Who are the “good guys”?

Why, when good responsible people are so desperate to repay their debts would someone want to lead them down the wrong path? Money, that is why.

When you are experiencing financial difficultly it is imperative that you seek professional unbiased advice. If you suddenly found yourself in legal trouble you would go to the best lawyer you could afford for independent legal advice. The same should apply if you are in financial trouble – independent credit and debt advice.

Everywhere you look these days someone wants to help you with your financial problems. Bankruptcy Trustees, Credit Counsellors, Debt Counsellors, Money Management Consultants, Financial Consultants, Planners and many more. Everyone suddenly has become a credit or debt expert – or so they say. The debt management industry is one of the fastest growing industries in the country. The problem is, there are few if any government regulations to protect you from the “bad guys”. So here are a few suggestions to help you in your search.

Remember not all credit counsellors are created equal and nothing in this life is free. Always ask who is paying for service you are receiving and how much.

  • Look under "credit counselling" in your telephone directory or your Internet search engine to find a credit counsellor.
  • Ask your EAP – Employee Assistance Provider – if they contract to a company they can refer you to – the employer pays for this service – but it is completely confidential – Credit Solutions provides this service for EAP programs. 
  • Ask a friend or family member – don’t be embarrassed anyone can experience financial problems. 
  • Make sure the company is Government licensed and bonded to Provincial legislation. Do not deal with a counsellor or a company that is not licensed. Ask for a copy of the license for both the counsellor and the agency. 
  • Check to see if the company is a member of a Canadian Association of Credit Counselling Agencies. There are several associations in Canada both independent and non–profit. Both have high standards for membership. Licensing, bonding and trust accounts are required and a code of ethics is strictly adhered to. 
  • Some companies have credit counsellors that are Registered Insolvency Counsellors under the BIA – Bankruptcy and Insolvency Act – ask about the counsellors qualifications – what makes them qualified to give you advise about your finances. 
  • If you have too much debt or are unable to repay your debt, a counselling agency may work out a Debt Management Program for you where you deposit money each month in to their trust account with the counselling agency. 
  • Since agencies fees differ, you need to know up front what the cost will be. 
  • Repayment plans usually cover only unsecured debt (i.e. credit cards, line of credits,). Your secured debts (i.e. car, house) should not be included. You must continue to make these payments to your creditors directly. 
  • If you fall behind with secured debt, work with your counsellor to get this up to date. Most lenders want to work with you if you’re acting in good faith and the situation is temporary. 
  • Some secured lenders may reduce or suspend payments for a short time. When you resume payments however, you may have to pay extra toward the past due total, so ask about any fees charged for these changes. Remember nothing is free.
  • Before selecting a credit-counselling agency, interview several. Check with the Better Business Bureau to find out if any consumers have filed complaints about the provider you are considering. Consider contacting the Director of Debt Collection for your province to find out more about companies that are licensed and bonded.
  • During the initial interview find out their fee, sources of funding, and who regulates and audits their operation. If there is a board of directors who are the members of that board. 
  • Ask yourself who’s best interests are being served before you agree to any type of repayment plan. 
  • Concerning their repayment plan, ask specific questions such as what happens if you miss a payment or repayment is more than you can afford and how secure is the information you provide. 
  • Do not allow the agency to trade any of your information without your written permission. 
  • You should demand that you receive status reports and that can you access your accounts at any time.
  • Always get a receipt for any money paid. 
  • Always make your payments “in trust” to the agency. 
  • Sometimes counsellors can get creditors to lower or eliminate interest and finance charges. If the creditor does not reduce the interest ask why not. 
  • Anyone that is offering “Credit Repair” should be avoided – if the information on your credit bureau file is accurate, no one can “repair” it – don’t waste your money.

Tips

  • A Debt Management Program does not change your credit history. Under the Credit Reporting Act, accurate information about your accounts can stay on your credit report for up to seven years. Ten years in some provinces depending on the information. 
  • In most cases credit counselling programs will remain on your credit bureau file for three years after completion of the program. 
  • Creditors may downgrade your credit rating and report to the credit bureau an account in that is in credit counselling has payments missed, or that there are write-offs on. But a demonstrated pattern of timely payments should help you get credit in the future. 
  • A credit counsellor is the perfect person to ask about setting up a budget and money saving tips. 
  • Think about getting a secured credit card. There are several on the market now in Canada. 
  • Do your homework before you pick a credit counsellor to deal with so you can be assured that your debts will be managed by an unbiased qualified professional and that they are acting in your best interest.