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 COVID-19 pandemic, 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.
4 Pillars is Canada’s largest and oldest debtor advocacy service. We are in your corner.
About 4 Pillars
Someone who is seeking a solution to their debt needs a resource that does not answer to creditors. It is our sole mission to level the playing field and advocate for you.
4 Pillars is a national company with 60 offices across all the Canadian provinces. Formed in 2002, we have not only become the biggest independent debt consulting team in the country, we’re the only agency nationwide that advocates solely for the rights of debtors. With our experience, we have helped over 50,000 families deal with a combined total of $2.5 billion dollars in unmanageable debt.
4 Pillars is NOT a licensed insolvency trustee. We maintain complete independence from all of Canada’s insolvency and banking framework. While our competitors at the larger LIT firms want you to believe it’s a bad thing we’re not licensed, nothing could be further from the truth. Let’s take a deeper look at how our competition operates so you fully understand why a license doesn’t mean what consumers perceive it to mean in the debt restructuring world.
Why Working Directly with a Licensed Insolvency Trustee May Not be in Your Best Interests for Debt
Our competition likes 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 for 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 a bankruptcy or consumer proposal, they may contact a licensed trustee, but they need to remember that the trustees 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 creditor recovers. 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.
You need another option, one that is not in bed with your creditors.
A Deeper Debt Problem
4 Pillars is the distinct solution to this issue. We’re here to fight for a fair and balanced system of debt restructuring nationwide. But our competitors are not interested in that. Debt restructuring is big business. Rival LIT firms have the marketing funds necessary to push educational resources like 4 Pillars to the wayside. The Canadian Debtors Association (CDA) is fighting to give the debtor a voice. 4 Pillars is a loud and proud member.
The debt relief industry has leveraged their considerable assets against us. They have engaged in marketing efforts designed to dissuade consumers from doing business with companies such as ours. Wrapped in their “license,” these entities have perpetuated the myth they are not only the more qualified consultants, but also that they are the only option for easing the burden of outrageous debt. That is simply not the case.
What is the Office of the Superintendent of Bankruptcy?
The Office of the Superintendent of Bankruptcy regulate and oversee licensed insolvency trustees. They also promote informed decision-making to deal with debt to reduce the negative financial effects consumers may experience. Additionally, they are looking to maximize returns to creditors.
Simply put, in the debt advisory business, you either represent the creditors or the debtor. In our view, it is impossible to do both.
They say that knowledge is power. Our mission is to provide knowledge, and thus alternatives, to Canadian consumers.
Debt Relief With 4 Pillars
The system might seem stacked against you, but there is light at the end of the tunnel. The expert consultants at 4 Pillars are in your corner. We are dedicated to advocating for the rights of our clients, not their creditors’ bank accounts. We can help you structure your consumer proposal. Then, we can present it to a LIT to ensure that your repayment plan is fair, equitable, and designed with your family’s health and future solvency in mind.
How We Can Help
We can also help walk you through the bankruptcy process so that you can benefit as much as reasonably possible. That being said, most of our clients find a carefully structured proposal is better than a bankruptcy. Why? Because we work solely to their benefit and that makes all the difference.
We offer resources and continuing education to help keep you on track and financially healthy after debt relief. We are fierce and loyal champions of debtors’ rights. We’d love to help you. For more information, please contact our debt consultants today.