Many people are surprised to learn that debt consultants cannot file consumer proposals at all.
Only Licensed Insolvency Trustees (LITs) have the legal authority to submit a proposal to the government and stop collections. Debt consultants can only offer advice, charge fees, or refer you to a trustee — and some charge hundreds or thousands of dollars for this “referral.”
Insolvency trustees vs debt consultants
Licensed Insolvency Trustees (LITs)
LITs are federally regulated and trained to administer consumer proposals. They can:
- legally freeze interest to 0%
- stop collection calls and wage garnishments
- reduce your overall debt through a formal settlement
- protect your assets during the process
Their fees are controlled by federal guidelines and come out of your proposal payments — not out of your pocket upfront.
Debt Consultants
Debt consultants are not regulated, not licensed, and cannot file a proposal. They often:
- charge high upfront fees
- sell long repayment programs with no legal protection
- misuse terms like “government program”
- make promises they cannot legally keep
In many cases, the consultant eventually sends your file to a trustee, but only after charging fees that you did not need to pay.
Legal Protection vs. No Protection
A key difference is legal protection. When an LIT files your proposal, federal law gives you a “stay of proceedings,” stopping:
- interest
- collection calls
- lawsuits
- wage garnishments
Debt consultants cannot trigger any of this protection. Creditors can still pursue you the entire time you work with them.
Important: If a consultant promises to “reduce your debt” or “stop collections,” they cannot — unless a Licensed Insolvency Trustee files your proposal.
Cost Differences
The cost difference is significant. LIT fees are set by the government and built into your proposal. Debt consultants set their own fees and often charge:
- consultation fees
- monthly program fees
- referral fees to a trustee
Many clients pay thousands to consultants before realizing the trustee would have handled everything at no extra charge.
Results and Reliability
If you want the best consumer proposal outcome, a trustee is the only path. Trustees file legally recognized proposals that:
- cut debt to an agreed amount
- provide fixed payments
- offer full transparency
- give you federal protection
Debt consultants offer none of these protections, and their plans often collapse when creditors continue collections.
Why Choose a Licensed Insolvency Trustee?
A Licensed Insolvency Trustee protects your rights, prevents unnecessary fees, and guides you through a safe legal process.
At Yanch Dey & Associates, our trustees use clear steps and simple explanations so you understand every part of your proposal. When comparing LITs and debt consultants, choose the team that provides legal protection, fair payments, and trusted support.
