Archive for June 2015

TDF Debt Advisory Law PC: new debt settlement service provider

 

Someone called me yesterday and suggested that I check out a website, www.debtconsolidationlaw.ca.  This website is for a debt settlement law firm that I have never heard of before, TDF Debt Advisory Law PC. On the website’s OUR PROFESSIONALS webpage two indivdual’s bios can be found, Ronan Levy, a member of the Ontario bar, and Andrew Cooper, a licensed paralegal in Ontario.

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Blurred line between Total Debt Freedom Inc. and TDF Debt Advisory Law PC

The first thing that struck me about the website for TDF Debt Advisory Law PC was the blurred line between this new law firm and Total Debt Freedom Inc., one of the largest debt settlement firms operating in Ontario over the past decade.  The address for TDF Debt Advisory Law PC is listed on its website as 1650 Dundas Street E., Unit 205, Whitby, Ontario, L1N 2K8.  This address is the identical address given by Total Debt Freedom Inc. as its office location on its website, www.totaldebtfreedom.ca.

I went to the BLOG page on TDF Debt Advisory Law PC’s website and I read the three blogs there.  One was written by Andrew Cooper.  One was written by “sdumrev”, someone who is unknown to me.  Another one of the blogs was written by Richard Cooper. Richard Cooper’s blog contained a link to Total Debt Freedom’s website, www.totaldebtfreedom.ca.

I found it odd that there were three blog posts on this new website for a debt settlement law firm and not a single one was written by a lawyer at the firm.  One of the blog posts was written by Andrew Cooper, a licensed paralegal.  To the best of my knowledge, two of the three blog posts on the website were written by individuals, who were neither lawyers nor licensed paralegals.

 

Total Debt Freedom Inc. is “partnered” with TDF Debt Advisory Law PC

On the LET US SETTLE YOUR DEBT webpage on Total Debt Freedom’s website, www.totaldebtfreedom.ca, it states that “we have partnered with lawyers to provide better representation”.

June272015LETUSSETTLEYOURDEBTwebpage

On this webpage you can listen to Richard Cooper, President of Total Debt Freedom Inc., speak.  Here is the link to this video:

https://www.youtube.com/watch?v=6l-M_2MeQCo&feature=youtu.be

 

Exemption for lawyers under the Ontario Collection and Debt Settlement Services Act

As a general rule, any firm providing debt settlement services to Ontario residents must possess a valid Ontario collection agency license.  There is however, an exemption for lawyers.  This exemption is contained in paragraph 2(1)(a)  of the Ontario Collection and Debt Settlement Services Act and reads as follows:

2.(1)   This Act does not apply

(a)   to a barrister or solicitor in the regular practice of his or her profession or to his or her employees:

Given the unusual relationship between TDF Debt Advisory Law PC and Total Debt Freedom Inc. it will be interesting to see if the Ontario Registrar of Collection Agencies, a Tribunal, or a court, some day might take the position that neither TDF Debt Advisory Law PC nor Total Debt Freedom Inc. are exempt from the requirement of being licensed as a collection agency under the Act.

On July 1, 2015, the following anti-avoidance provision comes into effect as section 2.1 of the Ontario Collection and Debt Settlement Services Act.  This section reads as follows:

2.1    In determining whether this Act applies to an entity or transaction, a court or other tribunal shall consider the real substance of the entity or transaction and in so doing may disregard the outward form.

 

This exemption is of critcal financial importance

If a lawyer is entitled to provide debt settlement services to Ontario residents under the above-noted exemption under the Ontario Collection and Debt Settlement Services Act then the law firm will not operate under any restrictions with respect to the fees that it can charge or when those fees are earned.  In contrast, if a firm providing debt settlement services to Ontario residents is not exempt from the Act then it must possess an Ontario collection agency licence and it will be subject to draconian limitations concerning the fees that it can charge.

This week there may be some very interesting developments in the debt settlement industry in Ontario.  If you would care to discuss these developments with me then I would invite you to contact me at  (519) 827-5513.  Alternatively, I would invite you to send me an e-mail at mark@comprehensivedebtsolutions.ca.

Huge exposure for firms offering debt settlement services illegally in Ontario

 

July 1, 2015, marks the first day of a new regulatory regime for those providing debt settlement services to Ontario residents.  A number of firms that offered debt settlement firms to Ontario residents before July 1, 2015, will not do so after June 30, 2015.  This group might have included some mortgage brokers, somed debt consultants, and some small debt settlement providers operating without a collection agency license.

