52 – Who Is the Right Financial Professional to Help Me With My Debt?

Wayne Kay  0:04  

Welcome to the Debt Matters podcast where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada. I’m Wayne Kay. 

Today we’re going to be talking about who is the right financial professional to help you with your debt. Debt happens and it happens to a lot of different types of people. What are the types of financial consultations that are available to help you? What sort of professional should you consult with first? Who’s the right professional to help you with your debt? And what should you look for in a financial consultant? And are there any things that we should be aware of that we need to be wary of when it comes to financial consultants? 

That’s what we’re going to be talking about and learning today on the show. My guest today, Daniel Maksymchak from LCTaylor, Licensed Insolvency Trustee in Winnipeg and Kenora. Daniel, thanks for being here.

DANIEL MAKSYMCHAK  0:58  

Thank you for inviting me back. Wayne, happy to be here.

Wayne Kay  1:00  

This is a big topic, because when people get it wrong, it can affect them for a long time can it not?

DANIEL MAKSYMCHAK  1:07  

It can. When it comes to finances, it’s something that can potentially affect you for the rest of your life if a mistake is made, or bad advice is followed. So it’s important to make the best decisions possible to set yourself up for the best future possible.

Wayne Kay  1:23  

And everybody seems to have an opinion. So you have to be very careful, careful of whose opinion you’re going to be following. So what types of financial content consultations are there available?

DANIEL MAKSYMCHAK  1:35  

Well, there’s a wide variety, depending on what kind of services you’re looking for. Financial consultations could be anything from applying for a bank account, or what kind of credit card is best for you, given your situation, or your spending habits. 

Perhaps you’re in the market for life insurance, or something like that. And you’re seeking a financial consultation to determine how you can best protect the interests of your loved ones, if something were to happen to you. Or debt, of course, that’s what we specialize in as Licensed InsolvencyTrustees –  people who are facing debt troubles, can have consultations about how best to deal with that debt.

Wayne Kay  2:13  

There’s a consultant for everything, and you have to find the right one to fit each of the different pieces.

DANIEL MAKSYMCHAK  2:17  

It’s going to come down to what aspect of your financial product or services you’re looking for. If you’re looking for insurance, you need to speak to an insurance professional. If you’re looking for a loan or a mortgage, it would be a mortgage broker, potentially. So it comes down to, you have to really look at what you’re trying to get out of this transaction and think about who would best meet that need.

Wayne Kay  2:39  

So when it comes to LITs, and we talk about professionals in the finance world, the financial world that can help us with debt? Why do we need to focus on debt in a positive way?

DANIEL MAKSYMCHAK  2:52  

Well, debt can be very expensive, and it can really impact your life, both financially and mentally. If you have debt that is really stressing you out, you’re worried about where the money is going to come from to make the payments that are required – it can put you in a bad mood. It can really impact your mental state, affect your relationships with your loved ones, that kind of thing. 

So if you feel that you’re in the situation where you might need some debt advice, how you can escape this situation, then it’s important to select the right professional who can both provide unbiased and honest advice, and can actually have the ability to act on that advice, so to speak, or offer the products that will allow that situation to be resolved.

Wayne Kay  3:40  

So when we talk about different products available for financial debts. LITs – what are some of the things you cover?

DANIEL MAKSYMCHAK  3:48  

So LITs primarily offer two things. They offer Bankruptcies, if that’s necessary as a kind of last resort. If your debts are really insurmountable, and you need to completely start over again financially, then Bankruptcy is an option to do that. 

But more and more what’s being offered or being in the best interest of the people who call us for the financial consultations is called a Consumer Proposal. That’s an offer that you make to your creditors through an LIT –  licensed by the federal government to provide Consumer Proposals. It’s an offer that you make to your creditors to settle the debts for an amount that’s more based on what you can afford, versus how much you actually owe. 

If you owe a certain amount of debt at interest rates that are just not manageable – what you can do instead, through a Licensed Insolvency Trustee is you can offer a Consumer Proposal to your creditors. You say, Look, I can’t afford to pay back all of this money with the interest rate that is expected by you. But what I can offer based on what I earn and what I own is this. It’s a monthly payment that can be up to five years. A single payment that’s made to the trustee, the trustee then divides between the creditors.

The advantages of that is that it simplifies your finances. There’s just one payment that you have to worry about making. And it’s based on what you can afford as opposed to what you owe, which may no longer be affordable.

Wayne Kay  5:12  

And so when you go to pick that financial consultant, how do you do that? You have some words of advice for us?

DANIEL MAKSYMCHAK  5:19  

Yes, I would say first of all, make sure it’s a Licensed Insolvency Trustee. Like I say, Licensed Insolvency Trustees are the only ones licensed by the federal government to be able to file legal Bankruptcies and Consumer Proposals, which is what we’re talking about here. \

And when it comes to choosing between LITs, I would say, make sure you’re comfortable with the person that you’re speaking to, I mean, if you can go into their office and sit across the table from them and look them in the eye, that’s probably a good thing. It means that they’re in your community. They’re local, they’re readily available, should you need anything over the course of your Consumer Proposal. 

