With the primary banks restricting credit access by continually tightening their requirements, more and more Canadians struggling with debt are looking for someone to turn to for financial help and guidance.
But here’s the question: Who can they turn to, other than family or friends? A recent article in the Daily Finance magazine explores exactly what can happen when people resort to family and friends to borrow money.
Personal banker? Most personal bankers are not credit experts, let alone have the capability of providing financing for distressed situations.
Accountant? While accountants are great at pointing out that your numbers don’t work, or look poor, the best they can normally do is refer you to someone to talk to.
Financial planners? Let’s face it. Most planners are looking to earn a commission by selling financial products and investments. If you’re working with a planner, its unlikely you are looking to borrow money from friends or family.
Bankruptcy Trustees? If you didn’t already know, the Bankruptcy Act in Canada sets out the trustee as being the creditor’s representative. That’s right, they act for your LENDERS, not YOU. So … where can you turn?
The truth is that many people turn to friends and family, but as a recent article points out, this type of situation is ripe for family strife and failure. Is that family or close friend really worth the risk? Will they ever repay? Can you even ask for interest?
At the end of the day, with so many options available on the marketplace for home equity loans, the reality is that you’re better off referring your family or friend to speak to a qualified mortgage professional rather than risking the relationship for a few bucks.
Keep in mind, however, you should take this advice with a grain of salt: Most mortgage agents and brokers, having only handled a few such situations are more likely to do more harm than good. Make sure you interview your prospective broker to ensure they have expertise in debt management and also just as important credit repair and potentially even debt settlement.