Prior to July 1, 2015, many of these firms felt that their potential financial exposure for operating in contravention of Ontario law were within an acceptable range.  This all changes on July 1, 2015.  After June 30, 2015 any firm providing debt settlement services in contravention of the Ontario Collection and Debt Settlement Services Act and Regulation 74 faces huge financial exposure.

 

What conduct falls within the scope of the Act?

Subsection 1(1) of the Ontario Collection and Debt Settlement Services Act defines “debt settlement services” as follows:

“debt settlement services”  means offering or undertaking to act for a debtor in arrangements or negotiations with the debtor’s creditors or receiving money from a debtor for distribution to the debtor’s creditors, where the services are provided in consideration of a fee, commission or other remuneration that is payable by the debtor.

This means that any firm which offers to negotiate settlements with an Ontario resident’s creditors receiving compensation for doing do will be caught by the Act unless it can bring itself within an exemption.

The Act also contains an anti-avoidance provision which might catch an entity or transaction in circumstances where, except for its outward form, it would be caught by the Act.   Section 2.1 of the Act reads as follows:

In determining whether this Act applies to an entity or transaction, a court or other tribunal shall consider the real substance of the entity or transaction and in doing so may disregard the outward form.

 

No entitlement to fees unless a debt settlement provider is licensed

Under the Act a firm offering debt settlement services to an Ontario resident is not entitled to any fees unless it is licensed as a collection agency under the Ontario Collection and Debt Settlement Services Act or it is exempt from the Act.

 

An Ontario resident’s right to cancel a debt settlement services contract

An Ontario resident has the right to cancel a debt settlement services agreement, without any reason, within 10 days of receipt of the agreement.

Furthermore, in the event that a debt settlement services agreement does not satisfy the mandatory language required for a debt settlement agreement under the Act then an Ontario resident has the right to cancel the agreement within one year after entering into the agreement.

 

Ontario resident’s entitlement to a full refund upon cancellation of agreement

An Ontario resident who cancels a debt settlement agreement in circumstances permitted under the Act is entitled to a full refund of all payments made under the debt settlement services agreement.

 

Ontario resident can sue for return of all monies owing under the Act

An Ontario resident is entitled to sue a firm providing debt settlement services in Ontario for the return of all monies obtained in contravention of the Act.  Furthermore, where the consumer’s lawsuit is successful,  the court has the discretion to order exemplary or punitive damages.

 

Ontario consumers might be entitled to significant refunds

Any consumer who has entered into a debt settlement agreement after June 30, 2015, who would like to learn more about how they might be able to obtain a refund of all the payments they made under their debt settlement contract is welcome to call me at (866) 996-9941 or (519) 827-5513.  Alternatively, they can send me an e-mail at mark@comprehensivedebtsolutions.ca.

If you are an Ontario resident and you signed a debt settlement agreement after June 30, 2015, then you might be entitled to a 100 percent refund of all the fees you paid to a debt settlement provider.

If you are an Ontario resident and you signed a debt settlement agreement after June 30, 2015, then you might be entitled to a 100 percent refund of all the fees you paid to a debt settlement provider.

 

Three Debt Settlement Firms to Watch

It is going to be very interesting watching developments in the Ontario debt settlement industry in July of this year.

It is going to be very interesting watching developments in the Ontario debt settlement industry in July of this year.

 

July 1, 2015, Canada Day, marks the first day of a new era in the debt settlement industry in Ontario.  Debt settlement firms will be subject to a significant number of obligations and restrictions.  Furthermore, starting July 1st firms providing debt settlement services to Ontario residents face draconian restrictions regarding the fees that they can charge  A consumer cannot be charged a penny in fees until such time that a settlement is actually paid out. This means that a debt settlement firm will likely not generate a nickel in revenues on a significant percentage of its files–files on which it has provided services and incurred expenses.

On any debt settlement services agreement signed after June 30, 2015, the maximum fee that a debt settlement firm can charge a client is equal to 10 percent of the amount of the consumer’s outstanding debt on the date he signed the agreement.  For example, if a consumer with one debt–a $10,000 credit card debt–signed a debt settlement agreement and at some later date a settlement was paid out then the maximum fee that the consumer could be charged is $1,000 or ten percent of the original $10,000 debt.

These punitive restrictions on fees will make it difficult for any debt settlement firm which is not exempt from being licensed as a collection agency under the Ontario Collection and Debt Settlement Services Act to be financially viable.  Last week I received a phone call from a gentleman who operates a small one-man debt settlement firm in Ontario and he advised me that he intended to surrender his collection agency license in the next two weeks.  I anticipate that in the next few weeks and months that more debt settlement firms operating in Ontario will seriously consider doing the same.

