Levels of household debt have once again hit a record high. Debt levels in Canada continue to grow. In fact, since Statistics Canada started keeping track of debt 53 years ago, levels have reached a new record high in every year but one. This shows that Canadians are continuing to take out higher and higher levels of debt and potentially setting themselves up for troubling financial situations. In fact, Stats Canada data shows that 71% of Canadians carried some form of debt in 2012. These debts include mortgages, auto loans, lines of credit, credit card debt and other debt. High levels of debt can cause problems. Too much debt leaves you with little (if any) money left over at the end of the month and little (if any) flexibility if you find yourself having to pay an unexpected expense such as a car or house repair. These situations can put people into a position where they can’t pay their debts which could force them into insolvency and considering personal bankruptcy. A recent report from CIBC showed that insolvencies in Canada rose by 1.2 percent in the six-month period ending in February. Insolvency is a situation where a person is unable to pay the money that it owes on time. This typically leads to a person filing a consumer proposal or personal bankruptcy in order to alleviate the pressure of debt.
Personal Bankruptcy, Consumer Proposal and Canadian Seniors
Recent numbers show that the number of Canadian seniors filing for personal bankruptcy and consumer proposal has risen. Seniors now account for 10% of all insolvencies. This number is up from 8% four years ago. One of the reasons for this is changing demographics. A larger percentage of the population is made up of Baby Boomers and seniors, so it makes sense that the number of insolvencies would rise to match the demographics. Another reason is that seniors have higher levels of debt than before. One cause for this may be that many pensions have not kept up with the cost of living. The recession of 2008/2009 led to a decrease in pension and RRSP values for many people. It also led to fewer people being able to save or invest for retirement. This, combined with lower interest rates, means that many seniors do not have as much money saved for retirement as they hoped. When you combine this fact with rising costs and higher levels of debt, you can see how many seniors find themselves in financial trouble. These troubles can lead to filing for personal bankruptcy or consumer proposal. Both of these choices are legal options that are designed to help people who are overburdened by debt and are unable to pay their debts as they become due. If you are struggling with debt and aren’t able to handle your financial obligations, consumer proposal and personal bankruptcy are options that may be worth investigating.
Finding out more about Personal Bankruptcy & Consumer Proposal
One of the first steps that you should take if you are struggling with high levels of debt is to speak with a trustee in bankruptcy. While many people may be nervous or intimidated by the name, don’t worry. Speaking with a trustee doesn’t automatically lead to filing for personal bankruptcy. You can likely arrange a free consultation with a trustee where you will speak to him or her about your financial situation. The trustee will review your finances and present you with the options that are available to you. A consumer proposal or personal bankruptcy may be among the options. In a consumer proposal, you submit a formal offer to all of your creditors that sees you propose to pay them a portion of the debt that you owe in exchange for having the rest of your debts forgiven. The amount you offer to pay will be more than what your creditors would get if you were to file for personal bankruptcy, which increases the likelihood that your proposal will be accepted. Filing for personal bankruptcy is another option that can help you find debt relief. Your trustee will inform you if this option is available to you and you may decide that it is your best choice.