debt settlement fees

Debt Settlement Fees: How Much Should Debt Relief Cost?

Some people love to shop. Other people hate it. There is no doubt about it that we are not all the same which is a good thing. However, whether you are looking at buying a vehicle, toaster or a pair of jeans everyone should be asking how much does it cost? The same question is appropriate when you are seeking relief from your debt. If you don’t ask that question and get a specific answer you may end paying thousands more than necessary and take way longer to pay off your debt.

We have seen some people turn to payday loans or non-bank lenders in order to try and gain immediate debt relief. This is always a short-term solution that may provide debt help today but ultimately leads to a toilet bowl spiral of more debt and higher interest rates.

Banks and credit unions can provide debt help through a consolidation loan if the monthly payment does not get too big to fit your budget. Ask the question: how much will I/we have paid by the time we have paid back this loan in full?

There is no shortage of debt consultants and credit counsellors offering to provide debt help for a fee. Because there is no regulation in this area it is very much buyer beware. Again, ask questions. If you cannot ask those questions face to face, then be double careful. There is a wide range of debt consultants and credit counsellors. Some can be helpful. Others very hurtful. Ask how much it costs and what will you get for what you are paying. Will you get immediate debt relief? Will creditors still be able to contact you? Can you get debt relief from income tax debt? How much will you have to pay by the time you are totally finished?

In contrast, a Licensed Insolvency Trustee (LIT) is licensed and regulated by the Federal Government. If you decide to file a Consumer Proposal or make an assignment into bankruptcy with a LIT, there is a cost to do this which is regulated by federal law, usually through a tariff structure. This is for the protection of the public. LITs are the only professionals in Canada that can file a Consumer Proposal or assignment into bankruptcy on your behalf. In the vast majority of situations, the payment is easily affordable because you also receive immediate debt relief and don’t have to make payments on your unsecured debt. Payments are also a function of what your monthly income is and how many people are in the household, among other factors. It is difficult to generalize what the consumer proposal or bankruptcy cost will be so it is important to take advantage of the free initial meeting that LITs will offer and ask that most important question: how much will it cost?

As an independent firm, we can take the time to find a way to make things work, even if your income is modest. By deciding to contact us to discuss debt relief options at one of our convenient locations you are more than halfway there to a brighter financial future. Why not make the call, it’s free!

Derek L. Chase, CPA, CA, LIT

Being able to offer debt help assistance to individuals and corporations on a more intimate basis was a driving force in completing a “second CPA” by becoming licensed by the Federal Government as a Licensed Insolvency Trustee (previously Trustee in Bankruptcy) in 1997. It is extremely satisfying to be able to witness lives change for the positive due to a restructuring of financial affairs.