How a Licensed Insolvency Trustee helps you with debt relief

On today’s episode of the BDO Financial Wellness Podcast, BDO LITs, Michelle Statz and Ilan Kibel join Tera Beljo to guide you through what your first free consultation with a Licensed Insolvency Trustee will look like. Along the way they’ll discuss how they can help you with early debt advice, routine debt counselling or filing for bankruptcy. Find out why a Licensed Insolvency Trustee is a great place to start when you need help with your debt.

Transcript: What happens when you meet a Licensed Insolvency Trustee

Tera:

Welcome to the BDO Financial Wellness Podcast. I’m Tera Beljo and we’re going to be talking about asking for help – to be more specific, asking for professional help when you’re struggling financially. Let’s face it, a lot of us don’t like to talk about money problems with anyone, not even family members or close friends. The idea of sitting down with a debt professional - like a Licensed Insolvency Trustee - and opening up about your financial difficulties can be intimidating. Well, not to give too much away, but if you stick with us through this episode, you’ll find out that even though that first step is difficult, getting debt help often results in a huge sigh of relief for most people.  Michelle Statz and Ilan Kibel are joining us to talk about what happens when you schedule a consultation with a Licensed Insolvency Trustee. Michelle and Ilan are both Licensed Insolvency Trustees with BDO Debt Solutions so they’re uniquely qualified to walk us through that first meeting. 

Hello and welcome Michelle and Ilan. Today we're going to talk about what happens during an initial consultation with LITs at BDO. In your experience, what are a few of the reasons that people reach out to schedule the first meeting with a LIT, Ilan?

Ilan:

So, generally, it comes down to when there's a crunch, or they're being hounded by creditors, creditors calling, their wages have been garnished. There's some kind of court or legal approach. That really seems to be the breaking point for a lot of people. Unfortunately, we think it's better for them and would be more manageable for them if they wouldn't wait that long and come in and see us. But it's… generally, there's something that happens that actually forces them into their position. So, it's more of a push than into them actually wanting to do it on their own.

Tera:

And so, do you see a lot of people who come into the office that life events have happened? Divorce, illness, Michelle?

Michelle:

Definitely, that's what I was going to add to Ilan's comments. Life events can happen to anyone, and they're outside of our control. And sometimes it's a relationship breakdown when you've got used to living on two incomes, and that's reduced to one, and you're not able to afford payments anymore. Sometimes it's a loss of employment. Sometimes it's health issues that cause an inability to work. So there's definitely things that are outside your control that start to throw the budget into disarray and cause a problem.

Tera:

Do you often see people in that first meeting whose debt is not yet an emergency situation, Michelle?

Michelle:

Definitely, sometimes it's not quite at that point of being an emergency, but sometimes that's good because it opens up options. If they're not quite in that situation where they're in dire straits, there can be other ways of correcting the situation. It might not necessarily be an insolvency process they need. Maybe it's just a matter of getting some debt restructuring advice, or maybe it's a consolidation or, maybe there's assets with equity they can tap into. So definitely, it's not always an emergency at the time.

What does your first meeting with an LIT look like?

Tera:

Okay. So, let's talk about what happens when a person first visits a Licensed Insolvency Trustee. Ilan, who will they meet with first? An LIT? An administrator? What happens?

Ilan:

So, they can meet with either a Licensed Insolvency Trustee or an administrator to go over their personal situation and figure out based on the information we obtain from them, what options are available to the individuals. And there are multiple options; just because we are called Licensed Insolvency Trustees doesn't mean it's only either a consumer proposal or a bankruptcy. We look at the whole aspect of options available, as Michelle mentioned, whether there's options to consolidate debts or create a budget and pay down your debt. So, we go through all the variety of options that are available for individuals.

Tera:

What information do they need to bring with them? You mentioned information. So what information do they need to bring with them, Ilan?

Ilan:

Generally, in the first meeting, we ask them to bring as much as they can, but we do know that it's overwhelming. What is as much as you can really mean? So, the first meeting's really more of a high level; how much debt do you think you have? Or the income that you earn and things of those kinds of questions, but they don't always bring information because they're really not sure what it means. So, it's really more of a high-level overall scan their situation based on what they understand. And then, once we go through what options are available, we would start gathering more of the supporting documents to what they actually told us as day one.

