On May 1st, Doug Hoyes (co-founder of Hoyes, Michalos & Associates Inc.) & Laurie Campbell, (Chief Executive Officer of Credit Canada Debt Solutions), were interviewed by Global TV on a story relating to “debt settlement, or debt consultant” practices that have become more prominent over the last few years as Canadians continue to struggle with debt.
The interview conducted by Sean O’Shea, explains that debt settlement companies (that have been outlawed in Alberta & Manitoba) will try and negotiate your debts by instructing you to not pay your creditors and pay them instead. This process is similar to a consumer proposal (which can only be administered by a Trustee in Bankruptcy), but without any legal protection. They take their fees first and then they will hold all your funds in a separate account in the hopes your creditors will accept a reduced amount on what you owe.
This may be a solution that works for a lucky few, however, collection agencies will harass you for payments and your creditors could garnishee your wages (none of this can happen when someone is in a consumer proposal).
Once the pressure becomes too great, debt consultants will then refer you to a Trustee in Bankruptcy (like Hoyes, Michalos & Associates Inc.) to file a consumer proposal or personal bankruptcy.
Unfortunately these debt settlement companies will keep most of your payments as a “referral fee”.
Only a Trustee in Bankruptcy can administer a consumer proposal.
A consumer proposal is a federally legal binding contract that is negotiated between you and creditors (and the trustee acts as a mediator in the process). Once the proposal is filed, your creditors have 45 days to vote on the proposal.
Once it’s accepted, it cannot be renegotiated and you know exactly how much you pay.
A consumer proposal provides the exact same legal protection of a bankruptcy and the phone calls and legal actions stop.
If you are in financial distress, contact us right away for a free initial consultation, or call directly at 866-747-0660.
We’ll be happy to meet with you and discuss all your options free of charge.
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