That that’s a good thing to look for, as well. And make sure you know that they really understand your situation, they take the time to ask all the right questions, find out what’s really going on and discuss with you all of your options and select the option that’s best suited for your unique situation.

Wayne Kay  6:13  

And when it comes to the opposite side of that, what do we need to be wary of?

DANIEL MAKSYMCHAK  6:18  

Definitely be wary. And this isn’t just with LIT’s, which is when you’re dealing with financial consultants, in general, you’re going to want to avoid any high pressure tactics or time limited offers. Sign now, or we’re not going to be able to do this for you tomorrow. 

Or, having to pay a lot of money up front, potentially, that is often a red flag. With LITs, the payments are based on the filing of the proposal or the Bankruptcy. So anyone who says, Okay, you have to pay, pay me this much money upfront, and then I’ll start working for you. Or there’s this many monthly payments to get your file started or something like that, and then we’ll contact the creditors. 

That’s probably not an LIT offering that service. And that’s something that you should maybe reconsider and make sure that you’re actually getting value for that money that you’re paying.

Wayne Kay  7:11  

What about interviewing a few different ones?

DANIEL MAKSYMCHAK  7:14  

You could. It’s like anything, if you’re not comfortable with the advice you’re receiving, or the discussion that you’re having with the first person or they’re not willing to meet with you in person or something like that – get a second opinion. There’s no no harm, and these consultations, if they’re done with an LIT there is no cost. So what’s the harm in talking with someone else? I suppose if you’re not comfortable with the first person.

Wayne Kay  7:37  

Yeah, I bring that up because I remember once I went to a health professional, and it was a free consultation. But as soon as I walked in, they asked me a couple of questions. They said, Well, I guess we need you to sign up for 10 sessions, for such and such. And I was like, I think one is fine. You know, let’s try one and see if I feel better, or not. 

Why would I sign up for 10 when they wanted to do a 10 treatment plan, which didn’t make any sense to me. I just had a weird feeling about it. So I went to somebody different and they were able to fix me up.

DANIEL MAKSYMCHAK  8:15  

That’s a good story about trusting your gut. When you were told that you’re like, well, that doesn’t make sense. Why would I need to commit to that much right now? And your gut told you that that was a bit off. 

So when people are speaking to LITs, trust your gut. Do you believe what the person is saying? Is it someone that you’re going to want to work with, potentially for the next five years, because that’s how long a Consumer Proposal can last in terms of the length. 

If you meet with someone, you feel they’re being honest, trustworthy, you feel that they’ve understood your full situation and provided you with a solution that’s right for your circumstances, and is really going to help – then great. But if you get this feeling that something is off, or maybe you’d like to speak with someone else, there’s no harm in that. 

Like I say, Trustees offer free consultations, but if you speak to one, and you like what they have to say in terms of how the process works, or how the law works, or how your proposal is going to have to be structured before the creditors are going to accept it. Our hands are tied by the legislation. 

Some things are fixed, and there’s nothing that we can do about that because that’s what the law says. We all have to abide, of course, ethically and by the Bankruptcy and Insolvency Act legislation. So you want to find a fit, someone hopefully who’s local in your community is readily available and accessible and friendly. Those are kind of the criteria and that you trust. Those are kind of the criteria that you’ll be looking for, as opposed to different things that are governed by the law that the LIT has no control over.

Wayne Kay  10:01  

But I think once you give them the options, once you have a time, not just you, but any LIT – when you sit down for that consultation, and they look at your situation and they say, Well, here’s a couple of different options for you. And they make sense. Then that’s where you start trusting. And you say, Well, this is somebody who does this all the time. This does make sense. 

And it seems like they’re looking out for my dollar to help me with this situation. And I know my life will get better at the end of whether it’s that three years or five years, or what have you. That you’re going to be able to kind of move forward. People work hard for their money. They need to understand that you can’t just keep throwing it away on debt. And there’s big cycles that continue going without looking for some options and help sometimes.

DANIEL MAKSYMCHAK  10:47  

Absolutely, one thing that I say to a lot of people that I speak with – when they’re deciding, do I want to file this Consumer Proposal or do I want to continue on the path that I’m on trying to struggle and pay this debt off on my own? 

We get a lot of people who come in and they say, Well, I’m making the minimum payments, I’m current with my debt, my credit report, my credit score is great, right? But then we’ll look at the statements of these credit cards. 

On the statements now there’s a disclosure that’s required. It says, if you only make the minimum payment, which is what a lot of people who come to us are only doing, it’s going to take you, depending on the balance, for most people longer than the rest of their expected lifespan. It’s just not not manageable to only make the minimum payments for the rest of your life. Think about how much money you’ll be throwing away over that time, and not really making  a dent in the debt. 

As opposed to a Consumer Proposal where it’s five years. You know what your payments are going to be. You know at the end of the five years, you’re going to be debt free in terms of your unsecured debt. 

