Archive for September 2015

My article appearing in Law Times raises questions about Ontario Deputy Judge’s firm offering debt settlement services

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LawTimesSept212015

This article appeared in the paper edition of the Law Times dated September 21, 2015.  It did not appear in the smaller digital version of the Law Times of the same date.

 

On September 21, 2015, the Law Times, a weekly publication for Ontario lawyers, ran an article I wrote titled “Questions raised about deputy judge’s debt settlement activity”, in the publication’s paper edition.   The URL for the Law Times is www.lawtimesnews.com.  This article does not appear in the September 21, 2015 digital edition of the Law Times.

The full text of this article can be found at the end of this post.

In this article I asked whether or not an Ontario Deputy Judge’s recent foray into the Ontario debt settlement marketplace will lower the public’s opinion towards both lawyers and judges in this province.

I also ask questions about the relationship between the unnamed deputy judge operating  Ontario Debt Law, OCCA, Quick Connect Solutions, and debthelpers.ca.

This article is based upon my post, dated August 16, 2015, published earlier this year on this blog, titled “OCCA helps Deputy Judge Serafini and Ontario Debt Law enter debt settlement marketplace”.

Here is the link to this post:

http://blog.comprehensivedebtsolutions.ca/2015/08/occa-helps-ontario-debt-law-enter-debt-settlement-marketplace/

 

Let us review your debt settlement agreement

If you are an Ontario resident and you have signed an agreement with any firm that offers to eliminate your unsecured consumer debt for less than what you currently owe then I would invite you to provide me with a copy of your agreement.

Depending upon your particular circumstances you might be entitled to a refund of the monies that you have paid to a debt settlement service provider.

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

You are welcome to call Mark Silverthorn if you are an Ontario resident and you have signed an agreement with a firm offering to eliminated your debt for less than what you currently owe.

You are welcome to call Mark Silverthorn if you are an Ontario resident and you have signed an agreement with a firm offering to eliminate your debt for less than what you currently owe.

 

Contact me if you have any information about the activities of Ontario Debt Law and OCCA

 

I would also invite anyone with knowledge of the activities of Ontario Debt Law and OCCA to contact me.

 

Text of my article appearing in the September 21, 2015, paper edition of the Law Times

 

This article reprinted below appeared in the September 21, 2015, paper edition of the Law Times.  The URL for the Law Times is www.lawtimesnews.com.

 

SPEAKER’S CORNER

Questions raised about deptuy judge’s debt settlement activity

BY MARK SILVERTHORN

For Law Times

 

Some time in July of this year, an Ontario deptuy judge who sits in the central west region launched a new law firm, Ontario Debt Law, that offers debt settlement services to Ontario residents.

The law firm’s debt settlement agreement states that it can assign the law firm’s obligations under the agreement to OCCA Consumer Debt Relief Inc.  Brampton, Ont.-based OCCA has been one of the largest Canadian debt settlement firms over the past decade.  In 2014, OCCA claimed to have more than 12,000 clients.

Ontario Debt Law has been carrying on business since the beginning of July.  It is becoming increasingly apparent that such activities may create issues not only for Ontario’s legal community but also for the administration of justice in this province.

A letter on Ontario Debt Debt Law letterhead states that an Ontario lawyer described as a deputy judge owns and operates the firm.  An unsophisticated individual reading this marketing letter might think that entering into an agreement for legal services with Ontario Debt Law might be very advantageous because the lawyer operating it is a deputy judge.  The reference to a deputy judge might lead a potential client to think to conclude that the courts or the Ministry of the Attorney General approve or recommend the firm’s services.

The entrance of Ontario Debt Law into the Ontario debt settlement marketplace coincides with the new debt settlement regulatory regime that came into effect on July 1st.  Effective July 1, whenever an Ontario resident enters into a debt settlement agreement, there are significant restrictions on the fees where the debt settlement service provider is subject to the Ontario Collection and Debt Settlement Services Act.

A debt settlement firm cannot charge a client a penny in fees until a settlement is actually paid out.  Furthermore, the maximum fee with respect to a single debt is 10 percent of the amount owing as of the date the debt settlement agreement was signed.

