{"id":12218,"date":"2025-06-02T13:45:26","date_gmt":"2025-06-02T20:45:26","guid":{"rendered":"https:\/\/www.sands-trustee.com\/?p=12218"},"modified":"2025-09-26T11:14:27","modified_gmt":"2025-09-26T18:14:27","slug":"debunking-common-consumer-debt-myths","status":"publish","type":"post","link":"https:\/\/www.sands-trustee.com\/blog\/debunking-common-consumer-debt-myths\/","title":{"rendered":"Debunking Common Consumer Debt Myths"},"content":{"rendered":"\r\n<p>Licensed Insolvency Trustees are Canada\u2019s official debt help professionals, and we are uniquely qualified and empowered to offer advice and help to individuals looking for support and solutions to deal with their debt. Our job is to help you understand all your options to manage your debt, and we can assist you with legal options that can consolidate, cut, or completely clear virtually all your debt.<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Every day we provide debt advice and guidance to consumers with a range of needs, and a common thread is that \u201cknowing is not owing\u201d \u2013 people need to have the facts so they can make informed decisions about their unique situation.<\/li>\r\n\r\n\r\n\r\n<li>Even if you don\u2019t consider your debt a problem, it\u2019s important to understand your rights and responsibilities \u2013 owing money is stressful, there are many ins and outs when it comes to debt, and unfortunately what you don\u2019t know can hurt you financially.<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p>Read on as we break down 10 of the most common consumer debt myths and misconceptions.<strong>\u00a0<\/strong><\/p>\r\n\r\n\r\n\r\n<h2 id=\"h-myths-about-debt-you-owe\" class=\"wp-block-heading\"><strong>Myths About Debt You Owe<\/strong><\/h2>\r\n\r\n\r\n\r\n<h3 id=\"h-myth-creditors-can-always-sue-you-over-a-debt-owed\" class=\"wp-block-heading\"><strong>Myth: Creditors Can Always Sue You Over a Debt Owed<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: Canadian law sets out a statute of limitations on debt.<\/u><\/p>\r\n\r\n\r\n\r\n<p>In BC, the\u00a0<em>Limitations Act<\/em>\u00a0caps the period of time a creditor has to take legal action against you (i.e. sue you) for a debt you owe. What this essentially means is that while the debt does remain payable, if it has been\u00a0<em>two years or more<\/em>\u00a0since you made a payment or acknowledged the debt in writing, then your creditor may not have further recourse to collect the debt from you, beyond putting notations on your credit history and sending you mail.<\/p>\r\n\r\n\r\n\n\n            <div class=\"background-block-wrapper grey\">\n            <div class=\"container\">\n                <div class=\"cols gap\">\n                                        <div class=\"col col-75\">\n    \n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Generally even collection agencies will eventually give up, but there are some exceptions to this, such as with government debts \u2013 and certain actions can \u201creset the clock\u201d.<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p class=\"has-text-align-center\"><a href=index-593.html>Learn More About BC\u2019s Statute of Limitations on Debt<\/a><\/p>\r\n\r\n\r\n\n            <\/div>\n            <\/div>\n        <\/div>\n        <\/div>\n    \n\n\r\n\r\n\r\n<h3 id=\"h-myth-co-signing-debt-makes-you-responsible-for-half\" class=\"wp-block-heading\"><strong>Myth: Co-signing Debt Makes You Responsible for Half<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: <\/u><u>By co-signing a debt, you become equally responsible for repaying 100% of the unpaid balance to the lender.<\/u><\/p>\r\n\r\n\r\n\r\n<p>When you co-sign a debt, if the original borrower doesn\u2019t pay back the debt the lender can demand that anyone listed in the loan or agreement (i.e. the co-signer\/co-borrower) repay the entire balance \u2013 not half. This type of liability is known as \u2018joint and several\u2019.<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Read your applications and lending agreements carefully to understand the terms of borrowing and who is responsible for what \u2013 these can change depending on the lender and whether they are considering an application\/account for \u201cadditional cardholders\u201d or \u201cco-borrowers\/co-applicants.\u201d Always check the fine print!