CONSUMER PROPOSALS VS DEBT POOLING, MANAGEMENT, COUNSELLING PROGRAMS
Let me begin by defining Debt Pooling as a way to consolidate credit and retail charge cards with the individual consent of each participating creditor, whereby a consumer can make one (1) consolidated payment per month to an individual, business, or creditor-supported ‘nonprofit’ debt counselling society. The practice is based on historic provincial debt collection legislation intended in part to provide consumers with voluntary debt consolidation service when no one will lend – before the availability of the consumer proposal embodied in federal debt relief, financial restructuring legislation. That said, the service has to be paid for, and that is where things can get problematic. Creditor sponsored debt collectors organized into ‘nonprofit’ credit counselling societies, retain a percentage of collections. Approved private operators retain what is euphemistically referred to as ‘Fair Share’ for their collection effort. All others are on their own and must out of necessity, resort to the consumer already incapable of paying his bills as they become due; too often resulting in debt pooling fraud as demonstrated in Province Newspaper’s 2014 Don Antle debt pooling investigation and reporting, which connected debt pooling fraud to weak provincial government (gov’t) regulation and oversight.
Here is what everyone needs to know about Debt Pooling vs. Consumer Proposal administered by Westgeest & Associates, your federal government (gov’t) Licensed Insolvency Trustee, acting as Consumer Proposal Administrator under well regulated, monitored federal gov’t debt relief, financial restructuring legislation:
- First, let’s dispense with the oft repeated canard (untruth) that you are better off filing a debt pooling, management arrangement (better for your credit rating, score) than a consumer proposal. Consumer proposal is rated, scored exactly the same as a debt pooling arrangement on your credit report;
- Unlike consumer proposal, debt pooling management plans do not provide immediate relief from collection, litigation, garnishee or execution against pension, wages, assets and bank accounts upon filing as each and every creditor must, individually consent to the plan of arrangement, which can take some time if it happens at all, leaving you to deal with the chaos in the meantime as you try to explain to a phoning creditor, debt collector that you have entered into a debt pooling arrangement and he should be talking to your debt pooler, as he in turn, or just talking right over you, informs you he is not having any of it, and continues to press for payment;
- Debt Pooling does not necessarily catch all creditors as some will not participate, citing issues of ethics, credibility, qualification and regulation related to debt poolers and the practice of debt pooling (whether delivered “for profit,” too easily abused as demonstrated in the Province Newspaper’s Don Antle debt pooling fraud investigation and reporting in 2014, or so called “non profits,” variously organized, incorporated by creditors to minimize debt collection costs and maximize recovery, and who, unlike consumer proposal administrators, are not obliged to inform you about available government debt relief, financial restructuring programs which reduce what you owe getting you debt free sooner at less cost, and generally do not tell you about or send, redirect you to a government Licensed Insolvency Trustee to file a consumer proposal, and forego the business – (not likely), leaving you to manage non participating debt as well as the debt pooling arrangement. In contrast, by force of law a Lower Mainland consumer proposal filing involves all debt and immediately imposes a legal stay of proceedings preventing creditors, except child support, from pressing collection, lawsuit, garnishee or execution against pension, wages, assets and bank accounts, unless and until the proposal is rejected by more than 50% of voting creditors in dollar amount or set aside by a judge of the Supreme Court of British Columbia. If the Vancouver consumer proposal is accepted by creditors, the stay endures to plan completion when it is no longer needed;
- Debt Pooling is conducted by provincially registered debt collectors who require no particular education or background, do not have to refer, introduce you to cheaper and better government debt relief, financial restructuring options, and operate under ‘skimpy’ provincial collection rules requiring repayment of 100% of the debt plus interest unless otherwise arranged with the consent of each individual creditor. Whereas a consumer proposal in British Columbia is provided by Federal Government Licensed Insolvency Trustees, highly trained professional court officers, mostly Chartered Professional Accountants (CPA’s) who have earned their Chartered Insolvency and Restructuring Professional (CIRP) designation and survived the regulatory screening process: includes federal government examination and criminal background check. Licensed Insolvency Trustees, unlike provincially registered debt poolers, managers, and credit counsellors, must discuss all alternative solutions with you by law, and if you choose to file a consumer proposal provide mandatory, statutory credit counselling throughout. A consumer proposal further allows you to substantially reduce and reschedule all kinds of debt with the support of just more than 50% of voting creditors in dollar amount voting for the plan – if they vote – the abstainers, the rest, being stuck with the proposal as long as the plan is carried out to completion and the character of any one creditor’s debt on application to the Supreme Court, is not judged unforgivable: court fines, alimony, child support, fraud, embezzlement, misappropriation, damages awarded for causing intentional bodily harm, sexual assault and so on, all matters involving social issues society wants to encourage or discourage as the case may be. Unforgivable debt survives the completion of any proposal or bankruptcy for that matter, to the extent that it remains unpaid upon proposal completion unless the creditor with the unforgivable debt votes for the proposal.
- Debt Pooling is generally not available to restructure government debt, whereas a consumer proposal can compromise, settle government debt (includes all kinds of taxes, levies, loans, etc.) and prevent garnishee and execution against pension, wages, assets and bank accounts upon filing;
- Debt Pooling is not regulated like consumer proposal in the Lower Mainland, which has public and creditor protection built in and paramount as along with other goals, one of its unstated purposes is to protect the value of the Canadian dollar we all carry around in our wallets to prune the debt tree, the engine of all modern economy, relieving it of its dead wood and leaves, weight, thereby nurturing its health and encouraging growth in pursuit of ever greater economy;
- Unlike a debt pooling, management arrangement, a consumer proposal in Vancouver stops a wage, earnings assignment and postdated cheques often given to payday lenders to secure an advance, and prevents utilities and lessors (cars, other things and service) from terminating their contract, service or accelerating payment just because you filed for government debt relief, financial restructuring by way of consumer proposal;
- Unlike a debt pooling arrangement, filing a consumer proposal will qualify you for a driver’s license upon creditor acceptance, if ICBC is refusing to allow renewal solely because you owe them money. If your consumer proposal is accepted by just more than 50% of your voting creditors in dollar amount, ICBC is stuck. The law applies to all creditors equally in service to yet another of its goals, to provide a way out of crushing debt for individuals without going bankrupt.
Consumer Proposal in Vancouver is the safe, well regulated, government tool to consolidate, restructure, reduce and control debt. Readily accessible to all consumers and small business entrepreneurs who can overcome the innate human reluctance to talk to others about something as private as your finances, sufficiently to consult Westgeest & Associates professionals, your gov’t Licensed Insolvency Trustee, who administer consumer proposals.
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