 

Exemption for lawyers must be incredibly attractive

Certain organizations providing debt settlement services to Ontario residents are exempt from the new regulatory regime for debt settlement services in Ontario–including the punitive restrictions concerning fees.  The most important exemption is for lawyers.

I foresee two developments in the near future.  Firstly, I see law firms providing debt settlement firms taking market share away from firms providing debt settlement services which possess an Ontario collection agency license. Secondly, I anticipate that some existing debt settlements firms, particularly the larger ones, will be tempted to find a lawyer who will agree to permit their debt settlement services to be offered in the name of the law firm.  I can also foresee that these debt settlement providers transforming their operations in-house at a law firm will discover the transition much rockier than they anticipated.

 

Three debt settlement firms to watch

Today there are fewer than a dozen debt settlement firms which possess a collection agency license in Ontario.  Of these firms I anticipate that more than 70 percent of all existing debt settlement clients in Ontario are clients of three firms–listed below in no particular order of size:

  • Consumer Debtor Protection of Canada Ltd.
  • Ontario Consumer Credit Assistance (OCCA)
  • Total Debt Freedom Inc.

The $64,000 question is which business model will these three major players in the Ontario debt settlement industry be using by the end of July?  I see four options for these firms:

status quo:   These firms could simply retain their existing business model in which case their revenues will drop substantially because of the new restrictions on fees for any new client signing a debt settlement agreement after June 30, 2015.

status quo plus addition of new revenue streams:  These firms could retain their existing business model but try to offset the drop in revenues caused by the new fee restrictions by adding new revenue streams from additional goods or services, or business partnerships.

new clients will be clients of a law firm:  The principals at these debt settlement firms might join a law firm and new clients will become clients of the law firm in which case they can avoid the draconian fee restrictions imposed on those debt settlement providers holding an Ontario collection agency license.

exit the debt settlement marketplace:  It is possible, but very unlikely, that any of these three firms will exit the debt settlement marketplace in the immediate future.

If you have any insights as to what the debt settlement industry will look like in the near future I would invite you to contact me at (866) 996-9941 or (519) 827-5513.  Alternatively, you can e-mail me at mark@comprehensivedebtsolutions.ca

The names of individuals who provide me with information are kept confidential.

The names of individuals who provide me with information are kept confidential.

 

Complete Debt Solutions Operating in Canada Illegally?

 

In virtually every province in Canada, with the possible exception of British Columbia, a firm offering debt settlement services must be licensed as a collection agency.  The only exceptions might be for those entities which are exempt from licensing–the most important exemption being for lawyers.  Subject to these exceptions, any firm offering debt settlement services to Canadians must be licensed as a collection agency in a province where it operates.

Recently, someone sent me a link, www.completedebtsolutions.ca, for an outfit which calls itself Complete Debt Solutions.  According to its website the firm offers debt settlement services in Canada, the United States, and the United Kingdom.  You will find the entire homepage for www.completedebtsolutions.ca reproduced below:

 

Homepage for Complete Debt Solutions

 

cds home page top

CDS homepage middle section

CDS homepage bottom section

 

Contact page for Complete Debt Solutions

I have reproduced the bottom portion of the webpage titled “Contact” on www.completedebtsolutions.ca beneath this sentence.

This screenshot includes the bottom half of the CONTACT page on www.completedebtsolutions.ca.

This screenshot includes the bottom half of the CONTACT page on www.completedebtsolutions.ca.

 

Nowhere on this website does it state that Complete Debt Solution’s debt settlement services are limited to the residents of a specific province.  On the Contact page for this website local phone numbers are listed for the residents of Ontario, British Columbia, Alberta, and Manitoba.

The Contact page for this website lists a Toronto address for Complete Debt Solutions at 1075 Bay Street, Unit 149.  I would invite anyone reading this blog post who lives or works in the vicinity of this location to visit this address, and using their cellphone take a photograph of the nameplate on the wall in the hallway at Unit 149.  Furthermore, I would invite anyone reading this blog post to attend at this address, enter the premises, ask to speak to a representative from Complete Debt Solutions, obtain the name of the representative and request a copy of their business card.  I would then invite you to forward this photograph and any additional information you discover to me at mark@comprehensivedebtsolutions.ca and markasilverthorn@gmail.com.

 

Is Complete Debt Solutions lawfully permitted to offer debt settlement services to Canadian residents?