Be honest about your finances. You’re in a safe place.

Tera:

Okay. And Michelle, can you tell us a little bit about the people that you help?

Michelle:

For sure. Debt can happen to anyone. We see people in all different kinds of situations, all different walks of life, different income levels, single people, family households. So, we do see a variety of people that come in. So, debt doesn't pick and choose who it affects.

Tera:

A lot of people have a hard time talking about money, especially if they're experiencing financial difficulties. So how difficult is it to get people to open up about their financial problems, Michelle?

Michelle:

Yes. I think you're right. People feel uncomfortable, and I think that's why they have difficulties calling us for that first consultation. Once they get in and talk to us, I do feel they start to open up. Money is difficult to talk about. People have difficulties even talking to their significant other about their financial issues. So just taking that step to come in and see us is a big deal for those people. Once they come in and see us, and they'll meet with one of our team, and they will not feel judged. We try to be empathetic. We know it's difficult and stressful for these people. And so, it just happens naturally, and people will feel they can open up to us.

Tera:

When we in marketing talk to the administrators and LITs in the BDO offices across Canada, something we hear over and over and over again is how you guys really try to focus on being compassionate and empathetic, and non-judgmental with our clients, especially in the first meeting. Ilan, why is that important? 

Ilan:

This is a very sensitive point in people's lives. It's something they're very emotional. They come in very highly charged, not sure where they're going, what options are. There's the unfortunate belief that because of this debt, they're going to land up going to jail. There's this kind of uncertainty, and your health and your debt are somewhat correlated; they link together. So, when you're in this amount of debt, and you can't sleep at night, you can't focus, and it's all coming from your debt, your health starts deteriorating. And then you even become less focused on trying to resolve or deal with what's in front of you. With what Michelle said, based on the initial interview, we like to sit down, and I sort of call it a blank slate. We start out with every debtor as a blank slate, but it's more listening to the debtor.

If we start off with a checklist, what's your name? What's your date of birth? You're already putting people that are highly charged on the defense. Why do you want to know that? What's your social insurance number? Why do you want to know that? I'm here to talk about my debt. So, we like to sort of open up as a blank slate, open up the table and let them speak and tell us what the situation is. And I think we create that comfort lets them open up a little bit more. The other thing I wanted to say, there's, in my opinion, two really groups of people. The people that had the unfortunate circumstance, and it's something out of their control, are actually a lot more open than the people who have been trying to using the credit cards, dodging the bullet, keep on using, getting more and more.

So, I call it sort of the self-inflicted wound where you just make it bigger and bigger. The first group of people are a lot more open and willing to speak about this situation. My final thing is the one thing I've always ingrained in myself is when people are sitting across the table, I don't like to use the word I understand because do I really understand? If, unless I've been in that mountain of debt or in that situation, I don't know if I really understand what they're going through. It's the choosing your words carefully and working with them to say; I hear what you're saying, let's look at that. Hearing their pain points and dealing with those pain points, as opposed to brushing them over.

Tera:

I love that. That's really compassionate. So, I'm guessing in your experience, this for a lot of people is their first time they really are getting to talk about their difficulties, and being on the other side of that, there has to be some compassion. Michelle, can you talk about that a little bit? 

Michelle:

For sure. I guess what I like most about meeting people is hearing the stories and hearing the background. And so, I like to start with just asking them what's happened? What's the situation? Can you tell me what's going on? And that usually kind of opens the door for them to explain how they've gotten to the point they're at and I think people just want to be heard. And so, when you ask to hear their story, they feel like you're listening and feel like you may be not totally understand but have a certain amount of understanding and want to help them.

An LIT gets to know your debt story

Tera:

When someone visits it's for the first time, Ilan, do you bring up or explain a consumer proposal and bankruptcy to them? 

