Debt Settlements

Many people are confused about the difference between working with a Debt Settlement Company versus the relief of working with a Licensed Insolvency Trustee

Debt Settlements without a Licensed Insolvency Trustee:

A debt settlement arrangement that does not involve a Licensed Insolvency Trustee will usually involve a company or an individual who tries to arrange a settlement or a payment arrangement with your creditors for a fee. This debt settlement company has no legislative power to stop interest, prevent collection activity, or bind the majority of your unsecured creditors to the proposed settlement program.

In addition, a debt settlement arrangement can be difficult to negotiate if you do not have access to a lump sum payment to offer your creditors. Under this type of arrangement or program, only the creditors who have agreed to participate are bound by the settlement agreement. You should be aware that the debt settlement company cannot force individual creditors to participate in the settlement arrangement and any creditor who has not agreed to participate may continue their collection activity and harassment against you. As a result, it can be confusing and frustrating to keep track of which debts are actually being resolved with the funds you are paying to the debt settlement company, and which creditors you must manage on your own with additional payments.

Simply put, a debt settlement company has no further negotiating power than you have as an individual and they cannot access the legislated relief provided by the Bankruptcy and Insolvency Act, only a Licensed Insolvency Trustee may do this.

Debt Settlements with a Licensed Insolvency Trustee:

Under the Bankruptcy and Insolvency Act, filing a consumer proposal can provide relief from the struggle to pay all of your debts because it creates a new legal contract between you and your creditors. Filing a consumer proposal will also stop the interest on your debts. A proposal may allow you to compromise the amount of debt you owe and provide you with an extension of time to pay the debt. Once accepted, a consumer proposal is binding on all of your unsecured creditors and you make one monthly payment to the Licensed Insolvency Trustee. In this way, a consumer proposal can help alleviate your financial stress and frustrating budgeting issues.

Under the Bankruptcy and Insolvency Act, a bankruptcy filing can also provide you with relief from the struggle to pay all of your debts because it immediately terminates the obligation to pay most creditors.

As an alternative to struggling with debt settlement companies or individuals promising to reduce your debt for a fee, a Licensed Insolvency Trustee will apply experience and knowledge of the Bankruptcy and Insolvency Act to assess your situation and provide you with options to begin a fresh start.

If you are unsure how to move forward and struggling with deciding whether a debt settlement company or from a debt management program is right for you, call us today. Our associates will listen to you, review options with you, and explain to you how we can help you get out from under the burden of debt.

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