As noted earlier, with the possible exception of British Columbia, it is illegal for a firm to offer debt settlement services to members of the public unless it is licensed as a collection agency in that province.  The Ontario Government maintains a website where a member of the public can confirm whether or not a firm is licensed as a collection agency in Ontario:

https://www.consumerbeware.mgs.gov.on.ca/esearch/start.do

According to this website there is no firm by the name of Complete Debt Solutions licensed as a collection agency in Ontario.  Nor is there any firm licensed as a collection agency with a registered office address at 1075 Bay Street, Unit 149, Toronto, Ontario.

I am currently in the process of contacting each province in Canada to determine whether or not Complete Debt Solutions holds a valid collection agency license in that province.  I have found that debt settlement firms that are licensed as a collection agency typically make a statement on their website touting the fact that they are licensed to provide debt settlement services in a particular province. The website, www.completedebtsolutions.ca, contains no statements that the firm is licensed to provide debt settlement services in any province.  Accordingly, I would be surprised if Complete Debt Solutions is licensed as a collection agency in any Canadia province.

 

Call on Ontario Government to take appropriate enforcement action against Complete Debt Solutions

I have taken the liberty of writing a letter, dated today’s date, June 22, 2015, to Doug Kariam, the Acting Ontario Registrar of Collection Agencies, requesting that the Ontario Government begin an investigation into the activities of Complete Debt Solutions and take whatever action is appropriate under the circumstances.  You can read a copy of my letter to Doug Kariam which was sent to his office via e-mail and X-Press Post on Monday, June 22, 2015, which is reproduced below:

p1June222015DougKariamtotalDebtSolutions

p2June222015DougKariamtotalDebtSolutions

 

 

In the above-noted letter sent to the Acting Registrar of Collection Agencies in Ontario I indicate that I will be sending a copy of this letter to his counterparts in other provinces.

 

Anyone signing a contract with Complete Debt Solutions invited to contact Mark Silverthorn

I would invite anyone who has signed an agreement  for debt settlement services after visiting www.completedebtsolutions.ca to contact me.  I would like to learn who is responsible for putting up this website and which firm is actually providing the debt settlement services.  With the consumer’s permisssion, I will forward a copy of the consumer’s debt settlement agreement to the provincial regulator responsible for regulating the conduct of debt settlement firms in that province.

If you have signed a contract for debt settlement services after visiting www.completedebtsolutions.ca then I would invite you to contact me at (866) 996-9941 or (519) 827-5513.

You might want to call Mark Silverthorn and learn more about how to stop workplace collction calls.

You are invited to contact Mark Silverthorn if you have signed an agreement for debt settlement services after visiting www.completedebtsolutions.ca.

 

 

 

 

 

 

 

Settling Your Debt Might Be an Attractive Debt Resolution Option

In certain circumstances settling your debt can be an attractive option.

In certain circumstances settling your debt can be an attractive option.

 

Over the next few weeks you might see a number of stories in the media about major reforms in the Ontario debt settlement industry.  A new regulatory regime, which goes into effect on July 1, 2015, will have a dramatic impact on the debt settlement marketplace in Ontario.

This new regulatory regime will not, however, prevent an Ontario resident from negotiating a favourable settlement with his creditor, or the creditor’s authorized collection agent.  Nor will the new regulatory regime prevent an Ontario resident from hiring someone to serve as a “debt coach” who will coach or mentor a consumer as to how to negotiate a settlement on their own.

After July 1, 2015, we can anticipate some major changes in the Ontario debt settlement marketplace.  I anticipate six key changes to the Ontario debt settlement industry over the next few months:

  1. a number of traditional debt settlement firms will, or have already, exited the marketplace
  2. a number of traditional debt settlement firms will see their business shrink
  3. a number of firms that provided debt settlement services prior to July 1, 2015, who were not licensed to do so will cease providing debt settlement services
  4. there will be a dramatic increase in the amount of debt settlement services provided by small Ontario-based law firms
  5.  some small Ontario-based collection agencies might provide debt settlement services as a sideline to their primary business of collecting overdue accounts
  6. there will be substantial growth in the debt coaching industry—people who coach or mentor consumers who wish to settle their own debt

 

An attractive strategy for resolving your debts

If you are struggling to pay unsecured consumer debt then settling your debt might be an attractive strategy for resolving your debt.  A creditor might be prepared to accept a one-time lump sum payment for substantially less than the current outstanding balance.  Over a four-year period I negotiated hundreds of favourable settlements on behalf of consumers.  In many cases my clients made a lump sum payment of between 18 and 30 percent of the outstanding balance to settle an outstanding account.

