Monthly Archives: March 2012

Learning the Difference between Debt Consulting and Debt Reduction Companies

At DebtCare we applaud the FCAC (Canadian Government consumer agency) for finally taking a stand against debt reduction companies in a recent consumer alert.

If your client goes to a debt reduction company for help, he could find himself in a worse financial position than where he started. The debt reduction companies’ model is to accept hundreds to thousands of dollars per/month from your clients over a period of years with the promise that in the future they will make settlements with your clients’ creditors.

They advertise aggressively to lure clients in but they cannot ensure they will get multiple creditors to agree on a debt settlement in the future.

Debt consultants, credit counselling companies and bankruptcy trustees all offer access to programs where the money that your client pays into the program is immediately distributed amongst your client’s creditors. With each payment funds are distributed amongst the creditors in accordance with federal legislation (for example, a consumer proposal). Debt reduction companies can NOT offer immediate debt relief from creditors as their programs cannot legally protect your clients from their creditors.

It all sounds so confusing.  but that’s not a good reason to give up on finding sound resources to deal with debt.

If you would like to get informed about the differences between debt reduction companies, debt consultants, credit counsellors and trustees please call 416-907-2582 ext 2587 or email me at