Debt Advisors in Alberta

Do you really know who you are dealing with in the debt advisory market?

In November 2023, the Office of the Superintendent of Bankruptcy (“OSB”) and the Canadian Association of Insolvency and Restructuring Professionals (“CAIRP”) issued a joint bulletin to the Canadian public regarding debt relief scams by unlicensed debt advisory firms that provide false promises of providing consumer proposals and/or bankruptcy options.  The Bulletin reiterates, that only a Licensed Insolvency Trustee (“LIT”) is able to  provide such services.

Typically, these unregulated entities charge a fee for their services that can range in price from a few hundred dollars to even thousands of dollars and misrepresent the services that they can offer.  After paying their fee, the individual is then referred to a LIT, who would have reviewed the individual’s financial situation and reviewed all of their options for dealing with their debts.  The LIT does not charge any fee for this service and as such saves the individual from spending unnecessary funds when they are struggling to make ends meet and are looking for their options to deal with t heir debt.

The Bulletin comments on 5 warning signs to look out for:

1. Unrealistic promises or pressure to make a quick decision: They may not review all of your options for dealing with your debt or make unrealistic promises about being able to eliminate your debt;
2. Asking for up-front fees;
3. Charging unnecessary fees disguised as referral fees or administration fees;
4. Tell you to stop communicating with and paying your creditors or claim that they can negotiate with your creditors on your behalf; and
5. They may only offer online services with no option for in-person services.

A LIT is the only debt relief professional in Canada that is authorized to file a consumer proposal or bankruptcy on behalf of an individual.  They are legally required to review and explain all of your options to you for dealing with your debt.  A LIT is subject to regular reviews, audits and inspections by the OSB to ensure that standards of practices and adherence to the law are being maintained.  There is no such oversight in the unregulated debt advisory market.

A LIT does not charge any fee for reviewing your options with you.  They will make a comprehensive assessment of your individual circumstances.  They are both legally and ethically bound to play an impartial role in ensuring that both your rights and those of your creditors are being maintained.  A LIT is paid out of the proceeds of what you are required to pay under the consumer proposal or bankruptcy by way of a tariff established under the Bankruptcy and Insolvency Act and are regulated by the federal government.

You do not need a referral to speak with a LIT.  You can contact a LIT of your own choosing and one that you feel comfortable with in speaking about your unique situation.  Even if a consumer proposal or bankruptcy is not your best option, the LIT will refer your to a reputable credit counselling agency.  A LIT does not charge a fee for a referral to these agencies and cannot accept a referral fee from the agency.  You can find a local LIT by going to the OSB’s website and accessing the “Find a Licensed Insolvency Trustee” in their drop down menu.

LIT’s are the only federally regulated debt professional with the legal authority to negotiate binding agreements with creditors on your behalf.  As previously stated, only a LIT can offer bankruptcy or consumer proposal services which require that creditors cease collection actions such as collection calls, wage garnishment and civil lawsuits for the collection of monies owing on debts.

LIT’s are required to be licensed by the OSB and must provide an option for in-person meetings at your request at any time during the process.  Be wary of debt advisory firms that only offer online services or that do not have a legitimate address in your locality or even in Canada.

When you find yourself struggling with unmanageable debt, your first call should be to a Licensed Insolvency Trustee to avoid paying unnecessary fees and ensuring that all your options are reviewed for dealing with your debt.