Quebec: Credit Counsellors and Trustees. What is the difference and who should you use for your FRESH FINANCIAL START?

Caution: Please refer to this report on credit counsellors by Canadian Consumer Affairs. The report raises concerns about poorly trained credit counsellors and the conflict of interest “non profit” credit counsellors have because they are funded by credit grantors.

What Credit Counsellors are and how they operate

More and more credit counselling firms have opened up for business in Canada in the last ten years, fueled by the debtors’ desires to do almost anything to avoid going bankrupt. Credit grantors, in an attempt to dissuade people from filing bankruptcy, have also joined in with financial support of “non-profit” credit counselling companies.

Credit counsellors have you make regular payments to them, under a debt repayment plan, and they in turn make payments to your creditors. Credit counsellors get paid by holding back a certain percent of your payments for their fees.

What Trustees in Bankruptcy are and how they operate

Although you need a bankruptcy trustee to go bankrupt, bankruptcy is not the only thing bankruptcy trustees can help you with. Bankruptcy trustees are highly trained professionals who will give you the best advice they can even if it means you do not use their services.

Bankruptcy trustees are licensed and regulated by the Federal Government and subject to stringent codes of ethics. Bankruptcy trustees are the only debt professionals, in Quebec, who can provide a full range of financial solutions.

Furthermore, Quebec bankruptcy trustees are the only Quebec debt professionals who can guarantee that you will get protection from your creditors.

Comparison of the Services of Credit Counsellors
and Trustees in Bankruptcy

Key Considerations	Credit Counsellors	Trustee in Bankruptcy or a Proposal
When will my debt be erased from the credit bureau?	3 years after the debt is repaid.	Bankruptcy: 6 years after the discharge**. Proposal: 3 years after the Proposal is satisfied.
What about costs?	Credit counsellors hold back a portion of the payments you make for their fees.	Fees in almost all bankruptcies and in consumer proposals are set and regulated by the government.
Which is cheaper?		A bankruptcy or a proposal is usually cheaper.
Can income tax debt and other CRA debt be included and eventually written off?	No	Yes. Almost all debts can be written off.
Once I agree to a debt repayment plan with a credit counsellor or file for bankruptcy or a proposal, will my creditors, including CRA, be forced to stop all actions against me including trying to collect money; phoning me; garnisheeing my wages or repossessing my assets?	No. They will not be forced to stop but the creditors, that agree to a plan, will voluntarily stop collection calls and other actions.	Yes. By law, all actions must cease and garnishees are stopped or prevented once a proposal or bankruptcy is filed. Collection calls will stop once the collector knows you have filed a bankruptcy or a proposal.
Which will give me a better credit rating?		In most circumstances a bankruptcy or proposal will give you a better credit rating because it will deal with your debt more quickly thus allowing you to start to rebuild your credit sooner.
Can I pay back less then I owe and have the rest of the debt erased?	Only in rare circumstances.	Yes.
What training and education do credit counsellors and trustees in bankruptcy have?	There are no set standards. Please refer to this report on credit counsellors by Canadian Consumer Affairs. The report raises concerns about poorly trained credit counsellors and the conflict of interest “non profit” credit counsellors have because they are funded by credit grantors.	Almost all trustees have both an accounting designation and a university degree. In addition, all must complete and pass a rigorous three-year bankruptcy and law course and be investigated by the RCMP before being granted a trustee licence. Ongoing professional development is mandatory.
Are they regulated?	No	Yes, by the Federal Government. The government performs regular audits on each trustee office. Also stringent codes of ethics are in place by the Bankruptcy and Insolvency Act, the CAIRP and the accounting bodies.
What kinds of debt repayment plans are offered?	Payment plans, where monthly payments are made which are distributed to the creditors.	Bankruptcy, two kinds of Proposals, informal proposals, debt negotiation and free advice to people who are judgement proof such as pensioners.
Is Government approved Credit Counselling offered?	In some cases.	Yes. Government tested and approved counsellors provide credit counselling in all bankruptcies and consumer proposals.
What if I have a dispute?	There is no dispute mechanism in place.	You have the right to have your dispute mediated.