How prevalent is unethical marketing practices by Ontario bankruptcy trustees?


Over the past several months I have written numerous posts about firms offering debt settlement services to Ontario residents.  In several of these posts I have raised questions about whether some of these firms were acting in contravention of Ontario law.

During my research into debt settlement firms I stumbled across a much larger and insidious problem involving unethical marketing practices by some–but certainly not all–bankruptcy trustees in Ontario.  In Ontario today it is routine for many bankruptcy trustees to pay some form of referral fee or monetary compensation for referrals.  More specifically, these referral fees are being paid to a group that I will refer to as “debt consultants” most of whom advertise attractive results to consumers facing debt problems.


Who are these debt consultants?

Debt consultants are organizations–most of whom advertise on the internet–offering assistance to consumers struggling with unsecured consumer debt.  I would describe myself as a debt consultant.  Many debt consultants promise on their websites that they can eliminate 75 percent or 80 percent of a consumer’s debt under a federal government program.

Some debt consultants are independent financial advisors who provide quality advice to their clients at a reasonable price.  Other debt consultants provide services of limited value for exorbitant fees.  Finally, some debt consultants are little more than con artists.

Some of these debt consultants are heavily subsidized by a firm of bankruptcy trustees.  These shady debt consulting firms which hold themselves out as independent debt advisors are effectively exclusive marketing agents for one particular firm of bankruptcy trustees.  Reliable sources have told me that some bankruptcy firms pay the rent for a debt consulting firm in their community which serves as a referral funnel for them.  It is common knowledge among bankruptcy trustees in Ontario that some–but not all– trustees are paying anywhere between $1,000 and $1,500 for a referral from a debt consulting firm.

There are debt consultants who not only offer independent advice but also who do not receive referral fees.  Unfortunately, a significant percentage of debt consultants are nothing more than marketing fronts for unethical bankruptcy trustees.  If a trustee is paying a debt consultant $1,000 for a referral is a debt consultant going to tell a consumer that they don’t need a consumer proposal because Ontario’s 2-year statute of limitations has expired on their $45,000 worth of unsecured debt?


Unethical for trustees to offer financial benefit for a referral

Bankruptcy trustees in Canada are licensed by the federal government and their conduct is supervised by the Superintendent of Bankruptcy.  The conduct of bankruptcy trustees is governed by a document known as the Code of Conduct for Trustees in Bankruptcy.  Section 47 of this Code reads as follows:

Trustees shall not, directly or indirectly, pay to a third party a commission, compensation, or other benefit in order to obtain a professional engagement or accept, directly or indirectly from a third party, a commission, compensation or other benefit for referring work for a professional engagement.




Payment for referrals is becoming a pandemic amongst trustees

It is becoming increasing evident to me that a significant percentage of bankruptcy trustees in Ontario today are violating section 47 of the Code of Conduct for Trustees in Bankruptcy on a regular basis.  I have no knowledge as to whether or not the Superintendent of Bankruptcy is aware of this problem which would appear to be a growing problem–particularly in Ontario.  It constitutes a growing pandemic amongst federally licensed bankruptcy trustees and a major intervention is required.

It is unfortunate that those bankruptcy trustees with a questionable moral compass are now sullying the reputation of all bankruptcy trustees.  I want to reiterate that many bankruptcy trustees do not offer any financial compensation when a file is referred to them.   I am reluctant to say that a few bad apples are the problem because I believe that it would not be accurate to describe the number of trustees contravening the Code of Ethics as “a few”.  It would be more accurate to say that a significant number of bankruptcy trustees in Ontario are engaging in unethical marketing practices in contravention of the Code of Conduct for Trustees in Bankruptcy.


Request for assistance from the public

I would ask that anyone who has information about an inappropriate relationship between a debt consultant and a bankruptcy trustee to contact me.  People who are in the know would include bankruptcy trustees, as well as current and former employees of bankruptcy firms and debt consulting firms.  Anyone with information is welcome to call me at (519) 827-5513 or (866) 996-9941.  Alternatively, you can contact me via e-mail at  My goal is to bring this information to the attention of the Superintendent of Bankruptcy.


Anyone with information regarding an inappropriate realtionship between a debt consultant and a bankruptcy trustee is invited to contact Mark Silverthorn.

Anyone with information regarding an inappropriate relationship between a debt consultant and a bankruptcy trustee is invited to contact Mark Silverthorn.


This is not the last post on this blog on this issue!



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