Loved ones and debt: how to broach the subject

According to separate surveys conducted in Canada and the United States, discussing the topic of personal debt was ranked by some participants as a bigger taboo than topics like politics, religion, and marital problems. Some participants indicated they would rather endure a complete physical exam or even a root canal than discuss the topic of debt with family or friends.

In an era where consumer debt levels in Canada seem to be constantly on the rise, it begs the questions — why is debt still considered a taboo subject? And perhaps more importantly, given its prevalence, what can we do to change this? This can be especially tricky when you fear a loved one may be struggling with debt and you want to help.

Money is universal

Regardless of your income, level of education, gender, or race, money will have an influence on your life. Regardless of the currency we use, it’s simply the means by which we trade for goods or services. Once life’s most basic needs are met, money is the tool that helps us achieve our life goals, whether they be education, travel, adventure, security, or something else.

It is, I believe, this link to our goals that makes the topic of money so deeply personal — it can be the yardstick by which we measure our achievements. Individuals who are failing to achieve their goals due to their financial situation will often suffer from feelings of intense guilt, shame, and anxiety. These strong negative emotions associated with money are what makes the topic of debt so difficult for some people to discuss, but also so important for our financial and emotional well being. This is why it’s important to start by letting your loved ones know you are willing to discuss the topic of money and debt.

Start on neutral ground

Drawing on the universal nature of money, try to start the conversation on neutral ground. In other words, don’t bring up the topic of your loved one’s debt or finances specifically, but rather bring up the topic of personal finances in more general terms.

You could mention an article you read or podcast you heard recently on a financial topic that you found interesting and ask your loved one about their thoughts. If you have any personal experience to draw on, being willing to share your own story can be a great way to break down barriers and let your loved ones know that you understand these struggles.

If it’s a person who you share finances with, try to focus on finding common goals that you can focus on such as saving for retirement or paying off a specific debt. Sometimes asking your loved one for their advice will lower their defences around the topic. Regardless of how you approach the subject, the goal is to try and find some common ground that can help open the lines of communication for a discussion about your concerns.

You can’t judge a book by its cover

As a Licensed Insolvency Trustee, I have had the opportunity to meet with many individuals who are struggling with debt. Each of their stories is unique and I have learned many lessons from them. One that sticks with me is that, when it comes to money, you cannot judge a book by its cover.

I’ve met individuals who own million-dollar homes, drive luxury vehicles, own international vacation properties, earn six figure incomes and yet, they’re broke! In an economy where credit is so readily available, it’s relatively easy to possess property without really owning it. If you are concerned about a family member’s personal finances or debt, that is honourable; but don’t assume you know the whole picture. Assuming your loved one is willing to talk, approach the conversation with curiosity rather than assuming they are in trouble.

Focus on empathy

Given how closely money can be tied to a person’s feelings of self worth, it’s important to avoid passing judgement. Try to focus instead on empathy. If a person does share struggles with debt with you, ask them about their story. In other words, what was going on in their life that led to the debt, what they were thinking and feeling and how do they feel now about it now.

You may find it hard to connect with their story, especially if you don’t have similar experience to draw on, but emotions are much more universal. You don’t have to condone the choices that your loved one has made that led to their situation, but you can let them know that you understand how they are feeling and reaffirm your love and acceptance of them. You can also let them know that you are open to supporting them if they want help in dealing with their debt.

Whose problem is it

Unless you are a joint debtor or have co-signed your loved one’s debt, and no matter how much you love and want to protect this other person, it’s not your problem to fix. In saying this, I draw from the stories of two separate individuals I have met with in practice.

I met with a young man who was accompanied to our meeting by his parents. After reviewing his options with him and discussing the merits and consequences of each, his parents advised me that a consumer proposal was his best option. I agreed to have all the paperwork prepared and we scheduled another meeting for him to come back and sign. When he arrived, this time without his parents, he told me that he was no longer speaking with them as they were unwilling to accept his decision that he wanted to file a bankruptcy instead. It can be extremely difficult to watch a loved one make a choice that you do not agree with, but trying to control their choice can quickly lead to alienation.

The second story is of a man I met when he was in his early 60’s. He had saved approximately $1 million dollars and was able to retire in his early 50’s. By the time he came to me, the money was gone and he had about $80,000 in debt. All of his money, and all of the creditor’s money, was spent trying to save his daughter from her addictions and the debt she incurred as a result of them. When I met with him, she was still very much an addict. Money and debt were not really the problem for this man’s daughter, it was her choices and behaviours that led to a lack of income and debt that were — and these were not things he could change.

I don’t mean to suggest that you cannot share an opinion with a loved one, assuming they ask for it. Nor am I suggesting that you shouldn’t provide money to a loved one if you have the means. These stories are meant as a reminder that debt is the consequence of their past behaviours and choices, and only they have the power to change those behaviours moving forward. Even if your loved one wants to change — which they may not — it’s likely they will fail before they succeed. So it may be best to keep your expectations in check and focus instead on what is in your control, which is how you react and how or if you choose to help.

Respect their limits

In spite of your best intentions and efforts, your loved one may not be willing to discuss the topic of their money or debt situation with you. If this is happening in the context of a marriage or similar relationship where you share debt or you are financially interdependent, then it may be best to seek out counselling to address these roadblocks.

Another time where further action may be required is if you fear a loved one is lacking the mental capacity to manage their own finances, in which case you may need to address your concerns with their doctor. In most other cases though, if you want to preserve your relationship, you should respect the boundaries they set. This doesn’t mean that you cannot continue to express an openness to the topic or share your own information. And, if you truly believe your loved one is in debt or otherwise struggling financially, you could show your sensitivity by suggesting to spend time together in a way that minimizes any cost to them.

Where to find help

For many individuals, it can be easier to confide in a stranger than a loved one. If your loved one is resistant to speaking with you, or if they have shared with you that they are struggling with debt, you could mention the services of an LIT.

Most LIT’s offer free, confidential initial consultations where they review all options available relative to your unique situation. LIT’s are federally licensed, highly qualified, and the only people permitted by law to file a bankruptcy or a consumer proposal — a specific type of formal settlement offer — on your behalf. They are also ethically bound to discuss other options with you if they are likely to be a better fit.