<\/li>\r\n<\/ul>\r\n\r\n\r\n\n<div class=\"cta-with-bg-image-content  white center no-bg-img\"   style=\" \">\n    <div class=\"gradient gradient-teal\" >\n        <div class=\"content\">\n            <h2>\n                <span>GET A FINANCIAL<\/span>\n                FRESH START            <\/h2>\n            <p>Book your free consultation with one of our experts and start living a debt-free life.<\/p>\n            <a href=index-279.html class=\"red-btn\">\n                BOOK YOUR FREE CONSULTATION            <\/a>\n        <\/div>\n    <\/div>\n<\/div>\n\r\n\r\n\r\n<h3 id=\"h-myth-marrying-someone-makes-you-responsible-for-paying-their-debt\" class=\"wp-block-heading\"><strong>Myth: Marrying Someone Makes You Responsible for Paying Their Debt<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: <\/u><u>One spouse is not responsible for repaying the debts of the other spouse solely by virtue of marriage or cohabitation.<\/u><\/p>\r\n\r\n\r\n\r\n<p>You are responsible for repaying debts you\u2019ve co-signed for or taken on jointly (as discussed above), or debts triggered as marital debts by the act of separation under the Family Law Act. You cannot be suddenly made liable for a debt owed solely by your spouse just because you got married. Essentially, there is no way to \u201cmarry into\u201d a debt.<\/p>\r\n\r\n\r\n\r\n<p class=\"has-text-align-center\"><a href=index-507.html>Am I Responsible for my Spouse\u2019s Debts? Learn More<\/a><\/p>\r\n\r\n\r\n\r\n<h3 id=\"h-myth-you-should-always-buy-insurance-protection\" class=\"wp-block-heading\"><strong>Myth: You Should Always Buy Insurance Protection<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: Credit card balance protection insurance often isn\u2019t \u201cworth\u201d its cost. <\/u><\/p>\r\n\r\n\r\n\r\n<p>Some banks are quick to sell and aggressively promote various insurance products, and while some are worthwhile considerations, like life insurance for a young family, others provide little value in most circumstances \u2013 one of these Licensed Insolvency Trustees often caution against is \u2018balance protection insurance\u2019.<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Even if you don\u2019t carry a balance each month you pay fees into this product, which can be as high as 1% of the purchases on the card. Over the course of one year, this could take a 20% credit card interest rate to more than 32%.<\/li>\r\n\r\n\r\n\r\n<li>The other issue is that in most instances where you\u2019d expect the insurance to help, it does very little. For example, if you lose your job, it may cover the minimum payments for the period you are unemployed \u2013 but very little of these payments will reduce the balance you owe on the card.<\/li>\r\n<\/ul>\r\n\r\n\r\n\n<div class=\"cta-with-bg-image-content  white center no-bg-img\"   style=\" \">\n    <div class=\"gradient gradient-teal\" >\n        <div class=\"content\">\n            <h2>\n                <span>GET A FINANCIAL<\/span>\n                FRESH START            <\/h2>\n            <p>Book your free consultation with one of our experts and start living a debt-free life.<\/p>\n            <a href=index-279.html class=\"red-btn\">\n                BOOK YOUR FREE CONSULTATION            <\/a>\n        <\/div>\n    <\/div>\n<\/div>\n\r\n\r\n\r\n<h3 id=\"h-myth-incorporating-your-business-fully-protects-owners-personally\" class=\"wp-block-heading\"><strong>Myth: Incorporating Your Business Fully Protects Owners Personally<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: While corporations may protect owners from their debts to some degree, there is still a personal liability created for certain debts that cannot be avoided.<\/u><\/p>\r\n\r\n\r\n\r\n<p>This personal liability can include debts such as:<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Wages; GST and payroll remittances<\/li>\r\n\r\n\r\n\r\n<li>Debts you have signed a personal guarantee for<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p>Many business owners are aware that essentially any debts a sole proprietor or partnership business accumulate are payable by their owners, since there is no distinction between business and owner, but unfortunately, some business owners have a false sense of security when it comes to <a href=index-893.html>protecting their personal assets and liabilities if they incorporate their business<\/a>.