Comments on: Consumer Affairs Funded Report on the Study of the Credit Counselling Industry

By: Credit Counsellors in Ontario are having a Turf War. ()

Credit Counsellors in Ontario are having a Turf War. () — Tue, 31 Jan 2012 10:09:58 +0000

[...] Bankruptcy Canada’s views are supported by the Consumer Affair’s funded study of credit counsellors. [...]

By: Consumer Alert Issued on Debt Reduction Companies. ()

Consumer Alert Issued on Debt Reduction Companies. () — Tue, 10 Jan 2012 18:45:21 +0000

[...] For more information cautioning consumers please refer to this link. [...]

By: Which is better; a Bankruptcy or a Consumer Proposal? |

Which is better; a Bankruptcy or a Consumer Proposal? | — Wed, 23 Nov 2011 19:21:11 +0000

[...] a large part of their funding was provided by credit grantors. I also referred the reporter to a report funded by Consumer Affairs Canada that called into question the credit counselling [...]

By: Johanna Boven-MacLean

Johanna Boven-MacLean — Thu, 17 Nov 2011 13:40:50 +0000

Hi. Thanks for the reply. You are right, Canada Revenue Agency does not necessarily like working with third party agencies; however, since CRA took over collections of Student Loans, they almost always accept our payment arrangement with the client’s consent. They have even been known to stop legal proceedings also. As for personal income tax, any good credit counsellor will help the client to fill out disclosure and advocate for penalties and interest to be waived and they usually are quite cooperative. CRA’s mandate is usually that all personal income tax owing has to be paid within 12 months. But I am thankful to also see that they discharge in Bankruptcies and Consumer Proposals and are not treated as “preferred”. Through our agency, we now have to be Certified which is a 3 year course on Personal Finance and a separate course on Financial Counselling. All new Credit Counsellors have to enroll in this course and also enroll in their BIA as most of us do the BIA

By: Trustee

Trustee — Wed, 16 Nov 2011 22:49:49 +0000

Johanna: You said: “All debts, including student loans, collections, etc are included except for secured debts such as mortgages, equity loans and vehicle loans.”

My understanding is that you cannot include CRA debt in your program because CRA will demand full payment.

By: Johanna Boven-MacLean

Johanna Boven-MacLean — Wed, 16 Nov 2011 21:35:14 +0000

Yes, there is great debate as to what the difference between FOR PROFIT and NOT FOR PROFIT credit counselling agencies actually do. The reason why creditors donate (yes they donate) to Not for Profit agencies is because they also know that we EDUCATE, MEDIATE, ADVOCATE AND REHABILITATE. I would say that perhaps 20% of what we actually do for client is this payment program, the Debt Management Program. Our MANDATE is to educate the community, so that means going out to the public to deliver workshops free of charge. When we advocate on a client’s behalf there is no charge for that. There is NO charge to come in and go over the options. A good credit counsellor will ABSOLUTELY refer you to a Bankruptcy Trustee if they feel that those are the best options. We don’t sell anything. We help with money management, budgetting advice, seeing on-going clients until they have mastered their own finances, give out tools for them to learn on their own. We are here to help consumer HELP THEMSELVES. That is the difference. We absolutely do NOT just work for the creditors. All debts, including student loans, collections, etc are included except for secured debts such as mortgages, equity loans and vehicle loans. There is a need for Trustee’s for sure as they have viable options for the consumers that are insolvent. Not all consumers are completely INSOLVENT though. Trustee’s or For Profit agencies do not sit down face to face with you on a daily basis to help with your finances. They do not offer out tools to help you stick with a budget and learn about savings and investments. Both cannot easily MEDIATE between the creditor and consumer. Research research research who the company is. For a list of not-for-profit agencies in Ontario, anyone can visit http://www.oaccs.com. Good luck and if it doesn’t feel right, then it probably isn’t.

By: Paula

Paula — Wed, 26 Oct 2011 14:52:55 +0000

I am at a total loss now. I am currently in a Consolidated Credit Counselling program for my debts and can barely make my payments. My monthly payments are as much as my monthly mortgage payments! I’m not employed, and have no income (except for federal child payments) and am at home with 3 kids. My husband works 2 jobs. I was considering filing for personal bankruptcy to ease some of the burden on my husband, however, we have a joint line of credit (which is in the credit counselling) and the house is under both names. If I do declare personal bankruptcy, will my husband be affected via the line of credit? Will we lose our home?

By: Albert

Albert — Fri, 02 Sep 2011 18:01:52 +0000

Its already been proven. Both independent and Non profits collect fees.
The Independents actually will work to reduce all creditors interest and act in the best interest of the client , not the creditor. Thats what they are getting paid for. On the other hand, the Non profits will only add a creditor that offers a kickback (Fair share donation) and will not add in many cases creditors like Payday loans as they do not participate in the Fair Share program, and now often requires a 10% mandatory membership fee. So what is difference? I would prefer to deal with an honest upfront company that actually discloses how they make money. Also always ask if they have there head office in Canada or US are licensed in Canada. Dont believe the hype that Non profit is better , they clearly are not.

By: Trustee

Trustee — Tue, 23 Aug 2011 15:40:19 +0000

Christi: My answer to the the points you address are as follows:

1. You said: “Many non-profit credit counselling agencies can do more than a trustee can do for less of a fee, and have less of an impact on your credit rating.”

Answer – The impact on a person’s credit rating is the same whether there is a Credit Counselling plan is effect or a bankruptcy or consumer proposal. Here is what Equifax says about Credit Counselling plans:

“VOLUNTARY DEPOSIT – ORDERLY PAYMENT OF DEBTS, CREDIT COUNSELING: When voluntary deposit OPD credit counseling is paid, it will automatically purge from the system three (3) years from the date paid.

REGISTERED CONSUMER PROPOSAL: When a registered consumer proposal is paid, it will automatically purge three (3) years from the date paid or 6 years from the filed date.”

2. You said: “If, overall, you are looking for someone who is a neutral party to help you explore any and all options that you have, I recommend a non-profit credit counselling agency.”

Answer – This is what the Canadian Consumer Affairs funded report (See above) says about this:

“While credit counselling services are generally presented as not-for-profit, unbiased, consumer debt counselling services, they are also often franchises and collect a fee from your creditors for collecting your payments. Not-for-profit credit counselling services may be receiving secret commissions or generous financial support from creditors, the Government, United Way and industry at large. Not for profit does not mean that the employees and/or operators of many of these services are not collecting salaries and growing a business.”

Answer – The BC Credit Counselling Society, which claims to be “None Profit” and there to help consumers gets 73% of its funding from banks, financial companies and other creditors. Reference: Credit Counselling Society 2010 Annual Report. http://www.nomoredebts.org/_Library/docs/Credit_Counselling_Society-2010_Annual_Report.pdf

It is obvious that “Non Profit” Credit Counselling firms cannot be unbiased when they are taking kick backs from creditors of the very consumers they purport to help.

By: Christi

Christi — Mon, 22 Aug 2011 23:00:34 +0000

Not true Trustee. William, a trustee cannot offer a debt repayment program where you repay 100% of your debts with reduced interest and negotiated payment amounts unless they are doing a Consumer Proposal, which has a lengthy impact on your credit. Many non-profit credit counselling agencies can do more than a trustee can do for less of a fee, and have less of an impact on your credit rating. If, overall, you are looking for someone who is a neutral party to help you explore any and all options that you have, I recommend a non-profit credit counselling agency. If you are in Nova Scotia, you can contact Credit Counselling Canada (an association of all non-profit credit counsellors) to find the best non-profit Credit Counsellor for you.