That’s where you really have to think, yes, I can make the minimum payments, and I can make do for now. But if you can pay it all off and be debt free, within a reasonable period of time, then what are you doing? You’re throwing money away, essentially.

Wayne Kay  12:09  

And that’s what I’m saying. Money’s hard to come by, for so many people. It’s tough, you have to put in your time, you have to work, you have to get that and just to be losing, it would be just so difficult and heartbreaking. 

So it’s great that there’s different options out there for people to look at. And it’s not like they’re going to walk in the door, and you’re going to say Bankruptcy. And nobody knows what’s going on. But at least you’re finding a way out of the situation you’re in. 

DANIEL MAKSYMCHAK  12:37  

Yes, that’s exactly right. And you walk into the office for a consultation, you’re not committing to anything. You’re not going to walk into this room and suddenly be trapped into Bankruptcy or anything like that. You are just there to find out your options. 

If you decide that you do want to proceed with something, it’s of course up to you to sign the documents and make it official. Nobody can do that without your consent. No LIT should be pressuring you into that. So what’s the harm in going in and finding out your options? And is this a better way to deal with my debt than the path I’m currently on? And if it is, great. And if it isn’t, well, at least you know that you’ve explored your different options, and you’ve chosen to go down the path you’re on with your eyes open.

Wayne Kay  13:21  

I’m going to ask you kind of a weird question. To stop somebody from getting to this situation, what would be some of your advice? Maybe let’s do some credit counseling here, what’s your advice to people when it comes to having a bit of a hard time and wanting to then just start using up their credit cards, etc.

DANIEL MAKSYMCHAK  13:45  

You have to budget. You can’t make any adjustments to your spending and restructure your finances if you don’t know where your money’s actually going. So the first step that we say is, do a budget. Find out where your money is going each month. Keep track of where your money goes each month, so that you know where you’re spending it. 

And how you can adjust that because a lot of people don’t realize where their money’s going. And when they add up how much they spend on coffee daily or lunch at the office or something like that. It shocks them as to how much they’re really spending and how much they could save by making adjustments there. 

And money that is saved is money that you can apply towards your debts and get out of debt faster. So the first step to fixing your finances, I believe, is creating a budget, knowing where your money’s going. So then you can make informed choices as to how you spend your money.

Wayne Kay  14:35  

I’ve always thought we’ve been pretty good with our money, with budgeting and knowing what we have and when we don’t have it, we can’t spend. I just actually started doing online banking. My wife has mostly done that. What I did find interesting, I was playing along with it – there were some insights. It was kind of showing the amount of money coming in and the amount of money going out and I was actually spending a little bit more than I thought. And we’re pretty good with our budgeting.

DANIEL MAKSYMCHAK  15:00  

Yes, that’s the first step. Even with large, blunt numbers like that, how much you’re spending versus how much you’re making. Obviously, if you’re spending more than you’re making that’s going to lead to long term problems, and then more specifically, of the money that you’re spending, where’s it being spent? And are you satisfied with how that money is being spent? 

Maybe you’re spending money on things because you don’t realize how much you’re spending on things. But that thing’s not really a priority and you’d rather that money go to other things. And once you know how much you’re spending, then you know how much you can adjust. 

But yes, start with your inflows versus your outflows. I mean, you shouldn’t be spending more money than you’re making, that’s a sign of difficulties. And if those outflows are high because of debt payments, then all you’re really doing is borrowing money to pay your existing debts and your total debts will increase. And that’s something where you might want to consider speaking to an LIT in those situations, if that’s the case.

Wayne Kay  16:00  

Yes, final words of wisdom from you regarding this.

DANIEL MAKSYMCHAK  16:04  

When it comes to any financial professional, whether it’s an LIT, to a debt professional, or any other aspect of your finances, for people who might be listening. You know, when you’re selecting a professional, make sure that it’s somebody you can trust. Like I say, ideally, hopefully, someone that you can meet in person, or at least look in the eyes and realize that they are listening to what you’re saying, and hopefully looking out for your best interests. And not just the people that may have ulterior motives or reasons why they want to sell you certain things that may be best for them and not you. 

So make sure that you’re aware of what you’re really looking to get out of this transaction and find someone who’s on the same page with you and is going to help you to get there. Someone that you can trust and that you’re going to want to work with, for potentially multiple years while you’re in – whether it’s a Consumer Proposal or a mortgage or any kind of financial arrangement. 

Wayne Kay  17:03  

We always learned so much when you’re on the show, and I really appreciate you taking time to share this information with the listeners. Thanks very much.

DANIEL MAKSYMCHAK  17:09  

Thanks for having me, Wayne, take care. 

Wayne Kay  17:11  

Well, that’s my guest, Daniel Maksymchak. You can learn more you can schedule that free consultation that he was talking about with LCTaylor Licensed Insolvency Trustee by going to LCTaylor.com. 

And that’s it for today’s Debt Matters podcast. Make sure you subscribe wherever you get your favorite podcast from and of course for more information, you can always check out debtmatters.ca Thanks for listening.