Protecting Yourself from Debt Relief Scams

With more and more people getting into financial trouble in North America over the last few decades, debt relief has become big business.? The time when your sources for debt relief help were limited to non-profit credit counselors and licensed bankruptcy trustees has long since past.? Today Canadians are bombarded with commercial advertisements promising debt relief that sounds too good to be true.

In January of 2012 the FCAC (Financial Consumer Agency of Canada) posted a consumer alert about debt relief companies in which FCAC Commissioner Ursula Menke said : "if an offer to reduce your debts seems too good to be true, it probably is."

The alert includes steps you can take to protect yourself from debt relief scams.? But if you check them out you quickly realize that all require a good deal of effort and assume a level of calm and rational thinking often lacking in people facing severe financial trouble.? People under emotional stress are more likely to accept what they are told without question.? While there may be reputable for-profit debt relief companies out there, why go through the effort required to check them out when there are equivalent alternatives available to you at lower costs with minimal risk?

The safest thing you can do is to simply stay away from for-profit debt relief companies.? Instead look to either an approved non-profit credit counselor or a licensed bankruptcy trustee.

Today you have to be careful with credit counseling agencies. Some are actually for-profit businesses and not all non-profits can guarantee a level of professionalism you should have in a debt relief counselor.? During legal insolvency proceedings in Canada (including bankruptcy and consumer proposals) formal credit counseling is required from government approved counselors with an RQIC (Registered Qualified Insolvency Counselor) designation.?

Other non-profit credit counselors are members of national associations.? However, you need to check what that membership actually means.? National associations provide a detailed listing of the educational course work required for membership.? Although you could also use the BBB Canada (Better Business Bureau) to check for complaints, the better national associations will not keep members with excessive consumer complaints against them.

Credit counseling solutions are best for consumers with relatively low debt totals. Often reputable credit counselors will refer people in more serious trouble to licensed bankruptcy trustees for debt relief help.? This does not mean everyone who seeks assistance from a trustee ends up in bankruptcy.? Trustees offer a non-bankruptcy alternative called a consumer proposal that lets debtors avoid a major disadvantage of bankruptcy ? asset loss.? In essence, a consumer proposal is identical to those debt relief solutions you hear in commercials except they cost less and come with legal protection.? If you are eligible for a consumer proposal, a trustee will submit a repayment offer where you agree to pay back a substantially reduced total debt with lower monthly payments over a five year period.? Trustees are licensed by the federal government and go through an extensive series of educational coursework and examinations as well as a full RCMP background check.

Source: http://www.personalbankruptcycanada.ca/blog/protecting-yourself-debt-relief-scams

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