Initial Assessment of the Current Financial Situation

The counsellor’s first visit with the gambling client is an opportune time to begin gathering financial information. The first step is to determine the client’s current financial situation. While doing this, the counsellor may also gather valuable information that will be helpful in understanding family dynamics. For example, the process may reveal overspending (on activities other than gambling) by the client and/or partner, differences in the partners’ attitudes toward money or that the family is living beyond its means. These are issues that must be addressed during treatment because they can be relapse triggers.

Prior to the assessment, it will be helpful to explain to the client that you will require an individual meeting with his or her partner following the assessment process. Ask the gambler to arrive with the partner (if possible) so that once the individual session with the partner is completed, all the parties can meet to discuss treatment options. Family involvement at this stage is extremely important. Partners need to feel included, which helps them with their lack of trust. If clients are not partnered, agree to meet with a significant family member. This will give the counsellor the opportunity to hear another side of the problem and will provide a cross-reference to some of the information given by the gambler. Visiting with a partner or a family member provides an opportunity to educate him or her about problem gambling and to explain the resources available for families.

This is also an opportunity for the counsellor to explain to the family that providing money to help overcome a financial crisis is an ineffective response since it allows the client to go on gambling without facing up to the consequences. Rarely will gamblers insist on not involving a partner or family member. However, if this is the case, educating the client about the effect gambling is having on that person will be helpful. It is more likely that a partner will refuse to attend such a session. If this is the case, the counsellor has no choice but to proceed with the gambler.

During an assessment of a gambling client, whether it be the gambler or the partner, it is important to gather financial information regarding income, assets and debt. To determine how long the problem has existed, make a list of:

This is all information that will help to determine the severity of the gambling problem. In addition, clients should be asked about money they owe to family or friends. Most gamblers will not disclose this information unless they are asked directly.

Counsellors also need to ask if monthly payments such as telephone, hydro and gas bills are in arrears. Are rent or mortgage payments up to date? Are there outstanding loans that are in danger of being turned over to the court system? All of these areas can help to determine not only the severity of a problem, but if there is an immediate crisis, which at times can make it difficult for the gambler to stop gambling. When a financial crisis has not revealed itself or been disclosed, the gambler, hoping for the big win, often views continued gambling as the best or even the only option in overcoming the crisis.

Creditors can often be more understanding and helpful than gamblers anticipate. The reason many creditors take the steps they do is because they don’t know the reason for the default. Often creditors have been avoided or deceived by gamblers and sometimes even by the gambler’s partner. Encourage clients to notify their creditors, preferably in person, of the true reason for their financial delinquency. More often than not, creditors will respond by saying, “How can we help?”What the gambler and/or family will need is time. To allow for time, clients can ask creditors for a moratorium to address a financial plan for debt resolution. (This process is described in more detail in the next section.)

Strategy for Budgeting and Debt Resolution

During the initial assessment, financial information was gathered to give the counsellor an overview of the current financial situation of the gambler and/or family. The process for budgeting and debt resolution will now include a detailed accounting of all income and expenditures followed by a workable plan to meet the basic needs of the family as well to as satisfy creditors. The procedure for a financial plan should include the gambler and the partner. If the gambler is not partnered, it is important to involve a parent, an adult child or even a sibling. Depending on the complexity, the procedure can take from two to four visits.

The financial information that was gathered during the initial assessment should give the counsellor a good overview of the client’s financial status. If the gambler’s excessive gambling ceases, many families can work out their financial difficulties with little or no assistance. For others with excessive debt, inadequate income, problems with overspending or poor money management skills, a financial strategy may be necessary. Problem gamblers who have customarily had sole control over the household finances are likely to be triggered to return to gambling under the same arrangement. Equally important, partners who have lost their trust need to feel financially safe and secure in their relationship. If a couple arranges joint control (two signatures needed to access money), then both parties can begin to get their needs met. In some circumstances, the gambler who still experiences gambling urges will find ways to access money on his or her own and may request that his or her partner take total control at least until the gambler feels more confident in handling money. Arrangements such as these are support systems that can be put into place — they are not solutions. If gamblers are compelled to gamble, they will continue to find ways to access money.

