Tag Archive for non-profit credit counselling agencies

Consolidation in non-profit credit counselling industry inevitable

Canadians struggling with consumer debt spend millions of dollars to deal with their debt situation.  Some will take out a debt consolidation loan.  Some will hire a debt settlement firm.  Others will “go for credit counselling”.  Some will meet with debt consultants often referred to as “intermediaries”.  Finally, some will meet with a bankruptcy trustee, now known as a Licensed Insolvency Trustee (LIT), and make a consumer proposal or file for bankruptcy.

Make no mistake.  These debt relief service providers compete aggressively for these clients.  And a significant amount of revenues are at stake.  If you live in southern Ontario try listening to the radio without hearing an ad for a Licensed Insolvency Trustee or Consolidated Credit Services, one of Canada’s three largest non-profit credit counselling agencies.

 

Consolidation coming to non-profit credit counselling industry

The debt relief service industry is currently undergoing a period of consolidation.  We are already seeing this among Licensed Insolvency Trustees across Canada.  It is only a matter of time, however, before we will also see consolidation in the non-profit credit counselling industry.

 

The major players in the non-profit credit counselling

The Big 3 among Canada’s non-profit credit counselling industry includes Toronto-based Credit Canada Debt Solutions and Consolidated Credit Counseling Services, as well as New Westminster, B.C.-based Credit Counseling Society.  One might argue that the Credit Counselling Services of Atlantic Canada should also be included in this group.

 

3 Reasons Revenues for the Big 3 have flatlined

According to financial statements available on CRA’s website, the combined total revenues for the Big 3 have remained stagnant around $24 million since 2012, adjusted for inflation.  This is despite the fact that the Big 3 have spent, collectively, more than $4 million annually on Advertising and Promotion in taxation years 2012 through 2015.

  1. consumer proposals are becoming more popular
  2. higher household debt levels make DMPs less affordable
  3. bill collectors are less likely to “drive” consumers to non-profit credit counselling agencies

 

Consumer proposals are becoming a more popular alternative

One of the reasons that the total revenues for the Big 3 have hit a wall over the past several years is the increasing popularity of another debt relief alternative, the consumer proposal.

Consumer proposals are only available through Licensed Insolvency Trustees.  Under a consumer proposal a consumer will repay an amount–typically equal to 25 to 50 percent of their outstanding indebtedness–by making monthly installment payments over a period not to exceed five years.  In contrast, when a consumer enrolls in a Debt Management Plan he or she will repay an amount equal to somewhere between 100 percent and 120 percent of their indebtedness.

Licensed Insolvency Trustees routinely decline to do consumer proposals where the consumer has less than $10,000 in unsecured consumer debt.  Where a consumer owes more than $10,000 in unsecured consumer debt then a consumer proposal is three times less expensive to eliminate one dollar of debt.

 

Higher household debt makes Debt Management Plans less affordable

According to Doug Hoyes, Founder of Hoyes & Michalos, Licensed Insolvency Trustees, “Ten years ago a consumer who owed $10,000 could afford to do a Debt Management Plan where he or she repaid $1,100 by making monthly installments over three years. Today, however, higher household debt means that Debt Management Plans are becoming less affordable because either the monthly payments or higher or the Debt Management Plans are longer.”

According to Scott Hannah, President and CEO of Credit Counselling Society, the typical Debt Management Plan his agency sees is one where the consumer owes between $25,000 to $40,000.  He concedes that the higher the amount of money owing in a Debt Management Plan the more that affordability becomes an issue.

 

Consumers are receiving fewer collection calls from bill collectors

In the past anxiety generated by aggressive bill collectors to consumers with unpaid accounts were often sufficient motivation to persuade a consumer to contact a non-profit credit counselling agency and enroll in a Debt Management Plan.

Compared with ten years ago, however, bill collectors are much less likely to get a consumer who owes money on the phone to make a demand for payment.  Recent studies indicate that ninety percent of Canadians under 30 never talk on their cellphone.  In the future we should expect that bill collectors might get fewer and fewer consumers who owe money on the phone to make a payment demand.

 

Inevitable consolidation in the non-profit credit counselling industry

According to Scott Hannah, President and CEO of Credit Counselling Society, “in the next three years you will see some consolidation or mergers in the non-profit credit counselling industry.  I also expect that in the future that some of the smaller, community-based non-profit credit counselling agencies will no longer be financially viable in the marketplace.”

 

Share any relevant information with me and our readers

If you become aware of any information dealing with consolidation or mergers in the non-profit credit counselling industry then I would invite you to contact Mark Silverthorn at (519) 827-5513 or toll free at 1 (866) 996-9941 or via e-mail at markasilverthorn@gmail.com

What is with Credit Counselling Services of Atlantic Canada Inc. and its charitable status?

 

 

Credit Counselling Services of Atlantic Canada Inc. is a large credit counselling agency operating in the four Atlantic provinces.  According to its website, www.solveyourdebts.com, the organization has five offices in Nova Scotia, three offices in New Brunswick, and one office in each of Newfoundland and Prince Edward Island.

 

Agency collects large sums of monies for Canadian chartered banks

Industry sources confirm that Credit Counselling Services of Atlantic Canada Inc. facilitates the repayment of a substantial amount of debt owing to creditors–including Canada’s chartered banks and major credit card companies.  On the organization’s webpage titled Organization Information the agency describes itself as a “registered non-profit organization”. Furthermore, at the bottom of a substantial percentage of the webpages on this organanization’s website appears the logo for Credit Counselling Canada, an industry association whose membership accreditation is restricted to “registered charitable organizations”. 

The logo for an industry association, Credit Counselling Canada, appears at the bottom of many of the webpages on this agency's webiste.

