We have all heard the radio ads, seen the TV commercials or billboards. A company is claiming that they can reduce your debt up to 70% and that the government has announced a new program to help you eliminate your debt.
Who are these companies and what do they do? These companies are debt consultants and they claim that they can reduce your debt. I am reminded of a couple of TV commercials I saw last night. The commercial was for a weight loss product. It showed many before and after shots of someone who lost 50 pounds., the next person lost 100 pounds, the next one 200 pounds, then in teeny tiny letters on the bottom of the screen it states that these results are not typical. While watching a debt consultant’s ad it stated they can reduce you debt up to 70% and get you debt free in 2-3 years. Then at the bottom in teeny tiny letters it states that they cannot guarantee your debts will be lowered or you will be debt free within a certain period of time.
I don’t object to companies helping you manage your debt. I just have a problem with how some companies do it. You saw the ad and called the company that says they can help you reduce your debt. Maybe you just did paperwork with them on the phone, or maybe you went to someone’s home (and why are you not meeting at their office?). The cost of this meeting is $1,500.00. After spending a few hours with you they tell you your best option is to file a consumer proposal. They then give you the name of a Trustee they know and they offer to forward your information. Do you realize you could call us for free and the meeting is free, you don’t need a referral from someone else? You certainly don’t need to spend $1,500 to get my name.
Think about it this way. You are new to the area and you are looking for a hairdresser. You ask your neighbour where she gets her hair done. She tells you. Did she charge you money for this information? No.
Do you know what the best way to reduce your debt is? It’s a consumer proposal. A consumer proposal is a legally binding, negotiated payment plan made between you and your creditors. It’s not a new government program. It has been around for 20 + years and can only been administered by someone licenced by the federal government, such as Hoyes Michalos. Debt consultants are not licenced and cannot file consumer proposals.
My point is to do your homework. As the saying goes, if it sounds too good to be true, it probably is.
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