There is a pretty convincing commercial on TV right now. It appears to be a news anchor interviewing someone about how to deal with debt. I will admit that when I had the TV on in the background it took me a second to realize what was really going on. It is just a 30 minute paid advertisement. What the interviewer does is ask the expert all about the great things he does to help people with their debt. And what is this expert? He is a debt consultant, and we have written numerous blogs about their services and what to be aware of.
The expert explained his plan on TV just like it is written on their debt site. He tells you to stop paying your debts and instead pay him. You pay money each month into a bank account. Once the bank account has a certain amount of money, the consultants to negotiate a reduced payout one by one to each of your creditors. In the meantime what happens? Your creditors are calling you, interest is adding up and your credit rating is getting worse. According to the consultants website it could take 24-48 months to complete their plan. Of course on top of this the consultants charge you a fee. I am not sure what they are doing that you can’t do yourself, so why are you paying them?
You can easily save up cash and then offer your creditors a cash settlement. If it takes 4 years for the consultants to settle on your debts and then it will still be on your credit rating for 6 years. That means it will be 10 years before your credit rating has recovered! That doesn’t sound like a plan to me.
I find that there is a general concern with people I met with in Windsor about the effect of what they do on their credit rating. My opinion is that this is highly over rated. Most people don’t realize that once you start falling behind on your bills your credit rating is already getting worse. At that point your credit rating probably no longer matters to a bank since the rating is so bad no one will lend you money.
It then comes down to what are you going to do to deal with your debts to have the best all around effect on you. Does it make sense to give your money to a third part only to have collection agencies calling you and maybe even taking you to court? No, it doesn’t.
Does it make sense to file a consumer proposal, have court protection from your debts and have it off your credit rating 3 years after its completed? That sounds like a good plan to me.
Don’t get caught by the fancy ads and gimmicks that tell you they can save you money. Do your research first and find out what the true cost is dealing with a debt consultant. Then call me at 310-PLAN and let’s get started on a real plan that is right for you.
About Rebecca MartynRebecca Martyn is a bankruptcy trustee and consumer proposal administrator responsible for the Hoyes, Michalos & Associates office in Windsor, Ontario.
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