Clients (who may have already contacted creditors to request a moratorium, i.e., a delay or a waiting period for the debtor to begin payment to the creditor) need to set those funds aside to prepare for the start of a financial plan. The gambler should request delaying payments either in writing, face to face, or both. Past practice suggests that meeting face to face with the creditor will result in the most favourable outcomes. Moratorium time frame requests will vary from one to three months depending on different circumstances. Creditors need to see a repayment schedule along with an income and expense report in writing, to decide if the plan is acceptable.

Credit Counselling Services, bankruptcy trustees and other financial counselling services have developed their own financial forms geared to the general population they serve. Their forms are administered by trained counsellors and are only used internally. The forms for budgeting and creditor repayment reproduced were developed by Gamblers Anonymous (GA) in the 1960's for problem gamblers. GA has granted permission for counsellors to purchase and use the forms in the course of financial counselling. For our purpose, the forms have been slightly revised to better reflect Canadian circumstances and content.

The financial forms are designed to gather precise information regarding living expenses and listing of creditors. Problem gamblers tend to minimize, generalize or overlook expenses and debts. The details outlined in the forms help everyone involved get a clear and accurate picture of the client’s financial status. The financial summary form shows a listing for the partner’s income available. Gambling counsellors experienced in this procedure will encourage partners to protect themselves by depositing a percentage of their income in a separate bank account as personal security in the event the gambler decides to return to gambling.

Determining the Full Extent of the Problem

This meeting will be attended by the gambler and partner or other family member. The counsellor will explain the procedure. A time frame needs to be agreed upon for completion of the plan and a joint decision needs to be made regarding the control of finances. Will the finances be handled jointly or will one of the partners take control? Regardless of which way it’s handled, both should be encouraged to participate in financial discussions to stimulate communication and support mutual involvement.

Provide the couple with the expense forms, the form for listing creditors and the Ask them to take the forms home and complete them as accurately as possible. Use the column (month or week) that reflects the most accurate figure. Request that the forms be dropped off at the counsellor’s office as soon as they are completed. This exercise is often an agonizing experience for the gambler and sometimes for the partner as well. This may be the first time many couples acknowledge the reality of their financial situation.

Working with the Forms

Once the forms have been reviewed, the counsellor should have a clear picture of the family’s financial status. Based on the information presented, the counsellor looks at possible options for a viable plan. This is the point at which a counsellor’s own attitudes and values come into play. It can be difficult for a counsellor to evaluate the best possible plan of action if his or her own financial affairs are not in order. Many folks live in financial turmoil and gambling counsellors are no different.

Total the three expense forms and the income categories. Include the totals at the bottom of the Financial Summary form and subtract the expenses from the total income. If the result is a negative amount, expenses need to be reduced, or income needs to be increased, or a combination of both. If the result is a positive amount, this money can be used for creditor allocation. If the figure is not sufficient for creditor payments, possible options are reducing expenses, increasing income, or decreasing creditor monthly payments. The Repayment Schedule form is a helpful tool for the counsellor to use for suggesting different options.

After the counsellor has reviewed all the financial information and has a detailed understanding of the family’s situation, it’s time for the next meeting to discuss the current situation and possible options for meeting the basic needs of the family as well as satisfying creditors. Possible options include reducing expenses and/or increasing income (refer to attached list), or reducing monthly payments to creditors. This can often be an emotionally charged meeting where families need to separate wants from basic needs.

During the next meeting the gambler, partner and counsellor begin to discuss the possible options for a realistic financial plan. Borrowing money to make a workable plan is discouraged and should not be considered an option, even if the loan is offered by a family member. Prepare copies of the completed forms to make it convenient for everyone to follow the discussions. Any additional forms to demonstrate options should also be copied and passed out at this time.

The discussion of possible options should look at advantages and disadvantages and how each option may affect the treatment process. This should be a primary consideration. If a realistic plan is agreed upon, then final forms can be completed and used as a guideline for the family. A copy of the forms needs to be sent to any creditor who has agreed to consider a revised restitution plan.

