Feeling anxious about debt is normal. But are your fears keeping you from getting the help you need, or worse yet, paying for advice when you don’t have to?
We recently met with a debtor who had this problem. She had already consulted a credit counselor. At their first meeting, the counselor took advantage of the debtor’s fear about going bankrupt to convince her she could afford a debt repayment program, even though she couldn’t. On top of that, the counselor demanded over $500 up front for the advice.
As the debtor drove away after the meeting, she realized the plan wasn’t realistic. The counselor had used her anxiety to rush her into both a decision and a payment. If she’d been given time to think, she would never have agreed.
How can you avoid such a trap and get advice that works for you? Here are 3 simple tips:
Know what to expect
Most reputable credit counselors and trustees provide a free, no-obligation initial assessment of your financial situation. If you’re not sure, call first and ask.
During the meeting, they should explain your options, address your anxieties, and help you make the decision that’s right for you. You should have time to think about the suggested solution before committing to a plan.
Understand who you’re dealing with
In British Columbia, only a licensed insolvency trustee can administer a bankruptcy or consumer proposal. These services are governed by the Bankruptcy & Insolvency Act, which also sets the fees a trustee can charge.
Seeing a trustee doesn’t automatically mean you have to go bankrupt or file a proposal. But if you do, we’ll help you understand the process so you don’t fear it.
Credit counseling agencies typically provide debt counseling and repayment programs. But unlike trustees, they are currently unregulated in British Columbia. They usually can’t deal with government debt (income tax, ICBC, student loans), and creditors aren’t necessarily bound by the payment programs.
On top of that, agencies can charge what they want. As in the case above, an unscrupulous credit counselor can charge a fee for initial advice or to simply refer you to a trustee. You shouldn’t have to pay for a referral.
Don’t act on your anxiety
When dealing with an advisor, ask questions and make sure you understand your options. Don’t let your fears lead you to accept advice you can’t follow. Take time to think about the proposed solution and make sure you’re comfortable with your decision. And remember, if you’re being charged a fee just for coming in the door, you’re probably in the wrong place.
Too much debt? Call R. West & Associates Inc. and get free advice you can trust.