that they can call your creditors in attempt to “crack a deal”. Some creditors will not deal with a company that operates like this. For the client, it is a lengthy, stressful process and usually the debt reduction is not worth the aggravation. One of the biggest challenges with a plan like this, is that there is no protection from the creditors as they are not obligated to deal with a debt pooler. So an individual may very well get sued, wages garnished and/or a lien placed on assets long before a plan is ever in place.
A well-established company the represents the interests of the client
There are only few of these companies around in Ontario. But just because they say they can help, does not mean they are all the same. Anybody can put a plan together, but will it work? One needs to look at the company historically and operationally. How long they have been in business? How many of their clients have actually become debt free and in what time frame? Can you meet with the company in person and is there an individual responsible for your file? Do they help with a go forward plan after the debt solution has been put in place? A proper methodical credit rebuild along with a cash flow management plan after the fact, needs just as much attention as the debt solution itself.
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When looking to solve debt, one should not make a decision out of haste. Proper research and unbiased council is crucial. 4 Pillars Consulting Group in Muskoka is one of Canada’s largest, oldest debt management and credit rebuilding companies. We have helped 10’s of thousands of Canadians solve billions of dollars of debt. Our clients are debt free on average in 2.5 years with cash in the bank and a better credit rating then when they came to us.
4 Pillars Consulting Group is a Canadian owned and operated company and does not provide debt solutions outside of Canada. This post was created by the Muskoka / Parry Sound 4 Pillars office located at 109-B Kimberley Avenue, Bracebridge ON. P1L 1Z8 – 705-640-0187
