As a final article to wrap up Financial Literacy month in Canada, this article isn’t just for young Canadians, it’s for all Canadians. I’d like to suggest you not just read our articles or follow our advice. I suggest you read as much as you can. People do not spend nearly enough time researching their rights and options as consumers.
In this modern day of information, research by the internet is a powerful tool and far more powerful than a trip to the library – and it creates transparency to companies, and the laws that govern them. I believe a lot of companies in the credit and collections industry tend to forget this, or aren’t concerned about consumers digging deeper past a fancy website.
We're Here To Help You – For A Nominal Fee
One of the hot topics lately is organizations offering debt representation – if you Google certain phrases around the word credit or debt you will find a plethora of companies offering solutions to consumers to deal with their debt issues. And there is a lot of information out there, prolific and confusing.
Law firms offer debt settlement services, stating it is better than declaring bankruptcy. Bankruptcy trustees tout consumer proposals, eschewing dealing directly with collection agencies. Collection agencies claim equitable dealings with consumers and offer ombudsmen or compliance contacts. More and more law firms are venturing into third party collections. In the meantime, government is tightening regulations on all these aspects of debt services that impact consumers. The whole thing is a complicated and changing landscape, with the consumer is caught in the crossfire. The bottom line is that all these debt-related companies are trying to provide a service to somebody, and they all be paid for that service. Whether it is $1500.00 for a consumer proposal or bankruptcy (plus monthly administrative charges, surplus income payments or loss of non-exempt assets), to a percentage of debt saved through settlement, or a flat $75.00 fee for a stock cease & desist letter to a collection agency -- everyone wants to be paid for their time.
Can you deal with your debt yourself? Absolutely. While certain options like bankruptcy demand a professional, debt settlement, small claims court actions (as plaintiff or defendant), dealing with collection agencies, and such can all be done by yourself, armed with the right knowledge. Can these companies do it quicker, and more successfully? Quite probably -- but keep in mind everyone’s motivations.
Self-serving promotion is not restricted to the Internet. The federal government’s “Task Force on Financial Literacy” received a rather exhaustive research paper extolling the value of credit counselling organizations. Although submitted under an individual’s name the research paper made no reference to the fact the author was an employee of a credit counselling organization themselves.
Just getting through the material and confusion on the Internet is not sufficient for consumers. You should ask to know now who owns what company or business. Many organizations offering one solution under one corporate entity and offer a different solution under a separate corporate name.
If you are going to deal with someone to assist you with financial issues, do your homework. Ask for references, proof of certification, qualifications or training documents, their official company name, and check their credibility before you turn over your personal information or sign an agreement. And always find out what this will cost you – don’t make the mistake of compounding your debt with another expense!
To be clear, I’m not saying that companies shouldn’t make money for offering a valid service. That would be great. But in the interests of Financial Literacy, like our first article stating “Read the Contract”, everyone should read the fine print and see what these companies are selling.
Some Quick Tips
►If you are seeking Credit Counselling, seek a not for profit organization – their services will often be advertised as free, and this is your best option. An orderly payment of debt program should not carry extra expenses, or an administration fee. As well, OACCS, CACCS, and CCC (all credit counselling organizations) offer certification programs for counsellors, so you should ask for proof of certification. Ask for everything in writing before you sign up.
►If you are seeking a consumer proposal, ask your trustee what their fees are before signing, and find out if their fees are coming out before the creditors receive funds – often these “administrative fees” are paid for months before your payments start going to your bills. Ask for everything in writing before you sign up, and ask what happens if the creditors refuse or challenge the proposal.
►If you are dealing with a collection agency, make sure your rights as a consumer are respected, and get any settlement deals in writing before you pay anything.
►If you are using a debt settlement program, look for an ethical one that only charges if they are successful, and that charge their fees after the creditor is paid at the end. Ask for everything in writing before you sign up.
To My Colleagues
Consumers now are far more educated and aware of their rights and options than they were ten, twenty, or thirty years ago. We should all get with the times and offer transparency. It hurts no one to provide information about our industry, and allow creditors and consumers to make informed choices. And we can focus our energies on providing a valued service that can stand up in the light of day.
Go Look It Up
So many people end up in my office because they didn’t read the contract, or thought they could pay a lawyer to make their debt magically vanish – when it all comes crashing down, I really dislike being the cold hard voice of reality. Before you sign something, read it. If you are in trouble, don’t take the first website or opinion you read as gospel. If something is too good to be true, it probably is. If there is a claim that something is legal (or illegal), go look the law up and read it yourself! Ask questions. And if someone makes a grand claim, make them prove it.
In the interests of full disclosure, I will be honest and state I am a managing partner of a collection agency – I sell services to creditors, and one of them is debt collections. This article makes me no money although I hope it increases the reputability of our industry in some small way.
As always, if you have any questions (or heated rebuttals), you are certainly welcome to email me or call me at my office at Kingston Data and Credit.
Kingston Data and Credit