Ilan:

So yes, we do explain that, but that's not the first thing we dive into. We obviously, as we said, go through their situation. So how much debt they have, what assets they have, how much income they make, the family size. We go through the main, important things we need to know. Have they been bankrupt before or done a proposal before? Then, based on that and based on their debt load and their income, we do go through the other options. Let's say debt consolidation, remortgage your house, go back to your bank and see if they can reduce your payment using the COVID we've been going through. See if they have those options.

And in the end, if all that is not available to them or it's something they wouldn't be able to manage. And a lot of it managing it is just the stress of the phone calls from the creditors. Then we start talking about the consumer proposal and the bankruptcy and what to determine. Generally, the determination is made by the individual. We're not saying you have to do this; you have to do that. We're saying, here are your options, and based on your circumstances, these are mostly going to be the two best options or the one best option for you. What do you want to do?

Is insolvency right for you?

Tera:

After reviewing an individual's financial situation, do you ever find that may be insolvency isn't the best option for their debt? In other words, you wouldn't advise them to file a consumer proposal or bankruptcy, Michelle? 

Michelle:

Yes, absolutely. I think Ilan's right. I think it is our responsibility to make sure people know about all of the options available. The legislated options are there as last resort options and are there once you've canvased all other options. As Ilan said, there's other ways of trying to solve the problem. I also talk to people about what happens if they do nothing, that is an option as well. And sometimes it's a valid option, and sometimes it's not, but I think it's definitely our responsibility to make sure people look at all of their other options first. And that's when they've exhausted all other processes that they can look at the legislation; that's their fallback. 

Tera:

So, what I'm hearing is insolvency isn't for everyone. 

Michelle:

That's right. 

Ilan:

Yeah. And to say at what Michelle said is there are a number of times. And I think from my experience in doing this for so long; there are times when people come and say my credit score's fantastic. Why would I do this if it's going to affect my credit score? And I'll say to them that's fine, go back to your bank and see if you can get that loan because the credit score isn't everything. It's basically other factors they take into account how much debt you have in relation to your income. So, if you go back to your bank and the bank says, hold on, no way, I'm not lending you money. Your credit score means nothing. 

Therefore, they have to come to the conclusion that either a bankruptcy or proposal is the right thing for them. And a lot of people that walk to our office say, I went to my bank, and they won't lend me the money. So, you still go through that option. They say, oh no, they told me I can't do that. So that's tick, okay, you've discussed that option's not available. So here your other two options or three options. So, it's really a process of having people understand it because generally, buy-in from individuals is very important. If they buy in, they're committed to it, and they want to get out of it. If they don't buy in, if you force them into that process, there's going to be a lot of resistance on the way.

How can debt counselling help you? 

Tera:

Now, what about debt counselling process? What does that look like, Ilan? 

Ilan:

The debt counseling generally deals with the two mandatory sessions through consumer proposal or bankruptcy, and they deal with two main areas. One is budgeting. So going through people, showing them how to budget, track your budgets, and obviously live within your means. And the second one is what I think a lot more people focus on. It used to be purely credit rebuild. They've changed it recently to you being more goal setting and credit rebuilding. Helping people really just set goals for short term, maybe financing a car long term, buying a house, and then down the line retirement. So, it's really become more robust. There's a government website where you've got to go online. And I tell people do a little bit of homework; they're responsible for doing some homework. Then those get discussed with them at two mandatory counseling sessions through the process of either a bankruptcy or proposal. 

Tera:

And after sitting down with somebody, like you said, you need to have buy-in from them. So, they've sat down with you, they've decided a consumer proposal is not for me, and neither is a bankruptcy. Michelle, will you refer them to another trusted professional, like a lender or an accredited credit counsellor? That was a tongue twister. Let's try that again. An accredited credit counselor. 

Michelle:

Definitely, I think if I have contacts in terms of other professionals, I feel might be able to help them with financial advice, I won't hesitate to share that. I try to give them as many resources and as much information as possible to improve their situation. If it's not the insolvency process, is there other financial advisory professionals that can assist them?

What happens if you file for bankruptcy?