Here are 12 things to consider if you are contemplating settlling one or more of your debts:

  1. This strategy is not available for many types of debt including secured debt, monies owing to the government and non-dischargable debt
  2. If the relevant limitation period in your province has expired you should consider whether it is in your best interests to settle an account for any amount
  3. There is nothing to be gained from settling an outstanding account where the date of your last payment is more than six years ago  (will not show up on your credit report)
  4. Creditors will virtually never settle an account unless no payments have been made on the account for a minimum of six months
  5. If you are going to default making payments on a credit card, personal loan, or line of credit with a particular financial institutution then you should not have any money on deposit in a savings or chequing account with that financial institution
  6. If your account is overdue then you should expect collection calls
  7. If your account is overdue then there is a risk that you might be sued
  8. It might be possible to negotiate a settlement for less than the full outstanding balance if you have been sued
  9. You should never make a payment to settle your account unless you first receive a satisfactory written settlement letter from your creditor or its authorized collection agent
  10. You should retain any and all documents related to your settlement including your settlement letter, your payment, and any receipts serving as proof of payment
  11. Settlements tend to be more generous the longer an account remains unpaid
  12. Some, but not all, creditors will require some proof of a consumer’s financial hardship before agreeing to a settlement

 

Consumer proposal is not for everyone

Settling your debt might be an attactive option in a number of circumstances where a consumer proposal might not be an ideal solution for a consumer in a particular situation:

  1. Consumers who do not have a regular income and who cannot make 60 monthly installment payments which are typical under a consumer proposal
  2. Consumers who have substantial student loans in circumstances where the consumer ceased attending school less than seven years ago
  3. Consumers whose employment or profession would be adversely affected if they were to make a consumer proposal

 

Settling your debt is very attractive compared with credit counselling

Those  considering credit counselling might want to explore the merits of settling their debts in their particular circumstances.  The issue is cost.  How much will it cost you to eliminate one dollar of your debt by either settling your debt or by way of credit counselling?

If you were to choose credit counselling then the cost of eliminating one dollar of your debt will be somewhere between 110 cents and 130 cents.  If you were to choose settling your debt then you will invariably be able to eliminate your debt–and potentially resolve your debt situation by taking advantage of the expiry of a limitation period–for substantially less.

 

Three ways a consumer can settle a debt

A consumer who wants to settle an unsecured consumer debt has three options.  Firstly, a consumer can do it on his own.  Secondly, he can hire someone to serve as a “debt coach” who coaches him as to how to settle his debt.  Finally, he can hire a firm that will negotiate directly with his creditors on his behalf.  If a consumer decides to settle their debts then the costs associated with doing so will vary dramatically depending upon the level of assistance they seek from others.

1.      Do it yourself

 A consumer who attempts to settle a debt on their own pays virtually nothing in out-of-pocket expenses.

 

2.       Debt coaching services

It remains to be seen how much debt coaches will charge for their services.

 

3.       Hire a firm to negotiate directly with your creditors on your behalf

Any firm operating under an Ontario collection agency license:

After July 1, 2015, any firm offering to negotiate settlements on behalf of an Ontario resident must either be licensed as an Ontario collection agency or be exempt from this licensing requirement.

After July 1, 2015, some debt settlement firms will be providing debt settlement services on the basis of having an Ontario collection agency license.  Some of these firms might be described as traditional debt settlement firms.  In addition, under the new regulatory regime collection agencies are permitted to provide debt settlement services to Ontario consumers.

The maximum fee that these firms can charge is ten percent of the dollar value of a debt on the date the debt was enrolled into a debt settlement plan.  Therefore, if you hired a debt settlement firm to settle one $10,000 credit card debt–regardless of the amount of any settlement–the maximum fee that a consumer could lawfully be charged is $1,000, or 10 percent of the original $10,000 debt.  It is important to appreciate that a debt settlement firm which holds an Ontario collection agency license is not entitled to charge a nickel in fees until a settlement is actually paid out.

Law Firm:      Law firms–as well as bankruptcy trustees– are exempt from the draconian restrictions on fees that traditional debt settlement firms must comply with after July 1, 2015.  I anticipate that after July 1, 2015, law firms that provide debt settlement services in large volume will likely charge their clients an amount equal to about 15 percent of the amount of debt included in their debt settlement contract.  The law firm might also charge an additional fee of $50 per month during the life of the debt settlement contract.

Unlike debt settlement providers licensed as an Ontario collection agency, law firms can charge their clients for services on a monthly basis, beginning in the first month of a debt settlement contract, and their fees are not contingent upon a settlement actually being successfully negotiated and paid out.