The new regulatory regime, and in particular the significant restrictions on fees, is having a devastating impact on firms providing debt settlement services to Ontario residents.  The new regulatory regime for debt settlement firms does not apply to lawyers who can bring themselves under an exemption contained in the act.  Accordingly, it is much more attractive financially to provided debt settlement services in conjunction with a law firm than to do so on its own.

A marketing letter on Ontario Debt Law’s letterhead sates: “We are NOT a debt settlement firm!”  It would be accurate to say that Ontario Debt Law is not a firm licensed as a collection agency under the Ontario Collection and Debt Settlement Services Act.  Ontario Debt Law does, however, offer services that fall within the definition of debt settlement services under the act.  There are also several confusing aspects to Ontario Debt Law’s letterhead.  The contact information, for example, is a mystery.  Several phone calls to the the local number on the law firm’s letterhead elicited a fax tone.  A phone call placed after regular business hours to the toll-free number listed on Ontario Debt Law’s letterhead led to a voicemail for a marketing firim called debthelpers.ca.

Ontario Debt Law’s letterhead states that its address is 188 Wilkinson Rd., Unit 2, Brampton, Ont.  On July 13, 2015,a photograph taken at that address reveals that the name on the door is not Ontario Debt Law but that of a Quick Connect Solutions.  A sign on the door at 188 Wilkinson Rd., Unit 2, advises Canada Post to deliver mail for that address to 188 Wilkinson Road, Unit 1.  That is the address for OCCA.

Quick Connect Solutions’ web site describes the firm as offering telephony solutions to companies in the marketing, credit, collections, and debt purchasing industries.  The we site for debthelpers.ca includes the following statement: “Each company we work with is unique and offers several different programs.  One size-fit-all approaches will never help you regain your financial stability and achieve your goal of becoming debt free.”

OCCA and Quick Connect Solutions. in fact, have attracted the attention of the of the Canadian Radio-television and Telecommunications Commission.  Following a CRTC investigation in 2013, OCCA and Quick Connect Solutions agreed to pay $69,000 and $11,000, respectively, in fines for making robocalls.

It is not easy for a member of the public to speak to a staff member at Ontario Debt Law.  Ontario Debt Law does not have a web site and would not appear to have much of a public presence at all.  A member of the public, however, will receive marketing materials from Ontario Debt Law after calling a toll-free number listed on OCCA’s web site and speaking with a counsellor.

A deputy judge’s recent entry into the Ontario debt settlement marketplace raises potential concerns.  It would be surprising if such activities were to enhance the public’s perception of either lawyers or judges.

 

Mark Silverthorn is a retired lawyer and the author of The Wolf At The Door:  What To Do When Collection Agencies Come Calling.  He is also the founder of Comprehensive Debt Solutions Inc., a firm providing practical advice to consumers with unsecured consumer debt problems.  Its web site is comprehensivedebtsolutions.ca

 

 

 

Indebted consumers often receive poor financial advice from those holding themselves out as helping them

 

In 2010 my book The Wolf At The Door:  What To Do When Collection Agencies Come Calling (2010), published by McClelland & Stewart, was in bookstores across Canada. As part of the research for this book I mystery shopped about a dozen organizations in the Greater Toronto Area holding themselves as helping consumers with unsecured debt problems.  For lack of a better term I will refer to debt settlement firms, credit counselling agencies, debt consultants, and bankruptcy trustees as debt resolution service providers.

WATD(2)bookcover one column wide (1)

 

Response where limitation period was relevant

I provided my mystery shoppers with special pens that could surreptitioulsy record conversations.  I also provided my mystery shoppers with various scenarios to persent to debt resolution service providers.

One of the scenarios these mystery shoppers presented was that the date of last payment on all their unsecured consumer debts were more than three years ago.   I wanted to test these organizations’ response to a scenario where a consumer might be better off simply taking advantage of Ontario’s two-year limitation period for simple contract debt with respect to any unpaid unsecured consumer accounts.

