For a number of years, I have been on record as recommending credit counsellors as an excellent source for assistance when people begin to experience financial difficulty. Unfortunately the meaning of the title “credit counsellor” has changed. Many individuals now calling themselves credit counsellors are not affiliated with either the Canadian Association of Credit Counselling Services (“CACCS”) or a provincial counterpart such as the Ontario Association of Credit Counselling Services (“OACCS”). In addition, I am sorry to say, some of the member agencies of these associations have also blurred the line between “not-for-profit” and “for-profit” counselling agencies.
So who do you trust?
That’s the million dollar question. Some of my advice is going to appear self-serving, but it’s important to understand who you are dealing with you’re speaking about your finances.
The safest thing to do is use professionals with a proven track record of helping people deal with financial problems. Not all financial problems though, find ones that are similar to your own. You know people that have been in trouble – we all do – who did they use and how was their experience? The problem with this approach is twofold:
- You have to be willing to admit to family and friends you may be in trouble
- Your family and friends need to be willing to admit they used to be in trouble and share with you their experiences.
You can imagine how often this happens…
Other sources of trust
The next best source of information is probably the internet (you may have already figured this out since you are reading this article). You need to be a careful out there on the world wide web. Find out who are you actually talking to and what their angle is. Look at the credentials of the people that write the articles you are reading, or on the websites you are viewing. Watch for misleading statements like ‘government approved’ without referring to the fact that they are Licensed Insolvency Trustees. Does the information they’re providing answer your questions? Or are they simply pitching you a product?
Use me as an example (I told you my answer was going to appear self-serving). I am a chartered accountant and Licensed Insolvency Trustee. I co-own and operate an insolvency firm in Ontario – and we are one of the largest firms in the country. Since we make our money by helping people file bankruptcy or a consumer proposal you might expect articles that I post to be biased towards those particular remedies. If that’s the best option for you, then yes, we’ll recommend those remedies. Our team also understands that our job is to explain all options, even if that means the potential client should go elsewhere. In fact, for every 10 people that send us questions from the internet, one becomes a client. The other nine are able to choose another solution to their financial problems.
Back to credit counsellors
Can they be relied upon to give you an honest answer and all of your options for clearing up your money problems? Start by asking if they are affiliated with an accredited agency. If they are not then you should look elsewhere. If they are, then spend some time on their agency website. You should be able to tell whether they’re a counsellor or a salesperson from how they present their information. If you are still unsure, go and speak to someone else – get a second opinion before you commit to any payment program. Legitimate agencies won’t pressure you to sign. If they’re concerned that you want a second opinion then that’s a definite sign you should head for the door…
I still endorse most credit counselors. The real ones do it out of a genuine desire to help people solve their financial problems. I’ve just had to temper my endorsement these last couple of years because not all credit counselors are created equal. Some just want to sell you a plan and collect a fee whether the plan works or not. Taking all of these factors into consideration, it should be easy to tell the stars from the duds.
Have you had experiences, both good and bad, with credit counsellors or debt advisors? We’d love to hear from you in the comments section below.