 

Learn more about how you might benefit from “settling your debt”

If you would like to learn more about what would be involved if your were to resolve your debt situation by “settling your debt” then I would invite you to contact our office and schedule a telephone consultation with me.  You can reach me toll free at (866) 996-9941 or at (519) 827-5513. Alternatively, you can contact me via e-mail at mark@comprehensivedebtsolutions.ca.

You might want to contact our office and schedule a telephone consultation with Mark Silverthorn to learn more about settling your debt.

You might want to contact our office and schedule a telephone consultation with Mark Silverthorn to learn more about settling your debt.

 

 

Calling For Volunteers

 

I have had the opportunity to observe the collection industry for some 22 years.  Over that period I have seen the misery visited upon people struggling with unsecured consumer debt.  Money problems are a major contributor to the breakdown of relationships and marriages.  Furthermore, people experiencing debt problems might find that it casts a long shadow over not only their psychological well-being but also their performance in the workplace.

I would like to do something meaningful to reduce this suffering.  Knowledge is power and I want to empower people who are struggling with debt.  That is why I am sitting at my computer today writing this blog.

 

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One person can make the world a better place.  One person, working together with others, can accomplish great things.

 

Our mission

Every organization has a mission regardless of whether or not it is reduced to writing.

At Comprehensive Debt Solutions Inc. our mission is to help Canadians experiencing problems with unsecured consumer debt.

We strive to accomplish this through the following:

Providing information which could be extremely useful to people struggling with debt

By providing one-on-consultations with individuals

Serving as an advocate for Canadian consumers experiencing debt problems

By highlighting the activities of entities which are taking advantage of Canadian consumers

Some of the people reading this blog post might be very supportive of the efforts of Comprehensive Debt Solutions Inc.  A number of you might have read my book The Wolf At The Door:  What To Do When Collection Agencies Come Calling (2010), published by McClelland & Stewart.  This book might have been of some assistance to you with your debt situation.

Comprehensive Debt Solutions Inc. began operations in February of 2015.  Since that time a number of people have come forward and volunteered to assist us with our work.  Many of these people, for a variety of reasons, have asked to remain anonymous.

 

Call for volunteers to support our efforts

If you support our efforts then I would ask you to consider donating some of your time and volunteering to assist us with our work.  It doesn’t matter where you live.  It doesn’t matter how old or how young you are.  All you need is access to the internet.  It would be helpful if you had access to a phone as well.

We have a number of specific needs which one or more volunteers could help us with:

Research:       We have a number of ongoing projects compiling lists of contact information for a variety of organizations–a process which involves doing internet searches and making telephone calls.

Graphic design:     We could benefit from the assistance of someone who has some expertise in the area of graphic design.

Media/public relations:   Our organization would love to receive some help from someone who has worked in media and public relations.

Search engine optimization:   We would be delighted to obtain the assistance of someone who has a strong background in search engine optimization.

Website design:   We would love to obtain the assistance of someone with a strong background in website desgin.

If you are interested in volunteering and supporting our work then I would invite you to contact me.  You are welcome to call me at 1 (866) 996-9941 or (519) 827-5513.  Alternatively, you can contact me via e-mail at mark@comprehensivedebtsolutions.ca

 

Mark-White Female with short hair-)

If you are interested in supporting our efforts by volunteering some of your time then we would invite you to contact us.

Eight Tactics Canadian Consumers Might Use To Become “Creditor-Proof”

 

For about $10 a Canadian consumer can stop collection calls in connection with monies owing to a bank.

Based upon my 22 years of experience in the collection industry there are about 8 key things a consumer can do to make themselves “creditor-proof” to some extent.

 

It is possible for a consumer to adopt a strategy where the goal is to make if difficult for their creditors to recover any monies from them.  In this blog post I am going to describe eight tactics which underpin this strategy–tactics which I have learned over the past 22 years as a collection industry insider. For twelve years I worked as a collection lawyer for four of the ten largest collection agencies operating in Canada.  I also took a two-year sabbatical to write my book titled The Wolf At The Door:  What To Do When Collection Agencies Come Calling (2010), published by McClelland & Stewart.  For another four years I personally negotiated hundreds of favourable settlements on behalf of Canadians struggling with unsecured consumer debt.  More recently, I have contributed approximately 100,000 words worth of content to various publications and websites focusing on consumer debt.