If the gambler has additional creditors or debts that were not disclosed on the list of creditors, this is the time to admit it. As the plan becomes more and more concrete, it is difficult for the gambler to conceal a debt that has no payment allocation in the plan. If additional information is revealed, or if circumstances such as employment status or income status change, there can be a direct impact on available options. If the counsellor and the client see no viable options by the end of the second meeting, a referral to Credit Counselling Services would be in the client’s best interest.

Credit Counselling

The Ontario Association of Credit Counselling Services (OACCS) embodies a membership of 24 professional, not-for-profit agencies, 23 of which are in Ontario and the other is in Newfoundland and Labrador. Some of these agencies also have satellite offices to serve communities. Accreditation ensures that the agency abides by a rigorous set of standards, and that the agency’s financial, management and program records are reviewed.

Credit Counselling Services can assist those who:

• put off paying bills
• take out loans or cash advances to pay old bills
• rely on credit for daily living expenses
• argue over money
• receive upsetting letters or phone calls from creditors
• worry that they will never get out of debt.

The first interview with Credit Counselling Services is always free. Depending on the client’s financial situation, he or she may be asked to make a small contribution for any additional counselling sessions. Credit Counselling Services has an excellent reputation and claims that over 98% of their programs receive creditor co-operation.

During the first counselling session, a staff member will evaluate the client’s financial situation. The counsellor then works with the client to present several possible plans. If the client is confident enough to follow the plan on his or her own, then he or she may not need further assistance. If the client requires more help, the counsellor can contact the creditors and negotiate a workable repayment plan. Once the plan has been negotiated, the client delivers a certified cheque or money order to Credit Counselling Services and disperses his or her funds to the creditors. This arrangement is similar to a consolidation loan in that the client pays one source rather than all the creditors individually, although the client is using his or her own, rather than borrowed, money.

It is important to know when to use credit counselling and how it will affect your client. Steering a client toward financial assistance, especially to a different agency, can diminish the motivation for treatment. When a client appears to be sincerely motivated and engaged in the treatment process (usually after approximately four weeks) it can be helpful to make the referral. Bear in mind, Credit Counselling Services will require the attendance of a partner. Some Credit Counselling offices will have a waiting time for a first appointment. Check with the office in your area for this information.

Finally, if you plan to collaborate with Credit Counselling, it is a good idea to arrange to meet with the financial counsellors. Visit with them and explain the treatment process and any concerns you may have. The two parties can agree that financial services will not be offered unless the client is engaged in a gambling treatment program. This arrangement is already working well in at least one area of Ontario.

Consumer Proposals

A consumer proposal is another option for dealing with creditors. Under the Bankruptcy and Insolvency Act the client may ask his or her creditors to extend the time to pay off the debt and ask that the creditors accept a percentage of what they are owed or a combination of both. When a consumer proposal is made, unsecured creditors (any creditor who has not secured debt with a lien against personal property) cannot garnishee wages or seize property until the proposal is withdrawn, rejected or annulled, or until the administrator is discharged from the case by the Superintendent of Bankruptcy because the proposal was not fully performed. Unlike bankruptcy, a consumer proposal does not require the client to sell all his or her assets. Any person whose debts, excluding a home mortgage, are less than $75,000 and is unable to pay them is eligible to make a consumer proposal. Any two debtors in a joint financial relationship can make a joint consumer proposal provided the total debt does not exceed $75,000.

A filing fee must be paid to the Superintendent of Bankruptcy as well as a fee for the administrator. These fees are prescribed by the Bankruptcy and Insolvency Rules.

To begin a consumer proposal the client must seek the assistance of an administrator. This could be a bankruptcy trustee or a person appointed by the Superintendent of Bankruptcy. Bankruptcy trustees can be found in the yellow pages of the telephone book. Information regarding appointed administrators can be obtained by the Office of the Superintendent of Bankruptcy at Trebla Building, 473 Albert Street, 2nd Floor, Ottawa, Ontario, K1R 5B4. Phone Number (613) 995-2994. A meeting with the administrator will help decide what kind of proposal would be best for the client as well as the creditors. After the proper forms are filed with the Official Receiver, the administrator has 10 days to send a report listing the client’s assets, debts and creditors to the Official Receiver. The report includes the administrator’s assessment of the fairness of the proposal and of whether the client will be able to follow through. A copy of the proposal and report is then sent to all creditors.