Tera:

So, on the flip side, if they decide a consumer proposal or a bankruptcy is the right solution for them, what are the next steps after the initial meeting, Michelle? 

Michelle:

So, the first thing would be to gather the information or the verification of the information from that consultation. As Ilan mentioned, we don't necessarily have that at the initial meeting. And so, we just want to make sure we've got pay stubs and creditor statements and those kinds of things as we prepare the documentation. Because the next step would be that appointment to sign the statutory paperwork. And once the documents are signed, they're registered immediately that day. So, the individuals know that this is going to be in effect right away. They're going to get immediate relief. And so usually it happens quite quickly once we have the necessary information. 

Ilan:

Yeah. And that relief that Michelle's talking about is I tell people's protection from your creditors because they're now stopped and stayed from taking further action against the individuals. With respect to giving them of the initial meeting, a checklist of information they need to provide us. We also have the role, whether it's a trustee or the administrator, of being in touch with that individual.

Because once again, as we said, back in the beginning, it's a very highly sensitive situation. People are emotionally charged, and we try to keep them on track, and it's not keeping them that you have to come back. You have to come back. But we know, I don't know how many times, and I'm sure Michelle's done the same thing where you meet with somebody, he says, no, I'm going to do this on my own. And six months later, they're back in our office, more debt, a worse situation. You just get that gut feel from doing this for so long. So, if we can keep people on the straight and narrow and help them get to that finish line, it really just ultimately helps them making sure they get the protection.

Work with a team of debt professionals

Tera:

Will you talk a little bit about the debt professionals on your team? Who guides a person through the consumer proposal or bankruptcy process, Ilan? 

Ilan:

So, we have multiple people on the team. From the start, we've got what we call administrators or the trustees who are in touch with the debtor, do the national meeting, help them gather all the information, help them file and sign the documents. And then, through the process, we have other groups that will be working on the individuals, what we call an estate, which is a bankruptcy or consumer proposal estate. And if there's any kind of reaching out to the individual for backup information, or they missed a payment, we needed to do that. We have, through BDO, have a number of people that are in charge with doing those roles and keeping in touch and keeping the individuals informed. Because on a consumer proposal, missing payments is not a good thing. Same thing on bankruptcy because you may not get your discharge, but missing payments is must be one of the biggest touch points we have. And then we have the credit counsellors that are BDO employees that are actually doing the counselling sessions at the mandatory times. So, we're always in touch or sort of touching base with the individual throughout the process. 

Tera:

And how often do you meet with clients after that initial meeting? Are you available for questions? Are there monthly meetings, Michelle? 

Michelle:

Sure. I think first of all, as Ilan mentioned, sometimes there'll be an initial meeting and a second meeting as well for further consultation. But once the person signs the documentation at the signing meeting after that, the only other meetings required would be the two mandatory sessions. But that doesn't mean they can't contact us if there's issues, contact a member of the team, if they've got questions or if they need to see us outside of that. So basically, you have the consultation, the signing meeting, and the two counseling appointments as the expected meetings. 

Ilan:

Yeah. So, sorry to add onto that. I'm in that situation right now; we signed up a grandfather and his grandson both into bankruptcies. And they're having a little bit of struggle with completing their mandatory income and expense statements. So, I've actually got an appointment booked with him, both this evening to get on a call with them and go through that. So, it's really at the debtor's need or the individual's need as to what help they need. They reach out, touch base with us. There's something about that initial meeting with that person you get comfortable with them. So, we are always, or I say, I'm always available. They can call, email and we deal with them as best as we can in helping them through that process.

Find debt relief with a Licensed Insolvency Trustee

Tera:

I have two final questions that I'm going to ask you both to answer. So Ilan, since you were just talking, I'm going to ask you go first. So, the question is, what advice do you have for those people who are hesitant to reach out to a Licensed Insolvency Trustee? 