 

#1    Avoid having your monies scooped under your creditor’s right of set-off

If you are currently struggling with debt or you anticipate having problems at some point in the future then you should not have a bank account at the same financial institution that has extended you credit–credit cards, personal loans, or lines of credit, or your mortgage.  If you do have a bank account at the same institution which has extended credit to you and you are unable to make a payment to your financial institution on your credit card, personal loan, line of credit or mortgage then it will simply take the money out of your bank account at that institution and make the payment.  This is called a financial institution’s “right of set-off”.  Each banking day in Canada, Canadian financial institution’s recover hundreds of thousands of dollars from Canadians across the country using the “right of set off”.  Many Canadians first learn about the “right of set off” after their bank account has been cleaned out.

 

#2    Selling any real property that you own in your own name

If you are a creditor the easiest way to recover monies on an unpaid account from a consumer is to sue the consumer, obtain a judgment against the consumer and then place a lien on any real property that the consumer owns in his or her own name.  Recovering monies from a consumer can be much more difficult if the consumer does not own any real property in their own name.

If you anticipate that you will be unable to meet your financial obligations at some future date then you might want to explore the merits of selling your real property–to a third party at fair market value–particularly in circumstances where the real property is in your own name.  If you fail to make your payments on an unsecured consumer debt your creditor might decide not to sue you because you do not own any real property in your own name.

 

#3     Avoid owning any property in your own name

If you owe monies to creditors, then ideally, you should not own any property in your own name.  If you are married, and you have outstanding debts and your spouse does not owe anyone any money, then any assets that you acquire should be in your spouse’s name.  Entrepreneurs, business people, and professionals know this and it is common practice for them to structure their financial affairs to that they do not personally own any assets in their own name.

 

#4     Owning an inexpensive car

Each province in Canada has a law which provides Canadians with some protections from creditors in terms of property that can be seized by judgment creditors.  For example, in most provinces $10,000 worth of household items–furniture, clothing, and appliances are not available to creditors who have a judgment against a debtor.  Most provinces have an exemption for an automobile–typically around $4,500 to $6,500.  This means that if you require a car and you anticipate some major financial problems in the future that you should seriously consider obtaining a car with a Blue Book value of less than $6,000 or whatever the relevant exemption is for an automobile in your province.

 

#5    Living without a bank account

There are two circumstances where a Canadian should avoid having a bank account.  Firstly, if you owe monies to the Canada Revenue Agency then, in the absence of having a judgment against you, it can seize monies in a bank account in your name.  Secondly, if you have creditors, other than the Canada Revenue Agency, who obtain a judgment against you, then if they find your bank account they can seize monies in your bank account–but not more than the amount of the judgment against you.

It is possible for many Canadians to function without a bank account today.  It is possible to cash a cheque payable to yourself, at any number of firms that offer cheque cashing services including those offering payday loans–without the necessity of having a bank account.  It can be incredibly helpful to obtain a secured credit card available through a firm that offers payday loan services.  Cash Money, for example, which has hundreds of locations across Canada, offers a secured credit card which enables you to make recurring payments to your creditors, without the necessity of having a bank account.

 

#6      Seeking employment in an industry where you can easily change employers

In some cases where monies are owed to a creditor it will sue the consumer, obtain a judgment against the consumer, and do a wage garnishment.  Under a wage garnishment the court notifies a consumer’s employer that a portion of the consumer’s wages are to be deducted from the consumer’s paycheque and remitted to the court for distribution to one or more of the consumer’s creditors.  The exact amount of money deducated from a consumer’s paycheque will vary, province by province, depending upon the provincial exemption with respect to garnishment of wages.  In Ontario, for example, the maximum amount of a debtor’s wages which is available with respect to unsecured consumer debt is twenty percent of the debtor’s take-home pay.

Creditors do not typically try to recover wage garnishments where the consumer has a low paying job–such as someone working in a restaurant–because the person will simply quite their job and get a similar job at another restaurant.  This forces the creditor to then find the debtor’s new employer and go through all the time, trouble, and expense of obtaining a wage garnishment at the debtor’s new employer.

If you work in an industry where your skills are in demand then you might be able to defeat a creditor’s attempts to recover monies from you through wage garnishments if you are prepared to change jobs each time your creditor obtains a wage garnishment against you.  I anticipate that many creditors, at some point, might give up using wage garnishments if you are prepared to change employers each time they obtain a wage garnishment against you.

 

#7       Moving to New Brunswick

If you owe monies to creditors then one option for you to consider is moving to New Brunswick which has been described as a “debtor’s haven”.  New Brunswick is the only province in Canada which does make garnishments available to judgement creditors.  This means that if you are a resident of New Brunswick then you should be in a position to avoid garnishment of your wages and garnishment of your bank accounts–with respect to monies owing on unsecured consumer debt.

