How to Spot Canadian Debt Relief Scams in Manitoba

If you’re deep in debt, you’d probably do just about anything to get out. Unfortunately, many disreputable companies know that and prey on people who are in desperate situations. Debt relief programs in Manitoba and companies claiming to help you get out of debt are plentiful, but how can you know who you can trust?

Before you agree to a debt relief service, ask yourself these questions:

Does the Organization Charge Hefty Fees up Front?

Even reputable and non-profit organizations will charge fees for their services; that’s part of being a business. But if a debt relief company charges you large fees upfront before they’ve even lifted a finger or doesn’t back their fees with a guarantee, you may want to look elsewhere. This could be a debt relief scam.

Additionally, look to see where your monthly payments are going. If they put most of your monthly payment towards their fees rather than your debt, don’t do business with them.

Do They Make Outrageous Promises?

Promises to erase bad marks off your credit, cut your monthly payments in half, or lower interest rates on all your credit cards sound great. However, no credit counselling company can guarantee such things. If you read the fine print of your contract, it’s very likely there will be no mention of any guarantees. Further, if they refuse to put promises in writing, it’s time to find a different company to work with.

Do They Tell You That They Can Get Rid of Your CRA Debt?

CRA very rarely agrees to take part in an informal payment plan put forth by a credit counselling or debt relief company.  That will mean that you may have a payment plan for your other debts, but CRA can still collect, still put a lien on your home, still withhold your tax refunds, etc. A solution that does not solve the entire problem is not a solution at all. 

Do They Tell You They Can Stop Creditors from Calling?

Creditors can be relentless in their attempts to collect money, and as long as they’re not breaking the law by harassing you, they are within their rights to contact you. If any organization promises to stop creditors from calling you, proceed with caution. The only debt relief counsellors that can legally force your creditors to stop calling are Licensed Insolvency Trustees. They can issue a Stay of Proceedings to prevent collection by creditors in a Consumer Proposal or a Bankruptcy.

Do They Tell You They Can Stop a Garnishment?

Just as collection calls cannot usually be stopped without a legal Stay of Proceedings (only available through a Licensed Insolvency Trustee (LIT), creditors are extremely unlikely to stop a garnishment once it has begun, unless legally required to do so by an LIT. Think of it this way: they could keep collecting via your employer (a sure thing) or they can trust that you will make your payments through an informal payment plan put forth through an unlicensed credit counselling company. If you were them, which would you choose?  The sure thing, of course.  Only with a Licensed Insolvency Trustee can you be sure that the garnishment will be stopped.

Do They Tell You They Can File a Consumer Proposal or Bankruptcy, Even Though They Are NOT Licensed Insolvency Trustees?

This is a real debt relief scam, since debt relief companies and credit counselling companies cannot do this.  However, many will tell you that they can. What they actually plan to do, is collect a (fairly large) upfront fee from you, before they take you to an actual Licensed Insolvency Trustee, who will then deal with your debt.  The upfront fee was completely unnecessary — a waste of money — since you can go directly to an LIT without their help, and receive a free confidential assessment of your situation from an expert.

Finding Honest Debt Relief

Unfortunately, you will come across a good number of debt relief scams in Manitoba and all across Canada. If you’re having trouble knowing who to trust when it comes to debt relief, first contact a Licensed Insolvency Trustee. This doesn’t mean you have to file bankruptcy. A trustee is a licensed financial professional who prepares bankruptcies, Consumer Proposals, and offers financial advice and counseling. Trustees must adhere to a strict code of ethics and their fees are government regulated so there’s no need to worry about excessive charges.

When you’re drowning in debt, you already have enough to be stressed about. Be on the lookout for these indicators that your debt relief program could be a scam. The most experienced, best trained and regulated debt relief professionals in Canada are Licensed Insolvency Trustees. They can offer a full range of safe solutions to your debt problems.

Leigh C. Taylor, LIT

Leigh has been working in the insolvency field since 1975. He is a graduate of the University of Manitoba. Leigh began his career as an Official Receiver with the Office of the Superintendent of Bankruptcy. He is a Certified Professional Accountant, and he attained his license as a Licensed Insolven Read More Leigh has been working in the insolvency field since 1975. He is a graduate of the University of Manitoba. Leigh began his career as an Official Receiver with the Office of the Superintendent of Bankruptcy. He is a Certified Professional Accountant, and he attained his license as a Licensed Insolvency Trustee in 1980.Leigh has been a member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) since its inception. He is a Past President of several organizations, including the Manitoba Association of Insolvency and Restructuring Professionals (MAIRP), the Armstrong Point’s Association, and the Manitoba Opera. In addition, he has served for numerous years in leadership roles in Winnipeg churches. Close