Ilan:

There is obviously that stigma and that thing of, if I talk to a Licensed Insolvency Trustee, I'm going bankrupt. So, my advice to people is it's a free initial consultation. There's no obligation; there's no commitment. And what does it hurt to get the advice from generally the only people in Canada - Licensed Insolvency Trustees - that can help you with a consumer proposal of bankruptcy? Your lawyer can't help you. Your accountant can't help you. We're the only people that are legally licensed, and as I say, there's a free consultation. There's no commitments you need to make. Educate yourself through the people that know what the process is about. A lot of people go online and read the internet, and I always say to people, if you were sick, I'm not sure how much you would be diagnosing yourself on the internet versus going to your doctor. 

Tera:

No, it's crazy. Because whenever you Google your symptoms, it's always the worst possible answers. 

Ilan:

Yeah. And that may be the same thing with a proposal or bankruptcy. You get a lot of people out there saying (and it's more competition to Licensed Insolvency Trustees), don't go there. They're not for your benefit. They're only for the creditors' benefit. Come in and find out. We are neutral. We have to be neutral by law. We act for the benefit of the creditors, making sure they're getting the right information from you. And we act for your benefit to make sure you're not being abused by the creditors. So all collection calls will stop, harassments, garnishments get stopped, Canada Revenue Agency debt gets taken care of. Nobody else can do that in the country other than a Licensed Insolvency Trustee. 

Tera:

What about you, Michelle? 

Michelle:

Yes. I was going to say there's a lot of misinformation out there, and people come for that initial consultation and have heard stories and things that are absolutely not true. So, if you're hesitant to come in, I'd say the only thing you're gaining is that knowledge. You don't have to commit. It is confidential. I always say the unknown is scary and intimidating. And once you inform yourself and you know what you're looking at, that in and of itself can bring relief. And maybe it's not something you need right now, as we talked about earlier, but having the knowledge this is available and how it actually works and understanding the process gives you that power to understand where you're headed and how you're going to resolve your situation. And it's not as scary as you might think.

Why should you choose an LIT?

Tera:

The final question I have for both of you is, what is the one thing you wish people knew about your job when it comes to being a Licensed Insolvency Trustee, Michelle? 

Michelle:

Well, I struggle with people understanding that we are heavily regulated. As Ilan has just mentioned, we're the only individuals licensed in Canada to be able to do this for people under this legislation. And so, I struggle with that, and I wish people understood our role a little bit better. To know that it's not just about bankruptcy, that we are licensed by the federal government, we are officers of the court meant to be impartial, objective, but here yet to administer the process and help you through the situation. Help the honest but unfortunate debtor, as we always say. So, I would like people to know I'd like that knowledge to be out there a little bit more. 

Tera:

Perfect. What about you, Ilan? 

Ilan:

Yeah, I echo what Michelle was saying that we are licensed, we're court officers, so we are regulated, we have an obligation to inform people of all their options and not just the one option that people think is going to make us the most kind of money. We have that obligation. And educational knowledge is power, so the more you educate yourself through the right channels in today's day and age, with the misinformation and stuff posted on the internet, fake media, if you want to call it, it's best to go to the people that really know what they're doing. And some that's reputable. We are part of a large organization. We've got a big reputation to uphold. And we tend to focus on the individual and deal with them as needed for the benefit of the individual and the creditors. 

As I said earlier, I always have this one quote that's in the back of my mind. And I come from South Africa, and it's from late Nelson Mandela who basically says, “I never lose, I either win, or I learn.” And that's the whole part about the process. You come in; you're not losing anything by coming in, but you're either gaining knowledge - so, you're winning - or you're learning something different. So, it's never going to hurt you to reach out and find out what your options are. 

Tera:

That is a very fitting quote to end off with. Thank you both so much for sitting down with me today and going through this process. I really think it's going to help a lot of people. Thank you. 

Michelle:

You're welcome. 

Ilan:

Thank you.

Tera:

Well that's it for another episode of the BDO Financial Wellness Podcast. A huge thank you to Michelle Statz and Ilan Kibel for sharing their advice and experiences with clients. That was a great discussion. For those of you looking for more Financial Wellness Podcast episodes, videos, debt management resources and tools, we invite you to visit our website, debtsolutions.bdo.ca. And remember, we're here to help you turn the page on debt. Your next chapter is waiting. 

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