An Ontario resident might have $60,000 in unsecured consumer debt in circumstances where the date of last payment on these debts was more than two years ago.  In this scenario, the consumer would have the option of not paying a nickel to their creditors.  The fact that an Ontario resident had an unpaid account, however, would show up on their credit report for seven years following the date of their last payment.

I was shocked when I listened to the recordings of these interviews.  As a general rule, the people who met with my mystery shoppers either had no idea about the significance of Ontario’s two-year statute of limitations, they denied its application to the mystery shopper’s particular situation, or they informed the mystery shopper that the fact that Ontario’s statute of limitations had expired was of no benefit whatsoever to their situation.

 

Free debt consultation or sales pitch? 

All of the organizations who were mystery shopped as part of my research for The Wolf At The Door offered a free consultation.  When I listened to the recordings provided by my mystery shoppers it was evident that the firm’s representative was highly motivated to encourage the mystery shopper to sign on the dotted line for a debt resolution option available from their organization.

 

A system that is broken

 

1.       A system that is rife with conflicts of interest

The debt resolution service provider industry has a huge problem. And that problem is conflicts of interest.  As a general rule, these organizations only offer one or two debt resolution options from the toolbox of the six to ten debt resolution options that might be available to a particular consumer.

When a consumer drowning in debt speaks with a representative from a debt settlement firm, a credit counselling agency, or a bankruptcy trustee that organization is very limited in terms of the range of solutions it can offer to the consumer.  It is only human nature for these organizations to put the debt resolution option offered by their firm in the best light possible.  These organizations only receive financial compensation if an individual decides to proceed using a service offered by that debt resolution service provider.

 

2.    A system where consumers often choose less-than-optimal solutions

Consumers who reach out to a debt resolution service provider are typically vulnerable individuals.  They may be facing major issues: missed bill payments, collection calls, lawsuits, and sometimes wage garnishments.  It is common for these individuals to sign up for a debt resolution option with the first organization they contact.  These consumers might not be aware that in some instances the person they are discussing a debt resolution option with is essentially a commissioned salesperson.

Two factors contribute to consumers choosing less than optimal debt resolution options.  Firstly, the average Canadian knows very little about debt resolution options.  Secondly, debt resolution service providers often sell their debt resolution option to the exclusion of other alternatives. This cocktail often results in a terrible hangover for the consumer:  a debt resolution option which is not optimal for the consumer in their particular circumstances.

 

More robust role for government and government regulators needed

Governments and government regulators should take a more active role in protecting vulnerable consumers from signing up for debt resolution options which might not be in the consumer’s best interests in a particular situation.  Firstly, government websites should offer detailed descriptions of various options available to a consumer.  These should not only be educational but also they should be balanced.  Secondly, before a consumer makes a financial commitment with respect ot a debt resolution option–a debt settlement agreement offered by a debt settlement firm, a debt management plan offered by a credit counselling agency or a consumer proposal or personal bankruptcy– they should be required to either read a government-approved document or watch a government- approved video describing the particular debt resolution option in detail as well as alternative debt resolution options.

 

At my firm Comprehensive Debt Solutions, we are not captive of a particular debt resolution option.  If you would like to learn more about your various options for dealing with your debt please feel fee to contact me.  You might find that paying a modest amount to speak to me for 15 to 30 minutes is the best money you ever spent in your life!  Feel free to contact our office to arrange a consultation.  You can call our office at 1 (866) 996-9941 or (519) 827-5513 or send me an 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 your options for dealing with your current debt situation.

You might want to contact our office and schedule a telephone consultation with Mark Silverthorn to learn more about your options for dealing with your current debt situation.

 

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When should we be concerned about the relationship between debt consultants and bankruptcy trustees?

I can empathize with a bankruptcy trustee who not only has to compete for revenues with other trustees but also credit counselling agencies and debt settlement firms.

I can empathize with a bankruptcy trustee who not only has to compete for revenues with other trustees but also credit counselling agencies and debt settlement firms.

 

I do not envy bankruptcy trustees. Firstly, they have to spend a significant amount of money to run a financially viable business. While they receive compensation for facilitating Canadians making a consumer proposal or filing for personal bankruptcy many trustees feel that it is necessary to spend substantial sums on advertising. A trustee is competing for revenues with not only other trustees but also credit counselling agencies—most of whom benefit from favourable tax status–and debt settlement firms.

