Struggling with debt? Beware of debt-relief scams.

Unregulated debt advisors are targeting indebted Canadians with promises of a quick fix, charging unnecessary fees for debt-relief services they are not authorized to provide.
November 14, 2023

TORONTO – November 14, 2023 – The Office of the Superintendent of Bankruptcy (OSB) and the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) want to help Canadians avoid debt-relief scams.

Debt relief scams often target indebted consumers by falsely promising insolvency options like consumer proposals and bankruptcies. Some unlicensed debt advisory firms charge hundreds or even thousands of dollars in unnecessary fees for services they are not licensed to provide and often misrepresent the services they can offer.

Watch out for these telltale signs.

5 Signs of Debt Relief Scams

  1. Unrealistic promises or pressure to make quick decisions. Unregulated debt advisors may make promises they can eliminate your debt, without understanding your financial situation. They may pressure you to make quick decisions without discussing all of your options.
    Licensed Insolvency Trustees (LITs) are the only debt-relief professionals in Canada legally required to offer a complete financial assessment and explain all the options for debt relief. Only after a thorough financial assessment of your personal financial situation will they offer specific advice about resolving financial difficulties. They are legally and ethically bound to provide accurate, unbiased debt advice and they are subject to ongoing oversight via regular reviews, audits and inspections to ensure standards of practice and adherence to the law including a comprehensive Code of Ethics.
  2. Asking for fees up front or claiming they can get you a “better deal”. Requesting payment before they meet with you or before delivering a service, is a red flag. They may make false claims they can “get a better deal” with your creditors or better serve your interests.
    LITs generally offer free consultations, with no commitment and no up front fees, to give you a realistic picture of the debt relief options available for your situation. They are legally and ethically bound to play an impartial role in ensuring your rights, as well as those of the creditors. The fees charged by LITs for consumer insolvencies and bankruptcies are regulated by the federal government.
  3. Charging unnecessary fees disguised as “referral fees” or “administration fees”. They may charge money for services that are not necessary and do not provide debt-relief, leaving you in a worse position financially. For example, they may claim they can grant you access to more debt-relief options through a referral to a LIT, sometimes for an additional fee.
    If you have decided you need help with your debt, you should meet with a LIT first. You do not need a referral to speak with a LIT. Even if it is determined that the services offered by an LIT are not right for you, they may recommend non-insolvency options such as talking to your creditors, consolidating your debts, establishing and following a budget or entering into a Debt Management Plan (DMP). If needed, they can refer you to a reputable credit counselling agency, for example, to access DMP services. LITs do not charge fees for referrals.  
  4. They tell you to stop communicating with, and/or paying your creditors or claim they can negotiate with them on your behalf. Some debt advisory companies may encourage you to cut ties with your creditors and claim they can be your “advocate” and negotiate on your behalf. Creditors are not legally bound to deal with them, so you may pay up front fees for this service even if they are unsuccessful in reducing your debt and then you end up further in debt.
    LITs are the only federally regulated debt professionals with legal authority to negotiate binding agreements with creditors on your behalf. Only LITs can offer consumer proposals or bankruptcy services which legally require creditor actions, including collection calls and wage garnishments, to stop.
  5. They may only offer online services with no option for in-person service. Beware of debt advisory firms that only offer online services, that don’t have a legitimate address or a location in Canada, or that offer limited information about who they are on their website. If a debt advisory firm only operates online without any indication of in-person service availability within Canada or your province, it is wise to seek assistance elsewhere.
    LITs are required to be licensed by the OSB and must provide in-person service at any point in the file, at your request.

Looking to find an LIT? The OSB has a map-based directory of LITs and LIT firms. LIT services are available across the country, even in remote locations.

You can also find reliable tools and information about options for dealing with your financial difficulties by visiting the OSB’s Debt Solutions Portal at


“Anyone facing financial struggles and serious debt problems may be tempted to seek a quick solution from an unregulated debt advisor. But be careful before you pay for services you may not need. Instead, anyone wondering about a consumer proposal or bankruptcy should meet with a Licensed Insolvency Trustee (LIT). LITs are the only federally regulated professionals authorized to file a consumer proposal or bankruptcy. They are legally required to explore all your debt options, including non-insolvency options, to help you find the best solution for your debt problems.”
– Elisabeth Lang, Superintendent of Bankruptcy

“Feeling overwhelmed or at the point of crisis is what propels many to finally reach out for debt help. At that point, individuals are also the most vulnerable to debt relief scams that may involve high-pressure sales tactics or unrealistic promises to quickly solve their debt problems, often putting them deeper in debt with high fees. The good news is that there are telltale signs to help Canadians avoid becoming victims of unscrupulous debt advisory firms and they can avoid debt-relief scams altogether by speaking with a licensed professional, such as a Licensed Insolvency Trustee.”
– André Bolduc, Licensed Insolvency Trustee and Chair of CAIRP

Quick facts

  • The Debt Solutions Portal provides accurate and reliable information, including a handy questionnaire and a table to compare debt solutions, to help you find options to deal with your personal financial difficulties.

  • CAIRP is the national professional association representing nearly 1,400 members and associates, mostly LITs who have earned the Chartered Insolvency and Restructuring Professional designation.

Associated links