<\/p>\r\n\r\n\r\n\r\n<h2 id=\"h-myths-about-managing-debt\" class=\"wp-block-heading\"><strong>Myths About Managing Debt<\/strong><\/h2>\r\n\r\n\r\n\r\n<h3 id=\"h-myth-there-s-no-forgiveness-or-renegotiation-option-for-government-debts\" class=\"wp-block-heading\"><strong>Myth: There\u2019s No Forgiveness or Renegotiation Option for Government Debts<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: You can have government debts reduced and cleared by filing a Consumer Proposal (or forgiven through bankruptcy).<\/u><\/p>\r\n\r\n\r\n\r\n<p><a href=index-289.html>A Consumer Proposal is a legal debt consolidation remedy<\/a> that can be used to stop all interest, reduce amounts owing by up to 50-80%, and work out a payment plan for what you can afford to repay. <a href=index-610.html>Government debts like taxes, business GST, student loans, benefit overpayments and more<\/a> \u2013 plus debts like credit cards, payday loans, lines of credit, etc. can all be dealt with using this powerful tool, which will also halt a wage seizure or bank account freeze.<\/p>\r\n\r\n\r\n\n\n            <div class=\"background-block-wrapper blue\">\n            <div class=\"container\">\n                <div class=\"cols gap\">\n                                        <div class=\"col col-75\">\n    \n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Besides a bankruptcy proceeding, a Consumer Proposal filed by a Licensed Insolvency Trustee is the only renegotiation strategy Canada Revenue Agency and other government bodies will accept when it comes to consolidating and reducing your debt with them.<\/li>\r\n\r\n\r\n\r\n<li>Every year tens of thousands of Canadians work with a Licensed Insolvency Trustee to successfully \u2018make a deal\u2019 with the government on outstanding amounts owing, without <a href=index-296.html>filing for bankruptcy<\/a>.<\/li>\r\n<\/ul>\r\n\r\n\r\n\n<div class=\"cta-with-bg-image-content  white center no-bg-img\"   style=\" \">\n    <div class=\"gradient gradient-teal\" >\n        <div class=\"content\">\n            <h2>\n                <span>GET A FINANCIAL<\/span>\n                FRESH START            <\/h2>\n            <p>Book your free consultation with one of our experts and start living a debt-free life.<\/p>\n            <a href=index-279.html class=\"red-btn\">\n                BOOK YOUR FREE CONSULTATION            <\/a>\n        <\/div>\n    <\/div>\n<\/div>\n\r\n\r\n\n            <\/div>\n            <\/div>\n        <\/div>\n        <\/div>\n    \n\n\r\n\r\n\r\n<h3 id=\"h-myth-minimum-payments-on-credit-cards-are-enough\" class=\"wp-block-heading\"><strong>Myth: Minimum Payments on Credit Cards are Enough<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: Making just minimum monthly payments may keep your account in good standing, but it\u2019s not enough to get debt paid off without incurring considerable interest costs.<\/u><\/p>\r\n\r\n\r\n\r\n<p>Many individuals fall into a trap of just making the minimum payments on their credit cards and assuming that they are making progress towards getting their debt paid off. The reality is that at 20% interest, making minimum monthly payments on a $10,000 debt could take more than 25 years to clear and will cost more than $12,000 in additional &#8211; and avoidable &#8211; \u00a0interest charges.<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Banks must disclose exactly how long it will take to pay off a debt if you make only the minimum payments, so you can see this breakdown on your own bill.<\/li>\r\n\r\n\r\n\r\n<li>If you can only afford minimum payments each month, you very likely have a debt problem and should <a href=index-290.html>talk with a Licensed Insolvency Trustee<\/a> as soon as possible.<\/li>\r\n<\/ul>\r\n\r\n\r\n\n    <div class=\"compare-your-debt-options-block-wrapper \">\n        <div class=\"compare-your-debt-options\">\n    <img loading=\"lazy\" decoding=\"async\" src=index-293.html width=\"95\" height=\"57\" alt=\"Compare Your Debt Options\"\/>\n    <h2>Compare Your Debt Options<\/h2>\n    <div class=\"text\">\n        <p>Enter your total amount of debt (excluding mortgage and car loan) and we&#8217;ll show you a list of options.