 

#8      Moving outside of Canada

Canadian creditors, and their authorized collection agents, have a poor track record when it comes to collecting monies from people living outside of Canada.  In my 22 years in the collection industry I am not aware of a single instance where a Canadian creditor has successfully recovered monies from a non-resident by suing them.

 

Learn more about how you might be able to become “creditor-proof”

If you would like to learn more about how to make yourself “creditor-proof” then you might want to call me at (866) 996-9941 or (519) 827-5513 or contacting me via e-mail at mark@comprehensivedebtsolutions.ca.

 

If you want to learn more about how you might be able to become "creditor-proof" you might want to arrange a 15 or 30 minute telephone consultation with me.

If you want to learn more about how you might be able to become “creditor-proof” you might want to arrange a 15 or 30 minute telephone consultation with me.

Idle threats to sue consumer on a bank debt are illegal

 

If you are a consumer who owes money to a bank then you might be receiving payment demands.  These demands–typically in writing or by telephone–might be from people working for your bank, or the bank’s collection agent:  a collection agency, a paralegal, or a law firm.  Under federal law it is illegal for these people, or these organizations, to threaten to sue you concerning monies owing to a bank if they have no intention of suing you.

On January 1, 2010, the Credit Business Practices Regulations, SOR/2009-257, became the law in Canada.  It applies where monies are owed to a bank provided the debt arose from a consumer transaction.  A debtor is not entitled to the protections afforded under the federal Credit Business Practices Regulations where (1) the debtor is not an individual, or (2) the debt was incurred for a business purpose.  Furthermore, a consumer might not be entitled to the protections available under the federal Credit Business Practices Regulations if their debt owing to a bank has been sold to an organization which is not a federally regulated financial institution.

 

You are receiving payment demands for an amount less than $2,500

If you owe monies to a bank and you owe less than $2,500 then I estimate that the odds that you are going to be sued are less than half of one percent.

 

You are receiving payment demands for an amount less than $5,000 and you do not own any real property

If you owe monies to a bank then the odds that you are going to be sued over a $5,000 debt, in circumstances where you do not own real property in your own name, are likley less than half of one percent.

 

You are receiving payment demands where the relevant statute of limitations has expired

If you owe an unsecured consumer debt to a bank and the relevant statute of limitations in the province where you live has expired then I estimate that the odds that you are going to be sued are less than half of one percent.  The statute of limitations for unsecured consumer debt is two years for the residents of British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick, three years for Quebec residents, and six years for all other Canadian residents.  Creditors, and their collection agents, rarely sue consumers after the expiry of a limitation period on unsecured consumer debt.

 

You are receiving payment demands from a collection agency

There are two different scenarios under which you might be receiving a payment demand from a collection agency.  As a general rule, if you receive a collection call or a collection notice from a collection agency the collection agency is attempting to collect your account on a commission, or contingency basis, on behalf of your creditor.  In some instances, however, a collection agency will have purchased your debt, in which case in steps into the shoes of your original creditor.  In Canada, banks, however, have historically been very reluctant to sell their debt.

In my book The Wolf At The Door:  What To Do When Collection Agencies Come Calling (2010), published by McClelland & Stewart, I estimate that collection agencies, collectively across Canada, only sue about one in ten thousand accounts placed with them for collection.  The primary function of a collection agency is to hound consumers to pay their outstanding accounts through written collection notices and telephone calls.  Most collection agencies sue an incredibly small percentage of unpaid account assigned to them by creditors for collection.

 

You receive a generic looking collection letter from a law firm

There are a number of lawyers and law firms in Canada that send out thousands, and in some instances, tens of thousands of demand letters each month in circumstances where the law firm has no meaningful involvement with respect to the collection of the account other than the letter itself.  I would hazard a guess that many of these law firms sue less than one half of one percent of the debtors that receive one of their collection letters.  In some cases the number of files sued might be closer to zero.

 

Learn more by contacting our office

If you are receiving collection calls then you might want to contact me.  You are welcome to call me at 1 (866) 996-9941 or (519) 827-5513.  Alternatively, you can send me an e-mail at mark@comprehensivedebtsolutions.ca

 

If you are receiving payment demands concerning monies owing to a bank then you might want to consider speaking with Mark Silverthorn.

If you are receiving payment demands concerning monies owing to a bank then you might want to consider speaking with Mark Silverthorn.