A month or so ago I received a call from a debt consulting agency asking if we could meet because they would like to refer their clients to me. Although I am not a huge fan of some of these agencies, I decided to meet with them to listen to what they had to say. I will call their representative Jake.
Jake told me that they meet with clients, complete an application form and help the client get the necessary paperwork together to file a consumer proposal. He then refers the client to a Trustee to complete the process. So far it sounded reasonable and I asked him what they charge for this service. Jake advised it is based on the client’s situation. I told him that I have had clients who have called the debt consulting agency (before they came to see me) and they have advised me that the fees start at $1500. I told him that considering the amount of work that they do, this is a lot of money, too much money as far as I am concerned.
I am not saying they can’t charge a fee for their service; however the fee needs to be reasonable. Jake offers the same service that we offer at the initial meeting; with the big difference that we don’t charge people to meet with us. When a client comes in if they want help completing their paperwork we help them and there is no additional charge for this. If the client needs to get other documents, we let them know how and where to get the documents we need.
Let’s just assume this whole process takes 3 hours. That means that Jake is charging $500 an hour to help you. Wow, that’s a lot of money. Just for fun I googled “hourly rates for lawyers in Vancouver”. I came across a law firm that charges between $150 an hour to $480 an hour depending on the lawyer. Is Jake’s time worth more than a lawyer in Vancouver? You can make your own decision about that.
I told Jake that I would be happy to take referrals from him, providing the fee he charges is reasonable. It probably comes as no surprise that he hasn’t referred anyone to me.
You need to be cautious of debt consulting agencies and as the saying goes “if it sounds too good to be true, it probably is”. Before you sign the paperwork ask them the following questions:
1. What do they charge?
2. What service do they provide?
3. Are they just going to refer you to a trustee?
4. Do they offer any followup progam?
You can then decide whether this is the path you should be taking. Better still, call us at 519-351-2323 or 310-PLAN and we can formulate a plan that is right for you.
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