When you file a consumer proposal, you aim to reduce the financial burdens of repayment and heavy debts. And while licensed and registered officials ensure your consumer proposal process is seamless, some scammers will milk your wallet dry in the name of support.

Scammers look for victims unaware of the official fee structure and paperwork processes. So unless you already know about the-

  • $1,500 filing charge for the consumer proposal
  • The licensed insolvency trustee’s fees, i.e., 20% of all your future payments.

Financial ill-wishers will pull you into a debt-rip-off scheme which is dangerous for those in heavy debt. Moreover, these are predominantly companies with shady business practices that prey on vulnerable patrons.

So here are a few ways such companies can scam you in the name of helping:

#1 Their Proposals Sound Way Better than the Officials’

Shady Consumer Proposal Process

A consumer proposal is a legally binding contract that a licensed insolvency trustee will help you file. And the contract is between you and your creditors. This means communication is a crucial factor here.

Now, while the process might look strenuous, it secures you from legal troubles. And here is where a company might scam you. They will propose a more attractive-looking debt payment process.

For example, they might decorate their scam as an upgraded government program that promises that your creditors will no longer disturb repayment. But remember that no legal process is this easy.

If you flee from creditors, they have full right to take you to court and seize your assets. So while you rejoice about protection from creditors for a small-ish fee, a new financial storm is brewing.

#2 “No Trustee Fee Need!”

Consumer Proposal

A licensed bankruptcy Trustee is a legal requirement for the consumer proposal process. They are in charge of keeping you on track about credit repayments and paperwork. Hence, it is mandatory to pay them.

A shady company might offer a more lucrative option that does not involve paying your Trustee for their legal work and other services. They encourage you to believe that a Trustee works for the creditor and not for you. But, when you deep-dove into their scheme, you will find several upfront fees.

Here is a way to watch out. A Trustee takes fees for filing your legal paperwork and managing your consumer proposal. On the other hand, Aascamming company will ask you to pay a fee to collect your information, which is redundant.

It is, hence, a debt management scam that might put you in more trouble, legally and financially. Instead, meet with a well-known debt settlement firm that is local and has a positive reputation.

#3 They Offer Credit Rating Protection

Consumer Proposal

When you cannot pay off your debt, solutions such as claiming bankruptcy and consumer proposals will affect your credit score. So you might doubt the benefits.

Now a debt racket firm will propose their services and reel you in by advertising their credit rating protection. In reality, no such protection exists in the legal consumer proposal format. Fortunately, a consumer proposal will show on your record for three years.

This means you can again start building your credit score right after. So while a licensed Trustee or a government-approved firm does not offer credit protection, they ensure legal arrangements for you and your creditors.


All in all, these are three of the many ways an unlicensed debt settlement company might rip you off. So when you file for a consumer proposal, always opt for government-certified firms with licensed bankruptcy Trustees.

Remember, filing for consumer proposals, the neverending paperwork, and the repayment process can be tedious. But afterward, you can start over your financial journey with a clean slate.

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