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<h1></h1> As a Licensed Insolvency Trustee (LIT), one informal role I often find myself taking on is that of family counselor. While this is not specifically something we train for as Chartered Insolvency and Restructuring Professionals (CIRP), it comes with the territory – unfortunately when finances get strained, so too do many relationships. When a friend or family member is under financial stress, our natural instinct is to want to help. Obviously, when one family member’s cash flow becomes strained an additional burden can be placed on the rest of the family. That can lead to a deterioration of relationships, and it’s important to know how to avoid getting into an uncomfortable situation. Protecting yourself (and as a result your family) We frequently see unmanageable debt being placed on a family by a relative, often when a family member co-signs or guarantees an obligation for a relative without looking at their own risk. We all want the best for our families, but, if by helping out a relative we are hurting ourselves, sometimes it is important to make the “selfish” choice. That being said, you can still help out your family while ensuring you are not also hurting yourself. That means taking a critical look over your own budget and finances before you agree to lend your signature to help someone else out of difficulty. Make sure that if they can’t pay, you can, because if you cannot, now you are putting yourself and your immediate family in hot water. Lending your name Whenever you lend your name to a guarantee or obligation related to someone else’s debt, it is vital that you understand the implications of that signature. If they don’t pay, you will have to, which is the nature of the help you’re committing to give. Where people often do not understand their exposure is when they allow friends or family to use their name to set up businesses or accounts because their own credit is not good enough, or because they already have debt trouble. The usual result here is that the “nice guy” or person who is helping their friend / family ends up being responsible for a litany of obligations including but not limited to, excise taxes, (GST, HST, QST), payroll taxes, employee wages, and environmental issues, to name but a few. Generosity also means shared responsibility These helpers tend not to be involved with the business they are helping, but in the eyes of the government and creditors, they share equal, if not full responsibility. Even worse, we see people who use their friends or family to move assets around to try and hide them from creditors or the government. The end result here can be a hefty legal bill to protect the “transactions” and / or a tax implication for having received a benefit without having paid for it. No matter what, when looking to help out your friends and family, think long and hard and make sure you aren’t hurting yourself. Saying “no” might seem cruel or heartless, but if you really don’t have the means to help, or helping means stretching yourself too thin, you have to consider your own situation first. After all, in the long run you are going to be in a better position to help a family member or friend in many other ways if you yourself are financially stable. It’s not selfish – it’s smart. Daniel Budd, CIRP, LIT received his Trustee licence in 2014 and has been practicing with M. Diamond & Associates Inc. in Montreal ever since. Daniel is currently one of Canada’s youngest Licensed Insolvency Trustees and sits on the New Members’ Committee of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).