Many Canadians are feeling the challenging effects of these economic times. According to a 2023 Statistics Canada report, one in four Canadians say they can’t afford an unforeseen expense of $500, and more than one-third of the population found it hard to make ends meet over the past year. From rising housing costs to high food prices, many individuals have turned to credit cards to try and get by. Equifax Canada found that credit card spending was up 17.3 per cent from late 2021 compared to the same time period in 2022.
The rapid increase of the cost of living along with high interest rates has caused consumer debt load to grow. Some Canadians have accumulated tens of thousands of dollars in debt during the pandemic from banks providing easy loans to get them through unemployment. But now there’s pressure to pay it back.
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People don’t take on debt thinking it will become a long-term problem but they can easily get caught in a debt cycle that’s hard to break free from – and one they may not even recognize as a problem until it is too late.
Breaking free from debt shame
Four years ago, Darryl Law found himself in debt and continuously in overdraft trying to support his daughter who was away at university. It got to a point where the financial stress was putting a strain on his marriage, and he wasn’t sure if he had ten dollars in his bank account to pay for gas. Law said that asking for help can feel like the most difficult thing to do.
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“For me, I have a decent profile job in the community too, so there’s that pride issue where I don’t need people knowing about this stuff,” said the 107.5 Dave Rocks radio morning show host who is now happy to share his experience with others and ‘pay it forward’.
“It’s hard to describe, but it was emotional. For me, after I made that call, I sat down and almost went into tears because there’s so much stress on you, so much pressure and you just don’t see a way out. And then you make that call and somebody suddenly reaches a hand into the water and pulls you up on the boat,” he said.
“The first thing I thought was, I’m going to be judged,” said Law who reached out to Welker & Associates Inc. to get support for managing his debt. “Chris made me feel so comfortable and everyone I dealt with at Welker and Associates – just an amazing experience.”
READ MORE: Roughly half of Canadians financially insecure as debt confidence hits record low
After about a year, Law noticed some big changes – “all of a sudden I watched, as we paid everything off, my credit score started going up, and up and up and up and up.” Law shared his family is now in a position where they’ve recently bought a new car, have been able to put money into investments and are looking at buying a place in Costa Rica in retirement. “Huge difference from not being able to put ten bucks in your tank,” he said.
Despite the obvious negative effects of debt, many people still procrastinate speaking with a Licensed Insolvency Trustee. So, what can stop people from taking control of their debts and getting the help they need? Welker breaks it down for us.
- They don’t realize they have a problem
If your phone isn’t ringing off the hook with collection calls, it can be hard to realize you might need to seek professional help. Welker advises that you take all of your bills from six months ago and add them up. Then take all of your bills from today and add them up. Compare the two totals and ask yourself, is that number coming down? If the total today is less than what you owed six months ago, you can see that your debt is going down. But if your total is the same or higher than what you owed six months ago, it’s probably time to review your situation with a professional.
- They’re afraid of what happens next
“Some people think that by simply calling a Licensed Insolvency Trustee, they will hurt their credit rating,” Welker said. But the trustee does not report to creditors or creditor reporting agencies (Equifax or Transunion). While it’s true that filing a consumer proposal or bankruptcy will have a negative impact on your credit rating, Welker said that most people are surprised by how quickly and easily they can rebuild their credit.
Another barrier that keeps people from reaching out is the fear that they will lose all of their assets. “Many of the people we talk to think that if they file a consumer proposal or bankruptcy that they will lose their house, car, and retirement savings. But that simply isn’t the case,” Welker said. He went on to explain that many assets are exempt from creditor action and protected by provincial and federal legislation.
- They don’t know who to call
Getting help doesn’t mean you have to turn to high-interest debt consolidation loans or pay day loans. Welker advises that the best place to start is to speak with a licensed professional. Licensed Insolvency Trustees, like Welker, are licensed through the federal government and are the only professionals that can help you to use legislated debt settlement options to deal with your debts.
Welker says, Most people in debt procrastinate getting help even though it causes them stress. The advantage of dealing with their financial troubles as soon as possible is that the sooner they start, the faster they’ll be able to put the debt behind them and move on with their lives.
To find out what options are available to you, visit: Welker & Associates to learn more.
