Licensed Insolvency Trustees (LITs), such as those of us here at LCTaylor, are trained and certified in debt counselling. Part of the extensive qualification process that LITs are required to undertake in order to earn their license from the Government of Canada is a course specifically addressing financial debt counselling.
The Practical Course on Insolvency Counselling (or PCIC, formerly known as the Insolvency Counselling Qualification Course or ICQC) is an important part of the training of a Licensed Insolvency Trustee. The PCIC is also undertaken by team members at LCTaylor who are not LITs but wish to specialize in the provision of debt counselling, so that we are better able to provide this important service to the people we meet with.
Licensed Insolvency Trustees do much more than administering insolvencies. They are also qualified financial counsellors and can help you get your finances back on track. This podcast talks about the different aspects of debt counselling.
What is Debt Counselling?
LCTaylor debt counsellors administer the Insolvency Counselling Program as designed by the Office of the Superintendent of Bankruptcy Canada. The program is intended to benefit individuals who have filed a Bankruptcy or Consumer Proposal. Its completion is required by everyone who makes such a filing under the Bankruptcy and Insolvency Act, but the modules that make up the online learning component of the program are available online for anyone to view.
The program is not graded, and is not something that you have to “pass” in order to complete your Consumer Proposal or Bankruptcy. The only requirement is that you have a discussion about each stage with the qualified debt counsellor working with your Licensed Insolvency Trustee.
How Does It Work?
The Insolvency Counselling Program is made up of two stages: The “Budgeting Stage” and the “Planning For The Future Stage”.
“Budgeting Stage”
This stage of the program consists of an introduction to the overall counselling process. It then concentrates on budgeting strategies and how to manage your money month-to-month. Learning how to budget your household income and expenses is a critical part of any plan for financial success.
Many people who file a Bankruptcy or Consumer Proposal with LCTaylor find that they have more available room in their budget than they had previously. In many cases, the amount that they are paying in their proposal or Bankruptcy is less than they were previously making in debt repayments to their creditors directly. It is important to make sure that those extra funds are put to good use – such as starting an emergency fund.
The “Budgeting Stage” suggests different methods that can be used to construct and manage your household budget. It even provides a helpful digital template that you can download, along with detailed instructions on how to use the template. With that said, not everyone is comfortable creating and using a budget on their computer in Microsoft Excel. In those cases, our qualified debt counsellors can show you other ways to budget that do not involve a computer.
Regardless of the format you choose to budget in, the goal is to create a reasonable estimation of your income and how you will spend it. Once the budget is created, it is essential to track your spending to make sure that you stay on target so to have sufficient funds to get you through the budget period.
By tracking your spending through the period, you will be able to make adjustments if unexpected and unavoidable costs arise. You will be able to quickly see that you have exceeded your budget in one category and where there might be room in another budget category to reduce your spending for that period.
“Planning For The Future Stage”
Once you have completed the “Budgeting Stage” and have adjusted to life in a Bankruptcy or proposal where your debt payments are greatly reduced if not eliminated – you are ready to move on to the “Planning For The Future Stage”.
This stage, as you may have gathered from its name, is all about preparing for life beyond the Bankruptcy or proposal. Nobody is excited to file a Bankruptcy or a Consumer Proposal, but sometimes it is a necessary undertaking in order to have a future that you are able to get excited about. Once the debt has been dealt with, it is time to refocus on achieving your financial goals.
There are three components to the “Planning For The Future Stage” of the Insolvency Counselling Program.
The first component is about setting and achieving financial goals. It goes without saying that in order for you to reach your goals, you first have to set out what they are. It is a good idea to think of your goals in terms of the time frames in which you hope to achieve them, and have short, medium, and long-term goals.
An example of a short-term goal might be to save enough for a small vacation in the upcoming year, a medium-term goal might be to save up enough for a down payment on a home, and a long term goal might be saving enough for a comfortable retirement. These goals can then be broken down into monthly commitments towards them. This section also covers things that help you to achieve your financial goals, such as managing financial risk and maximizing your savings by budgeting with your goals in mind.
The second component is about developing positive spending habits. Your spending habits can make or break your ability to budget and meet your financial goals. It is about the choices you make – the decision between eating at a restaurant rather than making a meal for yourself or going to the cinema versus watching something at home. Both choices in each respective example accomplish largely the same thing, but vary greatly in terms of the cost.
Being mindful of the spending choices and their consequences will help you to make more informed decisions, shaping your spending habits in a way that helps you to achieve your financial goals rather than hindering them.
The third component is about using credit responsibly. This section includes a discussion around the cost of using credit, how lenders make decisions on who to lend to and how your insolvency filing will impact your credit rating. Information about rebuilding your credit is included in this section.
Your LCTaylor counsellor can expand upon this discussion during the counselling session by helping you to identify practical and achievable ways to rebuild your credit rating following your insolvency. Taking on debt post-filing and carrying a balance that demands interest is strongly discouraged as it will hurt your ability to achieve your financial goals. With that said, we realize that certain forms of credit are important tools in today’s society. As such, we focus on methods of repairing your credit rating that come at minimal or no cost to you.
After the completion of each stage, you will have a discussion with a debt counsellor to review the material and answer any questions that you may have on the topics covered. If you feel that you need additional help, beyond what is covered by the Insolvency Counselling Program, we are happy to provide advice and suggest resources.
What Questions Should I Ask?
You are encouraged to ask any relevant question at your counselling sessions. Debt counselling is one of those things where the amount that you get out of it is proportional to what you want to get out of it. If you go into the debt counselling program with an open mind and are ready to learn, you will likely gain a great deal of information from it. Don’t be afraid to ask questions specific to your own situation and goals.
Is All Debt Counselling The Same?
No. Financial counsellors who have completed the Practical Course on Insolvency Counselling have undergone a rigorous certification program that includes coursework and hours spent counselling under the observation of a senior fully-qualified counsellor. Not all debt counsellors have this certification. If someone is holding themselves out as a financial or debt counsellor, you should check the qualifications that they have to ensure you are speaking with someone who will provide you with the best information and advice possible.
Can All Debt Counsellors Offer Relief Solutions Such As Proposals?
No. Consumer Proposals can only be filed by Licensed Insolvency Trustees. All Licensed Insolvency Trustees are qualified debt counsellors, but not all debt counsellors are Licensed Insolvency Trustees. When choosing who to call for advice about your debt situation, make sure that you are contacting a Licensed Insolvency Trustee such as LCTaylor. This will insure that you are dealing with someone who has every option at their disposal when it comes to helping you with your debt.
If you feel that you would benefit from financial debt counselling or other debt relief solutions, contact us. We have a team of Licensed Insolvency Trustees and debt counsellors ready to discuss your options with you. Consultations with us are free and without obligation.