<br\/><\/p>\n        <form name=\"home_calc\" action=https://www.sands-trustee.com/"//free-debt-consultation//debt-options-calculator//#highcharts-0\" method=\"post\">\n            <input type=\"number\" name=\"amount\" id=\"calc-input\" placeholder=\"Amount of Debt\" required\/><br \/>\n            <input class=\"form_submit\" type=\"submit\" onclick=\"ga(ga.getAll()[0].get('name') + '.send', 'event', 'Assessment Tool', 'Calculate', 'Home');\" value=\"Calculate Debt Options Now\">\n        <\/form>\n    <\/div>\n<\/div>    <\/div>\n\r\n\r\n\r\n<h3 id=\"h-myth-your-credit-score-is-a-reliable-indicator-of-financial-health\" class=\"wp-block-heading\"><strong>Myth: Your Credit Score is a Reliable Indicator of \u2018Financial Health\u2019<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: A credit score is essentially a numeric rating used by lenders to determine whether they will loan money, and at what cost. <\/u><\/p>\r\n\r\n\r\n\r\n<p>Part of the problem with taking a \u2018good\u2019 credit score as an indication of financial and debt health is that habits that drive a high rating are often at odds with habits that lead to financial success. Since a credit rating mostly measures whether you pay your bills on time it considers nothing about whether those bills are too high or if you have any savings or assets at all.<\/p>\r\n\r\n\r\n\n\n            <div class=\"background-block-wrapper grey\">\n            <div class=\"container\">\n                <div class=\"cols gap\">\n                                        <div class=\"col col-75\">\n    \n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>When it comes to dealing with unmanageable debt it\u2019s often better to take a short-term hit on your credit rating and reset, rather than try to preserve \u2018great\u2019 credit, especially when incurring interest costs each month to do so.<\/li>\r\n\r\n\r\n\r\n<li><a href=index-615.html>Your credit rating changes over time<\/a> \u2013 people can rebuild their credit in as little as two or three years, even after filing for bankruptcy.<\/li>\r\n<\/ul>\r\n\r\n\r\n\n            <\/div>\n            <\/div>\n        <\/div>\n        <\/div>\n    \n\n\r\n\r\n\r\n<h3 id=\"h-myth-debt-consolidation-must-be-done-by-borrowing\" class=\"wp-block-heading\"><strong>Myth: Debt Consolidation Must be Done by Borrowing<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: You can consolidate your debt without borrowing or interest by making a Consumer Proposal.<\/u><\/p>\r\n\r\n\r\n\r\n<p>Many people considering how to manage their debts believe their options amount to consolidation loans, credit counselling programs, or bankruptcy \u2013 but these are not your only options!<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li><a href=index-627.html>Consumer Proposals are an effective debt solution<\/a> that allows you to consolidate your debts, repaying what you can afford, with the unpaid balance being forgiven by your creditors.<\/li>\r\n\r\n\r\n\r\n<li>This consolidation option requires no borrowing and interest charges (such as a consolidation loan), nor require you to pay added professional fees (such as credit counselling).<\/li>\r\n<\/ul>\r\n\r\n\r\n\n<div class=\"cta-with-bg-image-content  white center no-bg-img\"   style=\" \">\n    <div class=\"gradient gradient-teal\" >\n        <div class=\"content\">\n            <h2>\n                <span>GET A FINANCIAL<\/span>\n                FRESH START            <\/h2>\n            <p>Book your free consultation with one of our experts and start living a debt-free life.<\/p>\n            <a href=index-279.html class=\"red-btn\">\n                BOOK YOUR FREE CONSULTATION            <\/a>\n        <\/div>\n    <\/div>\n<\/div>\n\r\n\r\n\r\n<h3 id=\"h-myth-canada-has-government-sponsored-debt-relief-programs\" class=\"wp-block-heading\"><strong>Myth: Canada has Government-Sponsored Debt Relief Programs<\/strong><\/h3>\r\n\r\n\r\n\r\n<p><u>Fact: The Canadian government does not offer grants or programs for personal debt repayment other than the options provided by a Licensed Insolvency Trustee.<\/u><\/p>\r\n\r\n\r\n\r\n<p>The Canadian government does not have government grants or debt programs available, but it does regulate legitimate legal debt relief options that are available through Canada\u2019s designated debt help professionals \u2013 Licensed Insolvency Trustees \u2013 namely <a href=index-289.html>Consumer Proposals<\/a> (to consolidate and cut debt) and <a href=index-296.html>bankruptcy<\/a> (to get debt forgiveness), as well as some student loan relief administered through Canada Student Loans.