In times of hardship many of us turn to loved ones for support – and a financial crisis is no different. As Licensed Insolvency Trustees, Sands & Associates is often contacted by people who are seeking debt advice and guidance while trying to help a family member or friend through a financially challenging situation.
BC Licensed Insolvency Trustee and Senior Vice-President of Sands & Associates Blair Mantin joined CTV News Vancouver to offer some expert advice on what you can do to help someone through a debt problem – and what you shouldn’t do if you find yourself in a situation offering support.
Watch the clip here and read more below:
Warning Signs Your Loved One Might be Struggling Financially
It is quite common for Licensed Insolvency Trustees to hear from people across the province who are trying to help someone through a financial issue – often because the person suffering is feeling overwhelmed, over-stressed or is simply too embarrassed to seek professional debt advice on their own. For example:
- Parents calling for their adult children
- Children calling about their parents
- One spouse calling regarding the other
- Close friends wanting to offer support
- Bosses concerned about their employees
Oftentimes a person’s finances get pushed to a crisis point because of a disruption that impacts their income, or creates a large and unexpected debt. If someone you know is or has recently experienced these types of life events within their household, it may be a good time to check-in – also be on the lookout if you notice general stress, anxiety or social withdrawal:
- Job-loss or impacts to business
- Chronic or long-term illness
- Divorce or separation
- Addiction recovery
Tips on How to Start a Conversation About Debt
4.6 out of every 1,000 adult Canadians filed for insolvency in 2019. Hearing that figure can help us understand how many people across Canada have (or will) struggle with debt at some point. By some estimates as much as 10% of the population may need to seek formal debt restructuring advice as some point in their life. If you want to broach a conversation or offer support, you might try starting by:
- Sharing a personal experience where you struggled financially
- Talking about a “financial literacy” concept you recently learned, or one you are trying to improve
- Mentioning a media piece/news article about debt help services
- Simply asking kindly how someone is managing financially following a life event or unexpected circumstance
It is important to remember that people are often very emotionally tied to their finances, and many people struggle for years before opening up and seeking help with money problems. Feelings of shame, guilt, anger and resentment are common. These are certainly not easy conversations to begin, especially if you are the person prompting a closer look at the big financial picture. Keep in mind that:
- Encouraging open communication about finances in general is key to ensuring everyone gets the support and access to help or services they may need.
- An example of keeping the “financial literacy” conversation going: Talking with relatives to be sure they are aware of the latest financial scams and schemes. All too often the elderly or other vulnerable consumers are targeted by scammers and fraudsters.
You cannot “make” anyone get help before they are ready – you can try to offer facts and resources to gently ‘nudge’ someone in the right direction of support though.
Help Address the Debt Problem
Here are a few general suggestions you can follow to help someone struggling with debt, and support them in moving forward solving their debt problem:
Get a Clear Picture of the Situation
- Start the process of getting organized by helping to compile a list of the debt details, if possible, include:
- Balances owing
- Account numbers
- Monthly payment requirements
- Debt status (i.e. Are there collection agencies involved or pending legal actions or garnishments?)
- Set a realistic budget for available income and household expenses
- Try the “Rule of 60” math: Divide the total non-mortgage debts by 60 – is the number an affordable monthly payment to pay off the debts over the next 5 years?
- If that monthly payment barely (or doesn’t) fit, don’t delay in evaluating professional debt management options such as non-borrowing consolidation with a Consumer Proposal, or even personal bankruptcy.
Connect with Local Financial Resources
You are not alone! Licensed Insolvency Trustees are the debt help professional endorsed and empowered by the federal government to offer British Columbians qualified debt advice and solutions. It takes less than an hour to get help in assessing your situation, options and resources – and putting together a debt-free plan.
- No referral is needed to get help from a Licensed Insolvency Trustee
- Confidential consultations are free
If the situation has escalated to the point where the person is experiencing collection actions, or a wage or bank account garnishee, contact a local Licensed Insolvency Trustee right away – they can offer solutions to address these types of urgent scenarios and can get creditor protection put in place quite quickly if necessary.
If you have been able to note other factors that aggravated the debt this may help you identify additional resources to seek, for example:
- If housing/rent is an issue, reach out to an organization such as BC Housing
- If depression and anxiety are a problem, speak to your doctor, or a support group
What NOT to Do if You are Helping Someone with a Debt Problem
- Avoid blaming or shaming the person with the debt – this will not help find a solution and compromise your ability to have open communications with the person in the future.
- Remember that helping someone else should not be at your own expense. It is not uncommon for us to hear from people who have found themselves facing their own financial strains after trying to help someone else through a money problem. For example:
- The “sandwich generation” supporting younger dependents as well as aging parents
- Seniors financially assisting loved ones despite their limited fixed income
- Other scenarios that you should generally avoid:
- Co-signing loans or other debts (you become 100% responsible for repayment in the event the other person does not pay)
- Using your credit to support someone else
- Using assets to pay off debt – either your own, or encouraging the other person to do so
If you recognize that someone is struggling with debt – or they have come to you with their issue, the best thing to do is encourage them to contact a Licensed Insolvency Trustee. We strive to offer guidance and advice with empathy and understanding – never judgment. We know this can still be a difficult step for people to take alone. We often suggest that the person bring someone else along for support if that makes them more comfortable.
Connect with a caring, qualified Sands & Associates representative in a BC office near you today – book your confidential free debt consultation now.