Untrustworthy debt advisors

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Untrustworthy debt advisors

If you’re facing personal financial problems, it’s important to know where to go for help that you can trust. That means speaking to an independent advisor who can give you options and help you make the right decisions for your situation.

In your search for debt and bankruptcy help or information about debt consolidation, you may come across unregulated, unlicensed advisers. Some advisors provide untrustworthy advice, purposely targeting vulnerable people in times of financial crisis and pressure.

Don’t pay the price for dodgy advice. Learn how to identify signs of dodgy debt advice. Remember, if it sounds too good to be true, it probably is.

What are the warning signs?

Untrustworthy advice comes in many forms and some common red flags include:

  • creating an unnecessary sense of urgency
  • charging a fee to submit a bankruptcy application
  • encouraging false or misleading statements in bankruptcy paperwork
  • suggesting that a bankruptcy or debt agreement won’t affect a credit rating
  • claiming they’ve done this many times before and won’t get caught.

AFSA also advises people to ignore slick ads on social and other media promising a way out of bankruptcy. Be aware that searching ‘can’t pay my debts’ or similar phrases on the internet can cause fake advice ads to appear in social media feeds. These ads are likely scams and should be treated as such.

Video: Untrustworthy debt advisors

Where to get help

If you are in debt and need help, there are a number of options available. For more information about informal options see ‘Dealing with debt’ or for information about your formal insolvency options see ‘What are my options?’.

You can also get help by speaking to a free financial counsellor. Financial counsellors offer free, independent and confidential services for dealing with unmanageable debt. To speak with a financial counsellor contact the National Debt Helpline on 1800 007 007.

For more information about who to contact for genuine debt advice visit ‘Where to find help’.

Report suspicious activity

If you are concerned that someone may be doing the wrong thing, you can tell us about it.

Report any concerns about potential dodgy behaviour or suspicious activities to AFSA via the online tip off service.

Case study: Remember Manpreet

Beware of dodgy advice

Remember Manpreet?

Manpreet owns and operates a coffee bean supply company, roasting his own beans and selling them to local cafés.

Despite an increase in trade, most of his customers continue to be impacted financially. This is taking its toll on Manpreet’s cash flow and his ability to pay his own debts on time.

Manpreet’s business and personal debts are now over $700,000, so he decided to research what he could do to get out of debt quickly. While searching, Manpreet stumbled across an ad that read:

“Get out of debt in 10 minutes. Start again with a clean slate.”

Despite thinking this was too good to be true, Manpreet was under a lot of stress and decided to click on the link anyway. Before he knew it, he was talking with Dodgy Dave, a representative from the company that placed the ad.

Dodgy Dave advised Manpreet to transfer his coffee bean business and his house, which he owns outright and is valued at $1 million, into his wife’s name, and then declare bankruptcy. He said that would allow Manpreet to wipe the slate clean, be debt free, keep his house and continue running his business. The only catch would be that Manpreet would need to pretend that his wife was now running the business.

Dodgy Dave wanted $20,000 in cash for the advice and to fill in some paperwork. Manpreet went home after work that night and discussed the advice with his wife. Manpreet’s wife didn’t like the sound of Dodgy Dave’s advice and told Manpreet to contact the National Debt Helpline for free financial counselling.

The National Debt Helpline’s financial counsellor explained to Manpreet that taking Dodgy Dave’s advice could result in a criminal conviction. Instead, the financial counsellor explained the legal options available to Manpreet, provided advice on how to negotiate with his creditors and recommended that he contact AFSA about the advice he received from Dodgy Dave.

*These case studies do not constitute legal or financial advice. You should consider whether the options referred to in the case studies are appropriate for you, and seek advice if necessary, before taking any action.

AFSA’s Untrustworthy Advisors report

In 2022, we published a report highlighting the prevalence of untrustworthy advisors in Australia. The report discusses the consequences of untrustworthy advice and details common tactics which may be a sign of untrustworthy advisor activity.

The report also explains how debtors, creditors, insolvency practitioners and financial counsellors can work together with AFSA to tackle the issue of untrustworthy advice in the insolvency system.

Read the report on our website.