Yes, usually. With us it always is. Our first debt relief consultation costs nothing, and neither does the second. The Financial Consumer Agency of Canada says no reputable credit counselling agency will charge you for the first meeting.
The free part is rarely the part that costs you. What costs you is what you sign at the end of that meeting. So we will give you the fees first, then the Ontario rules that limit them, then the questions to ask before anyone takes a payment.
Free at the door, fees after
The Financial Consumer Agency of Canada lists what a credit counselling agency may charge once you sign up for a debt management plan:
- an initial set-up fee
- a monthly administration fee
- an application fee
- a membership fee
- an upfront fee or a fee for each creditor
A debt settlement company is a different kind of business. The same agency says most of them operate for profit and earn their money from the fees they charge their clients. It warns that they may charge advance or monthly fees, and that fees for these services may be very high. It also warns that you may need to pay those fees even if your creditors refuse to settle.
Which warning matters most? The last one. A fee with no result attached is not help. It is a bill.
Does that make a free meeting a trick? No. It makes it the start of a sale, and you should treat it that way. Anyone who tells you the plan costs nothing because the meeting cost nothing is selling you something.
What Ontario lets them charge
In Ontario, the rules are found in the Collection and Debt Settlement Services Act. Steps to Justice, a project led by Community Legal Education Ontario, lists them. Non-profit credit counselling services and debt settlement companies:
- cannot charge up-front fees for repayment plans, except for a $50 set-up charge
- can charge a maximum of 15% of any payments you make to your debt settlement plan
- cannot begin collecting fees until they have an agreement with your creditors and have made payments to them
- must give you 10 days to cancel the contract for any reason, including a change of mind
Numbers are nice, but what do they mean for you? Steps to Justice gives the example itself. If you make payments of $100 each, the company cannot charge more than $15 for each payment.
Say a company wants a fee before a single creditor has agreed to anything. Hold that request against the third rule above. If the company cannot square the two, do not pay.
Put the two side by side. The federal agency warns that a company may still charge you fees even if your creditors refuse the offer. The Ontario rule, as Steps to Justice states it, holds the fee back until there is an agreement and a payment. If you live in Ontario, the Ontario rule is the one to hold the company to.
Steps to Justice last reviewed its page on these rules in April 2022, so the contract and the Act govern. If the contract says something different from the page, ask the company to explain the difference in writing.
Six questions before the free meeting ends
The Financial Consumer Agency of Canada gives a list of questions for any credit counselling agency. Ask its questions, and ours, before you sign anything.
- Is the first consultation free? That is the first question on the agency’s list. Ask about the second meeting too.
- Will you give me a written proposal? The agency’s list asks for a written proposal describing how they will help.
- Will you provide me with monthly statements of payments? A statement shows where each payment went.
- What fees will you charge me? The federal agency says to make sure you know. Then compare the answer with the two Ontario limits above.
- What do I pay if my creditors say no? This is the federal warning. Make them answer it.
- Where is the cancel clause? The Ontario rule gives you 10 days. Find it in the contract before you sign.
Then do what the federal agency tells you to do before signing up for debt settlement services. Read the full contract. Do not agree to anything under pressure. Check the company’s background, including complaints with the Better Business Bureau and your provincial consumer affairs office.
Three claims should end the meeting. The federal agency warns that some companies claim they can solve your debt problems quickly for a fraction of your debt, quickly and easily fix your credit score, or offer services as part of a government program. If you hear any of the three, thank them and leave.
What a filing needs that a meeting does not
A meeting is advice. A filing is a legal step, and it has its own rules. A consumer proposal or a bankruptcy must be filed with the Office of the Superintendent of Bankruptcy by a Licensed Insolvency Trustee.
Use a free meeting to ask which route fits, before anything is filed. If you are still deciding between a new loan and a formal route, the difference is set out in our debt relief vs debt consolidation post. If the next question is how long debt relief will take on each route, our post on how long does debt relief take gives the clock for each one.
If most of what you owe is to the CRA, the questions change. Start with our page on tax debt relief in Ontario. If you have unfiled years, tell us at the start.
What to bring so the free meeting is worth it
A free meeting is only as good as the facts on the table. What should be on it? Steps to Justice puts the first step plainly: make a list of your income and bills. Bring that list. Also bring:
- every creditor, with the balance and the name on the account
- any letter from the CRA, a collection agency or a court
- the date of any garnishment, or any notice that one is coming
- your mortgage renewal date, if you own your home
A page cannot know your income, the equity in your house, or which creditors you owe. You do. A few articles are not enough.
Questions people ask
Is a debt consultation free?
Usually, yes. Ours is free the first time and every time after it. The Financial Consumer Agency of Canada says no reputable credit counselling agency will charge you for the first meeting. Before you sign a plan afterwards, ask what it will cost.
Can a debt settlement company charge me if my creditors say no?
The federal agency warns that you may need to pay fees even if your creditors refuse to settle. In Ontario, Steps to Justice says these companies cannot begin collecting fees until they have an agreement with your creditors and have made payments to them.
Can I cancel a debt settlement contract in Ontario?
Yes, within 10 days, for any reason. Steps to Justice calls this a cooling-off period. Check the contract for the cancel clause before you sign.
How much does a debt management plan cost?
It depends on the agency. The federal agency lists a set-up fee, a monthly administration fee, an application fee, a membership fee, and an upfront or per-creditor fee among the possible charges. In Ontario, Steps to Justice says up-front fees for repayment plans are not allowed except for a $50 set-up charge, and a company can charge a maximum of 15% of any payments you make to your debt settlement plan.
Every file is different. Your buddy’s file is not yours, and neither is the fee someone quoted your buddy. Read each question on a contract before you answer it, and ask us when you are not sure what it is asking.
Where we fit
Get Total Debt Relief is a debt consulting and representation firm, not a Licensed Insolvency Trustee. Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy. However, he is not the only one you should get your information from. Unlike a Trustee, we look to preserve your equities and assets, not liquidate them. What we do is make sure you only pay what you have to pay, not what someone thinks you can pay. We use every tool available to make sure you protect your home, your business and other equities as well as Spousal rights. Once you’re ready to move forward with whichever process you choose, that’s when it’s time to move on to the selection of a Trustee. Please keep in mind that if for any reason, you have to deal with a legal matter during your Bankruptcy or Proposal, a Trustee can NEVER legally represent you. However, he CAN act against you. Choose your representation wisely!
DISCLOSURE:
Get Total Debt Relief is a debt consulting and representation firm. We are not a Licensed Insolvency Trustee, and we are not connected to the Canada Revenue Agency or any government body.
Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy.
OUR SERVICE:
However, any Trustee you choose can’t legally represent you over your Creditors nor can he give you any advice that will benefit you over your Creditors. The Trustee’s job is to maximize how much he can get from you and your estate for the benefit of your Creditors and the more he collects in a Proposal, the more he makes.
What we do is the work before the filing and the path you choose will come from the advice and information that goes with it. More importantly, we use tools that are not available to the Trustee because of who’s interests he represents. We go through your whole situation with you. We answer your questions, for as long as it takes and as many times as you need to ask them. Every consultation is free and if or when you decide to move forward, you’ll know which option best suits you, your family and or your business. And, unlike the Trustee, we will NEVER use the information you’ve given us against you in Court. The bottom line is that we don’t look to liquidate your assets and equities, we look to protect them.