As of 2019, Canada’s consumer debt exceeded $2.3 trillion dollars. This is due to the ease and immediacy of instruments like high credit cards or payday loans. Additionally, because mortgage interest rates are now between 1-2%, Canadians nationwide may feel the looming effects of financial insecurity. Consumer insolvencies have been on the rise over the last several years. Additionally, with the effects of the worldwide shutdowns, experts expect an absolute flood of bankruptcies by the end of 2020.
Declaring insolvency is one of the most difficult and crushing positions that a family can be in. It shakes your safety and security to the very core. If you or your loved ones are faced with a dire financial situation, it’s hard not to let your emotions guide your decision-making. It pays to understand the full range of options available to you. While it might make sense to turn toward a Licensed Insolvency Trustee (LIT) or a credit counselor for answers, it’s important you realize the duties they must uphold to the creditors, the conflicts of interest they face, and how they are paid/funded.
It is our job to make sure as many Canadians as possible are not taken advantage of when looking for solutions to their debt challenges.
We are not licensed insolvency trustees. We are not credit counselors. We are not a bank. With no strings attached, we have sought out who we believe are among the best companies in Canada to help Canadians solve debt. Our mission is simple: connect you with them. By going this route, you are getting over a decade of experience in working with thousands of past clients, searching out who we believe to be the best companies in Canada to work with.
Why you need to be aware when working directly with a Licensed Insolvency Trustee
Debt help companies like to advertise their services loud and proud. If you were to visit Canada’s official bankruptcy site, you would find an entire page full of carefully-constructed language defining what a LIT is and the role that they perform. That language is designed to foster trust without revealing how a LIT actually works. It’s always in the details, isn’t it? Their verbiage includes phrases like, “Not just anyone can become a LIT; it requires accreditation and a body to oversee it.” This makes it seem like not only is a licensed insolvency trustee the preferred option, it’s the only option.
A quick internet search brings up dozens of LIT firms, all offering their services to you, the consumer. But that’s not representative of how they actually work. Even though LITs advertise their services as if they were just another business, they are actually court-appointed agents, hence the title “trustee.” According to case law cited in the 2017 case of Ernest and Young Vs. Essar Global, Ltd.:
“The mandate of a trustee in bankruptcy is to maximize the value of the assets vested in the trustee on a bankruptcy for the purpose of providing a dividend to the creditors to partially satisfy their claims.”
What Does This Mean?
When an individual consumer wishes to file for bankruptcy or a consumer proposal, they may contact a licensed trustee, but they need to remember that the trustee’s job is to get the best return possible for the creditors. Canadian law makes it so only a LIT can submit a consumer proposal in an insolvency case, but this doesn’t mean the debtor is a client of the trustee. Note* a consumer proposal is the individual’s plan to repay the creditor at a reduced amount of the total money owed or over an extended period of time.
What may not be clear when the LIT is preparing your bankruptcy or drafting your proposal is that the licensed trustee is paid in proportion to the total amount the creditors recover. That means it is financially beneficial for the trustee to submit a proposal for more money out of your pocket. Given their role, it is impossible and impractical for a LIT to advocate effectively on behalf of the debtor.
So now what? That’s where we come in. Not every trustee functions exactly the same in the nuance. Not every trustee calculates the value of assets the same. Not every trustee will go the fence to make sure your proposals get accepted or that you get discharged from bankruptcy. Is it possible that some trustees are concerned about the profitability of your file and not necessarily the best deal for you? To put it short, not every trustee and not every solution are cut from the same cloth. The variables are many. What we have done at GetMeDebFree, with over a decade of experience and working with thousands of clients, is we have put together what we call our Gold Standard Test. We have done the leg work for the consumer and determine which companies pass our test. It is these companies and these companies only who we will refer you to. This simple step saves people from all of the potential worry of who to trust.
We want to see a fair and balanced system. We want to see a system that has mandated debtor representation and full transparency. Currently, in Canada, there is no mandate for debtor representation. In the meantime, we are doing what we can to help the consumer find the best plan to get out of debt. We do this by referring to companies we trust will do what they can, within the confines of the law, to facilitate this ambition.
How We Can Help
At GetMeDebtFree, we do not represent any interests of the creditors, nor do we receive funding from creditors. With our industry knowledge and experience, we have searched out who we believe to be some of the best companies in Canada to help our fellow citizens get out of debt. If the company does not pass our Gold Standard Test, then we will not recommend their services. If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a company that we believe can help.