<\/p>\r\n\r\n\r\n\n\n            <div class=\"background-block-wrapper blue\">\n            <div class=\"container\">\n                <div class=\"cols gap\">\n                                        <div class=\"col col-75\">\n    \n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>The Federal government has issued warnings about <a href=index-894.html>companies using false and misleading claims<\/a> to aggressively advertise to and target consumers.\r\n<ul class=\"wp-block-list\">\r\n<li>Advertisements that claim to offer you access to a \u2018government approved program\u2019 or to quickly repair your credit are usually misleading and misrepresenting their abilities.<\/li>\r\n<\/ul>\r\n<\/li>\r\n\r\n\r\n\r\n<li>Unless you are <a href=index-290.html>talking with a Licensed Insolvency Trustee<\/a>, the representative or organization cannot help you with a Consumer Proposal and isn\u2019t fully qualified to be giving you advice about your legal debt options either.<\/li>\r\n<\/ul>\r\n\r\n\r\n\n            <\/div>\n            <\/div>\n        <\/div>\n        <\/div>\n    \n\n\r\n\r\n\r\n<h2 id=\"h-get-information-and-advice-about-your-debt-and-debt-options-nbsp\" class=\"wp-block-heading\"><strong>Get Information and Advice About Your Debt and Debt Options<\/strong><strong>\u00a0<\/strong><\/h2>\r\n\r\n\r\n\r\n<p>The best and safest way to get accurate information about debt, and your debt options and resources, is to reach out directly to a Licensed Insolvency Trustee local to your province and ask to have a free consultation \u2013 you don\u2019t need a referral to talk confidentially with us.<\/p>\r\n\r\n\r\n\r\n<ul class=\"wp-block-list\">\r\n<li>Sands &amp; Associates is available for help seven days a week and we have options for in-person appointments, as well as full support over the phone and online videos.<\/li>\r\n\r\n\r\n\r\n<li>In about 30 minutes you should have a clear understanding of your situation and next steps in the debt solution you decide best fits your needs. Knowing is not owing!<strong style=\"font-size: 1rem;\">\u00a0<\/strong><\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p><strong>Get solutions, support, and a debt-free plan that\u2019s right for you.<\/strong><\/p>\r\n\r\n\r\n\n<div class=\"cta-with-bg-image-content  white center no-bg-img\"   style=\" \">\n    <div class=\"gradient gradient-teal\" >\n        <div class=\"content\">\n            <h2>\n                <span>GET A FINANCIAL<\/span>\n                FRESH START            <\/h2>\n            <p>Book your free consultation with one of our experts and start living a debt-free life.<\/p>\n            <a href=index-279.html class=\"red-btn\">\n                BOOK YOUR FREE CONSULTATION            <\/a>\n        <\/div>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Licensed Insolvency Trustees are Canada\u2019s official debt help professionals, and we are uniquely qualified and empowered to offer advice and help to individuals looking for support and solutions to deal with their debt. Our job is to help you understand all your options to manage your debt, and we can assist you with legal options [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":12219,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[263],"tags":[38,39,44,217,197,37,49,53,117,120,101,100,50,242,43,40,295,238,305,42,204,35,127,129,82,265],"class_list":["post-12218","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-expert-debt-advice","tag-bankruptcy-bc","tag-bankruptcy-trustees","tag-budgeting","tag-co-signed-debt","tag-consumer-news","tag-consumer-proposals","tag-credit","tag-credit-card-debt","tag-credit-counselling","tag-credit-counsellor","tag-credit-report","tag-credit-score","tag-debt","tag-debt-advice","tag-debt-consolidation","tag-debt-consultant","tag-debt-forgiveness","tag-debt-help","tag-debt-relief","tag-debt-settlement","tag-licensed-insolvency-trustee","tag-sands-associates","tag-statute-of-limitations","tag-student-loans","tag-tax-debt","tag-wage-garnishment"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.3 (Yoast SEO v26.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>10 Personal Debt Myths Debunked | Sands &amp; Associates BC<\/title>\n
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