Your Relationship With Your Bank

Opening your first bank account as a child is a modern day right-of-passage. The feel of your first debit card, your first transaction, watching your balance grow after you deposit your allowance. We spend years “banking” with the same institution, and we develop personal attachments to our service providers and bank relationship.

Not all relationships last forever

But what happens to that relationship when things go sideways unexpectedly, and you find yourself in a situation where you don’t have enough money to pay your debts as they become due? (The legal/banking term for this situation is insolvent)

What happens when the debts that you have are at that banking institution you’ve share this lengthy relationship with?

This is where things can get pretty messy. Because of our personal attachment to things that we use and interact with (think, are you an iPhone or an Android user; a Tide or a Downy user), we identify ourselves with that product. We even start to believe that the product and its manufacturer only have our best interest in mind. The truth is, however, that while all manufacturers want to ensure that their customers and clients have a positive experience with their product, these companies also have to ensure that their shareholders get a return on their investment. It’s not just about the customer, it’s about the shareholder too. (Banks have shareholders that they have to keep them happy as well.)

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It’s not personal. It’s business.

We sometimes believe that our bank is working and serving only us by helping us achieve our financial goals, and we forget that the bank has an equally important duty to serve its shareholders by making interest off of the money they loan, and charging fees for the services they provide. When we are struggling financially and we turn to our bank to discuss our difficult financial state, we expect compassion, understanding and empathy; some of us we even expect forgiveness of our debt or mercy through a reduction in interest. The fact of the matter is though, debt forgiveness is not in the charter of the bank, and it doesn’t matter how long you have been a customer. It’s not personal, it’s business.

Like any business, regardless of the length of time you’ve spent doing business together, the bank’s bottom line is always one of their top priorities; if it wasn’t, they wouldn’t be around as long as they have been. When you are struggling and are unable to pay your debts, if you ask your bank for help, they will make recommendations for obtaining a consolidation loan, or provide you guidance on which debts to tackle first, but it is very unlikely that they will tell you to speak with a Licensed Insolvency Trustee like Bromwich+Smith to address your insolvency.

A Licensed Insolvency Trustee (LIT) is a Court Officer, licensed by the Federal Government to assist citizens that are insolvent (that struggle with being able to pay their debts). So if you tell the bank that you are insolvent why would the bank not direct you to speak with an LIT? Well, it’s because the bank has to consider not only your needs, but also the needs of its shareholders, and those needs are for you to pay all of the debt and interest.  As an LIT we don’t work for the bank or its shareholders, we work for the Court and society; we are focused on debt forgiveness through formal restructuring, not on 100% debt repayment.

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This unwillingness of the bank to assist their insolvent clients in educating them on insolvency laws, is one of the hardest things that our clients face when we first speak to them. They are surprised that there even is such a thing as a consumer proposal. This normalization of the conversation of debt and the ability to use insolvency laws to restructure, is a big part of our vision here at Bromwich+Smith.

Starting over with a new bank is possible

One thing we want to make sure everyone knows I that their bank can go into their account at anytime and take money for debts that are due and payable. The bank doesn’t need your permission to do this, and they can do it without warning. They can even take money from your joint accounts – the ones you share with your children or spouse. The legal term for this action is set-off, and the impact on people’s financial situation is absolutely devastating. This is why we advise all of our clients to start a new banking relationship with a banking institution that they do not owe any money to.

We advise the people we speak to that they should start to have their pay cheques going into a new banking institution, and from there they should set up new monthly withdrawals on this new account. It may seem inconvenient, and it may seem sad to end this long-standing banking relationship, but it is an important step in moving forward and helping families obtain a more stable financial situation. The best part? Your new bank is going to be really excited to win your business, and they will be eager to help you to set up the automatic withdrawals, so the process is a lot easier than most people think!

We always remind our clients that they are good people, and that sometimes bad things happen to good people. Banks are excited to win the business of good people, so its important that you choose the bank that fits your needs – you’re worth it!   

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If you’re struggling with your debts, know that you are not alone, and that it’s not the end of the world. Our Debt Relief Specialists are here to help, and can walk you through options that will help you become debt free and to rebuild your worth. There is no commitment, and the consultation is free and confidential.

Our debt relief specialists available to offer debt advice and debt restructuring entirely from the comfort of your own home. One of the first in the industry to offer video appointments with clients, Bromwich+Smith’s Debt Relief Specialists are available for FREE personalized CRA debt consultation by phone at 1-855-884-9243 or via the contact us page.