Insolvency legislation in Canada has evolved but like most other legislation it lags behind the social changes that required its evolution, and this is particularly true of the BIA Counselling Directive. Very few people filed bankruptcies up until credit became more readily available, and as bank lending policies loosened and more people acquired high levels of debt bankruptcies and proposals became necessary (not optional) strategies for resolving debt problems.
An increasing number of people filed not just one bankruptcy or proposal but two or more. The government’s response was to implement a counselling protocol on the pretext that these people were just lacking in financial sophistication and needed guidance to help them to manage their money more effectively. This is probably a correct observation, at least to some extent, but it did not resolve the problem. Insolvency filings continued to escalate and mostly in a linear relationship to the issuance of unmanageable levels of debt.
While the idea of providing education to people experiencing financial difficulties is certainly laudable, it’s a lot like shutting the gate after the horse has bolted. Financial education should be mandatory in grade and high schools, teaching children how to balance budgets, and the pitfalls of using debt to finance their lifestyles. Armed with appropriate skills it is less likely that people would get suckered by lenders offering promise of how wonderful life can be when you are drowning in debt – the common bankers’ sales pitch.
The BIA Counselling Directive provides Licensed Insolvency Trustees with a laundry list of items to be covered that, while important money management topics, are quite unrealistic for the time that can reasonably be allotted for the two requisite sessions. Not to say that miracles can’t happen, but psychologists expect to see clients for an average of 10-12 sessions before noticing a marked change in behaviours. Some people may begin to change behaviour with a targeted therapeutic approach in 4-6 sessions, but most require 12-20 sessions.
Bottom-line, don’t expect miracles, attending at the required sessions brings insolvents and LIT’s into line with the Rules and Regulations under the legislation, but is unlikely to meaningfully change your life. You might be further ahead to attend community college courses or pay for private counselling sessions to develop your habits and change behaviours.