Comparing Bankruptcy Trustees to Credit Counsellors and Other Financial Professionals

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If you are having financial difficulties and are unable to pay your debts, there are several options available to you. If this is your situation, it makes sense to speak with a financial professional who can help you understand the options. However, much like with most professionals, not all financial professionals are equal. There are differences between bankruptcy trustees, creditor counsellors, financial advisors and debt management companies that you should keep in mind.

These differences are important because they affect the type of assistance you receive and the information that you are given. Here is some information on each of these professionals that can help you distinguish the differences between them and allow you to make a choice on who can help you with your financial situation.

Bankruptcy Trustees

Bankruptcy trustees are individuals that are registered and licensed by the federal government to administer bankruptcy and consumer proposal processes. They receive years of training in order to become trustees. Bankruptcy trustees are bound by a strict code of ethics that requires them to discuss all debt relief options, not just those that they are able to assist you with.

In most cases, administrative fees for bankruptcy trustees are set by the government and the federal Bankruptcy and Insolvency Act.

It’s also important to note that, since bankruptcy trustees are the only financial professionals who can administer bankruptcy and proposal processes, they are able to provide you with legal protection through these processes. When you file for bankruptcy or a consumer proposal, your unsecured creditors are not able to contact you directly. All communication with your creditors will be done through your trustee. This means that they cannot send collection agencies after you as well.

In addition, most civil legal action against you to collect debts will stop when you file for bankruptcy or successfully file a consumer proposal. Only bankruptcy trustees can administer these processes.

Credit Counsellors

Credit counsellors work with you to help you formulate a plan that will allow you to repay your debts. They can help you with budgeting, using credit wisely and improving your credit rating.

Credit counsellors can also enroll you in a debt management program. This means that the counsellor will contact your creditors and ask them to cooperate with you. In some cases, credit counsellors can negotiate with creditors and attempt to have them reduce the amount of interest that you are expected to pay on your loans. However, your creditors are not legally obligated to cooperate with a credit counsellor.

In addition, you have no guarantee that a credit counsellor will provide you with detailed information on all of the options available to you.

Credit counsellors are not able to provide the legal protection from creditors that can be achieved through consumer proposal or bankruptcy processes. In addition, fees for credit counselling will vary. Therefore, before you work with a credit counsellor, it’s important to find out what costs are involved.

Financial Advisors

A financial advisor is a person who provides financial advice to a person. This is done for a fee, the amount of which will depend on the individual advisor. It’s important to note that there are many different people who call themselves financial advisors and that each of these individuals may not offer the same services.

Financial advisors can assist you by coming up with a plan for improving your financial situation.

Debt Management Companies

Debt management companies typically offer similar services to those offered by credit counsellors. One of their main strategies is to involve you in a debt management program. This is a situation where the company will speak to your creditors on your behalf and try to negotiate with them to reduce the amount of interest that you will pay on your debts or extend the period of time that you have to pay.

As mentioned above, your creditors are under no legal obligation to agree to a debt management program. Each one will have to accept that plan that you propose to pay them off

Making a Choice

When it comes to making a choice of a financial professional, you will need to think about your particular situation and what goal you have in mind for reducing or eliminating your debt.

If you are looking for assistance on handling your debt, information on how to responsibly use credit or interested in a debt management plan, you may wish to speak with a credit counsellor. However, if you want to be sure that you find out information on all of the options available or if you wish to proceed with a consumer proposal or bankruptcy, bankruptcy trustees may be the right choice for you.