The logo for an industry association, Credit Counselling Canada, appears at the bottom of many of the webpages on this agency’s webiste.

 

 

Canada Revenue Agency annulled the agency’s charitable status in 2013

There is only one problem!

According to the CRA website, the charitable status of Credit Counselling Services of Atlantic Canada Inc. was annulled on July 12, 2013more than eighteen months ago!

 

According to CRA's website, Credit Counselling Services of Atlantic Canada Inc. had its charitable status annulled on July 12, 2013.

According to CRA’s website, Credit Counselling Services of Atlantic Canada Inc. had its charitable status annulled on July 12, 2013.

 

The term “annulled” is definded on the CRA website as follows:

When a charity’s .. registration is annulled, it is deemed to have never been registered.

 Why did CRA annull the charitable status of Credit Counselling Services of Atlantic Canada Inc.?

Like me, most people reading this blog might be wondering why the Canada Revnue Agency annulled the charitable status of Credit Counselling Services of Atlantic Canada Inc., one of the largest credit counselling agencies in Canada.  If anyone wants to learn the reason for the annullment all they have to do is contact CRA and request the information which might take up to 30 days to obtain.

 

Credit Counselling Services of Atlantic Canada Inc.’s use of Credit Counselling Canada’s logo

Given the information contained on the website for Credit Counselling Canada, www.creditcounsellingcanada.ca–that membership accreditation is limited to “registered charitable organizations”–it would appear to be inappropriate for Credit Counselling Canada to permit the agency to use the Credit Counselling logo on its website.

 

Credit Counselling Canada's website states its membership is limited to "registered charitable institutions".

Credit Counselling Canada’s website states its membership is limited to “registered charitable organizations”..

 

Not only does Credit Counselling Canada’s logo appear at the bottom of numerous webpages on the website for Credit Counselling Services of Atlantic Canada Inc. but also the agency’s website contains a statement that it is an accredited member of Credit Counselling Canada.

 

The agency's website states that it is an accredited member of Credit Counselling Canada.

The agency’s website states that it is an accredited member of Credit Counselling Canada.

 

It would be reasonable for a member of the public, reading the website for both Credit Counselling Canada and Credit Counselling Services of Atlantic Canada Inc, to come to the conclusion that Credit Counselling Services of Atlantic Canada Inc. is a “registered charitable organization”, something which does not appear to be true.  This is an issue which ought to be brought to the attention of the Compliance Division at the Charities Directorate at the Canada Revenue Agency.

 

Appropriateness of content appearing on Credit Counselling Canada’s website

Given the fact that Credit Counselling Canada’s website states that membership accreditation is limited to “registered charitable organizations” is it appropriate for its website to include any information whatsoever regarding Credit Counselling Services of Atlantic Canada Inc?  In fact,  website visitors to Credit Counselling Canada’s website can find all of Credit Counselling Services of Atlantic Canada Inc.’s locations on its website.

An individual visiting Credit Counselling Canada’s website would conclude that Credit Counselling Services of Atlantic Canada Inc. is a “registered charitable organization”.  By including content regarding Credit Counselling Services of Atlantic Canada Inc. on its website is Credit Counselling Canada misleading the public about the charitable status of the agency?  At some future date the Compliance Division at the Charities Directorate at the Canada Revenue Agency might be asked about the appropriateness of content on Credit Counselling Canada’s website with respect to this agency.

 

Appropriateness of agency’s accreditation with Credit Counselling Canada

On its website Credit Counselling Services of Atlantic Canada Inc. states that it is an accredited member of Credit Counselling Canada.  One can find detailed contact information for Credit Counselling Services of Atlantic Canada Inc.’s offices on Credit Counselling Canada’s website which I would assume means that the agency is an accredited member of Credit Counselling Canada.

Given the fact that Credit Counselling Canada’s website states that membership accreditation is restricted to “registered charibable organizations”, is it appropropriate for this agency to be an accredited member of Credit Counselling Canada?  It would appear that Atlantic Credit Counselling Services of Atlantic Canada Inc. is not a “registered charitable organization”.  Therefore, some might believe that by providing this agency with membership accreditation that Credit Counselling Canada is misleading the public about the agency’s charitable status.

 

Should creditors be participating in Debt Management Plans with a credit counselling agency that misrepresents its charitable status to the public?

Some industry obervers might take the position that Credit Counselling Services of Atlantic Canada Inc., directly or indirectly, with the assistance of Credit Counselling Canada, is misleading the public as to is charitable status. This then raises the issue of whether or not credtiors should decline to participate in Debt Managment Plans arranged through Credit Counselling Services of Atlantic Canada Inc.

 

Time for representatives from the agency and Credit Counselling Canada to make a public statement

It is time for senior management at both Credit Counselling Services of Atlantic Canada Inc. and Credit Counselling Canada to make a public statement and make themselves available to the media to answer important questions surrounding the facts and issues arising from this post.  They owe it to every person who not only is, but also anyone who might at a future date be, enrolled in a Debt Management Plan with Credit Counselling Services of Atlantic Canada Inc.

 

If you have any information that would shed light on this unfolding story then I would invite you to contact Mark Silverthorn toll free at 1 (866) 996-9941  or  (519) 827-5513 or via e-mail, at mark@comprehensivedebtsolutions.ca.

Any consumers who are currently enrolled in a Debt Managment Plan with Credit Counselling Services of Atlantic Canada Inc. are invited to contact Mark Silverthorn.

 

People should feel comfortable calling Mark Silverthorn and speaking with him as an anonymous source.

People should feel comfortable calling Mark Silverthorn and speaking with him as an anonymous source.