CBB

Today, in Canada, there are many unlicenced individuals and firms providing credit counselling, debt reduction and debt management services. Many of these individuals and organizations are honest and work diligently to assist their clientele. Frequently, however, there are significant limitations in their resources and ability to assist individuals overwhelmed by debt. We often meet individuals who have invested a substantial amount of time, energy and money in working with these services only to determine that they cannot resolve their financial problems.

The reasons for this are numerous and include:

1. Insufficient or no training in the complexities of debt collection, insolvency and bankruptcy law.
2. A lack of awareness and understanding of current developments in insolvency law and practice.
3. Conflicts of interest, such that resolution of the debtor’s finances is not necessarily their only or even their primary responsibility.
4. Lack of access to the full range of debt settlement and bankruptcy solutions as they are statutorily and legally prohibited from making use of them.
5. Lack of access to an established and recognized body, such as the Court, the Superintendent of Bankruptcy, or the Canadian Association of Insolvency and restructuring Professionals (“CAIRP”), for the settlement of the inevitable disputes that arise in this work.

If you are going to retain a non licenced credit counsellor you should be aware that certain of them are paid by the creditors who return a percentage of the debt settlement amount to them.

Also, Non licenced consultants cannot immediately stop garnishments and collection proceedings as a Licenced Trustee in Bankruptcy can upon the debtor filing for bankruptcy, a notice of intention to file a debt settlement proposal or the filing of a debt settlement proposal.

Many creditors will only reduce or eliminate the interest being paid by debtors and not reduce the principal owed, when approached by an unlicenced debt consultant or credit counsellor. As a result, we frequently meet with individuals who have been making unaffordable payments to a consultant for many months without making any substantial progress in eliminating the debt and the related stress.

With respect to unpaid tax liabilities, under Canada’s income tax law, CRA may only eliminate and write off all or part of the principal it is owed if a tax debtor goes bankrupt or files a debt settlement proposal. No other professional or a lawyer can do this-despite what their marketing literature may suggest!

In contrast, Collins Barrow Brown Inc., a licenced Trustee in Bankruptcy is subject to rigorous training and qualification standards, comprehensive annual professional development requirements and substantive professional conduct and conflict of interest rules. Trustee’s are fully accountable for their actions and must report on the results of many of their assignments to the Court and all of their assignments to the Superintendent of Bankruptcy. Debtors and creditors may ask the Court, the Superintendent of Bankruptcy or CAIRP for assistance if they do not agree with the Trustee’s conduct.

If you wish to learn more about bankruptcy, or consumer proposals, and how a Licenced Trustee can help you please visit our Bankruptcy 101 section.