Debt isn’t easy to talk about, but that’s what Licensed Insolvency Trustees (LITs) do for their clients every day. At FCT, we build solutions that make talking about and managing insolvency easier for all parties involved. That’s because we believe that debt is a human story, and that a human solution is the only way to bring it to a good end.
Brian Costello is CEO, default solutions at FCT. Today, he sits down with us to discuss the importance of compassion, communication and judgment when it comes to reaching fair insolvency outcomes.
It means that an insolvency file is never just a file. That file is there because a person has gotten into a bad situation where they can’t meet their obligations, and the parties on that file are there to get them out of that situation in a way that’s fair to them and to the creditor.
It’s a human story because it’s about making a judgement. You can’t just look at a person’s situation and say “okay, you have this much home equity, we can take all of that and pay off the majority of the debts,” because there’s more to their story than just the financial situation.
Why are they in that situation? If we’re looking at the file and seeing the death of a spouse, loss of income, are we going to turn around and force someone to pack up their children and leave their home? No, that’s not compassionate.
We have to recognize that people have a responsibility to meet their financial obligations, but we have to balance that with compassion, always. This is a person’s life. Not only are they in this stressful situation, they’ve gone through everything else that led them up to this moment.
I will say that over time, especially in the last 10 to 20 years, the stigma around debt has decreased, due to a shift in the culture. Household debt is so much higher now than it was 20 years ago, and that means you have more people facing challenges in meeting their debt obligations. There’s more understanding and sympathy for that now because more people have experienced it firsthand.
The stigma we do see is often self-generated. Many debtors feel shame or embarrassment about their situation, and it takes real courage to reach out to an LIT and start the journey out of debt.
To someone who’s in this situation, I would just say to look in the mirror honestly. If you’ve done everything you can to meet your obligation and you’re dealing with a circumstance that isn’t really in your control, there’s absolutely no shame in that.
Even if you’re looking in that mirror and seeing mistakes that may have led you to this point, I would say it’s not about stigma, it’s about learning. You’re on the road out of this hole, you’re getting help and you can avoid putting yourself back there—you can do this.
To get the fairest outcome from any situation as an LIT or recovery professional, you need information. Our solutions help us gather information quicker, more concisely, more accurately, then deliver that information to the parties. They may be looking for different outcomes, but that just means they’re working to bridge a gap.
If you see yourself as being in an adversarial situation, you can push your adversary away and not communicate with them, or you can actually bring them closer. You can talk, you can see more of each others’ perspectives and if you do that, you’re going to get a better outcome for all parties. Why? Because you’re not always fighting each other on every issue—you’re talking through the most important gaps.
At FCT we help with that. We build two-way communication into our solutions that let parties engage with each other and see the information they need. Without transparency, you don’t have understanding, and that creates challenges—that’s when assumptions get made and talks fall through.
We believe that you’ll get better results in a consultive environment as opposed to a combative one. We help provide that environment through better knowledge and information for both parties, and we’re always asking how the bankruptcy and insolvency system can operate better tomorrow or today than it did yesterday.
Privacy and clarity are key. We have people who work with LITs and different people who work with recovery professionals, and the data for both are also kept separate. What we provide professionals is anonymized, aggregated data that can help them make informed decisions.
At the end of the day, this is all about people. We’re coming together on an insolvency file that has a real person’s story behind it, and people are trying to make the best judgement possible on how to resolve this debtor’s situation.
For our part, we’re here to provide a smooth, efficient experience, to enable transparency and clear communication between LITs and recovery professionals, and we’re here to do the right thing. We’re not shy about saying to a recovery professional “we’re going to do what we believe is right for the LIT” and we’re not shy to say to an LIT “we’re going to do what we believe is right for the recovery professional.” We’re doing it to create a better overall system, and that’s good for everyone.
Learn more about FCT’s solutions for Licenced Insolvency Trustees.
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