Secondly, a trustee is at a competitive disadvantage in terms of the number of people who might pay for their services. A consumer wishing to enter into credit counselling or hire a debt settlement firm is not legally required to meet with them in person. In contrast, bankruptcy trustees must meet in person with a person considering making a consumer proposal or filing for personal bankruptcy. Therefore, a credit counselling firm or a debt settlement firm could operate across Canada from a single office. Because a bankruptcy trustee can only make a consumer proposal or file a bankruptcy on behalf of someone they have met in person then a trustee’s revenue base faces major geographic limitations.

Finally, no one wants to speak to a trustee. The last person a person struggling with debt wants to speak with is a bankruptcy trustee. Canadians would rather speak to anyone—and I literally mean anyone–advertising “Avoid Bankruptcy”. A consumer with financial problems is more likely to contact a debt consultant, a credit counselling agency, or a debt settlement firm before they contact a bankruptcy trustee.

 

Some debt consultants act as significant funnels of referrals to bankruptcy trustees

Bankruptcy trustees across the country employ a number of different strategies for inviting consumers to contact their office and learn more about the benefits of making a consumer proposal or filing for personal bankruptcy. It is common for many trustees to spend a substantial amount of money on traditional advertising. Many trustees spend a significant amount of money on their website and internet advertising. Finally, some, but not all, trustees may generate a sizeable number of files from referrals from debt consultants.

 

Diverse group of debt consultants operating in Canada

Debt consultants come in all shapes and sizes. They provide advice or services to consumers struggling with debt. Some consultants have one or more licenses. Other debt consultants are not licensed. I am a debt consultant.  I provide advice for a fee to consumers who are struggling with unsecured consumer debt. The largest debt consulting firm in Canada is Four Pillars which has approximately 50 offices across Canada.

There is nothing inherently inappropriate with a bankruptcy trustee having a relationship with a debt consultant that results in generating files for a bankruptcy trustee. In certain circumstances, however, a trustee’s relationship with a debt consultant can violate the Office of the Superintendent of Bankruptcy Canada’s Code of Ethics for Trustees in Bankruptcy. It is not fair that bankruptcy trustees who scrupulously comply with the Code of Ethics as it relates to debt consultants should be at competitive disadvantage vis-à-vis a trustee who has an improper relationship with a debt consultant.

 

Improper for trustees to provide compensation or benefits for referrals

It is a contravention of the Code of Ethics of Bankruptcy Trustees for a trustee to pay, directly or indirectly, a fee, compensation or a benefit in return for a referral.

 

Trustees shall not encourage anyone to engage in any conduct which is illegal or dishonest with respect to the bankruptcy and insolvency process

It is a contravention of the Code of Ethics of Bankruptcy Trustees for a trustee to “assist, advise or encourage” any person to engage in conduct which is illegal or dishonest in connection to the bankruptcy and insolvency process.

It would be fair to say that the majority of trustees in Canada do not engage in conduct which would come close to violating the Code of Ethics of Bankruptcy Trustees. Unfortunately, there are some bankruptcy firms whose conduct as it relates to debt consultants might constitute a violation of the Code of Ethics or warrant an investigation by the Office of the Superintendent of Bankruptcy.

 

Link to Code of Ethics of Bankruptcy Trustees

Here is a link to the website where you can read the Code of Ethics of Bankruptcy Trustees.

 

Contact Mark Silverthorn if you have information about inappropriate relationships between debt consultants and trustees

Anyone who has information about inappropriate relationships between debt consultants and bankruptcy trustees is welcome to contact me at (866) 996-9941 or (519) 827-5513.  Alternatively, you can contact me via e-mail at mark@comprehensivedebtsolutions.ca.

 

If you believe that you have information about an inappropriate relationship between a debt consultant and a bankruptcy trustee then you are invited to contact me.

If you believe that you have information about an inappropriate relationship between a debt consultant and a bankruptcy trustee then you are invited to contact me.