The creditors have 45 days to review the information and decide whether they will accept or reject the proposal. If creditors do not respond, they will be considered to have accepted the proposal. If a sufficient number of creditors accept the proposal, it then becomes binding.

• If the proposal is rejected, the client is no longer protected by the Act. The creditors are entitled to take legal action to recover their debts.
• If the proposal is accepted and the client fulfils the terms, the administrator will give a certificate of full performance to the client and the Official Receiver and the client is relieved of all debts included in the proposal.
• If the client defaults on any of the terms of the proposal, it may be annulled. Creditors can now make claims against the client for the full amount of debt still owed.

Bankruptcy Procedures

Filing for bankruptcy should always be the last alternative considered.

Bankruptcy is a legal process administered by a licensed trustee who may relieve an individual of most debts and stop any legal proceedings by creditors. The person filing for bankruptcy must assign all of his or her assets to the trustee except for any exemptions such as basic furniture. The trustee will then sell the assets and distribute the money among the creditors.

Any two people who have both signed for and share debt can file a joint assignment. If the trustee believes a joint assignment is in the best interest of the debtors and creditors and if their debts are substantially the same, they will allow two bankrupts to be dealt with as one file. However, if one party decides not to file, that party is still responsible for any loans. The Bankruptcy Act states that the co-signer of a loan is not to be relieved of financial responsibility. In other words, if a client’s parents co-signed a loan, they must pay the loan in full even if the client files for bankruptcy.

Although most debts are released through bankruptcy, some do not qualify. Any debt arising out of fraud, any court fine, a claim for alimony, spousal or child support or an award for damages in respect of an assault are debts that would not be released through the Bankruptcy Act.

The process starts when the client meets with the trustee who will assess the client’s option and explains the available option. If the client decides to file for bankruptcy, there are two forms to discuss and sign. The first is an “Assignment” in which the client declares that he or she is handing over all his or her assets to the trustee for the benefit of the creditors. The second is the “Statement of Affairs,” which lists the client’s assets, liabilities, income and expenses. The trustee will also ask about the client’s family, employment and disposition of assets. After the documents have been completed and the trustee files them with the Official Receiver, the client is declared bankrupt. There is a filing fee to be paid to the Superintendent of Bankruptcy as well as a fee for the trustee. These fees are prescribed by the Bankruptcy and Insolvency Rules.

After the filing of the documentation the creditors or the Official Receiver may require that the client answer questions under oath about his financial affairs. Generally these meetings are not necessary. First-time bankrupts are automatically discharged unless there is opposition from a creditor, the trustee or the Superintendent of Bankruptcy.

The client must participate in two stages of financial counselling with a counsellor registered with the Office of the Superintendent of Bankruptcy. The first stage deals with money management, spending and shopping habits, warning signs, and obtaining and using credit. The second stage focuses on the causes of the bankruptcy and establishing alternatives for a financial plan of action. The client may also request counselling for a relative or someone with whom he or she has a close financial relationship.

It is important to recognize that although trustees are specialists in their field, they are not gambling counsellors. They may not even know that gambling was a factor in the bankruptcy. Bankruptcy trustees assist their clients by making recommendations based on their client’s financial interest. Gambling counsellors make recommendations based on the rehabilitation and recovery process of the client. Recommendations from the two parties may not always complement each other.

Bankruptcy may actually help the recovery of some gamblers. It makes it much more difficult to obtain credit cards, or loans from banks, credit unions and finance companies. It can also humble those with inflated egos. On the other hand, once past debt is dissolved, the client has more disposable income available for gambling. Problem gamblers — particularly those who believe that they have a financial rather than a gambling problem — need gambling counsellors who can help them recognize and prepare for the high-risk situations that can follow their discharge from bankruptcy.

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