Having polled over 2,100 people from around the province who recently made an insolvency filing, the 2024 BC Consumer Debt Study offers unique insights into consumer debt issues across the province, exposing the realities of dealing with a personal debt problem and the serious impacts of debt issues on consumers’ health.

Sands & Associates President and Licensed Insolvency Trustee Blair Mantin joined CTV News to share key findings from the 2024 BC Consumer Debt Study.

Watch the clips here and learn more below:

• The 2024 BC Consumer Debt Study’s largest cohort (36%) said they had $25,000-$49,999 of debt (excluding vehicle loans/mortgages) when they started their debt relief process.
• Over half of individuals polled (56%) said credit card debt was the main type of debt they had – 4.5 times more than the next leading type of debt.
• Payday (or instalment) loans were the second-most reported (12%) type of problem debt for consumers, as well as tax debt (12%).
  • Payday loan usage has almost doubled as the main type of problem debt for BC Consumer Debt Study participants since 2020’s study (6.3% of respondents attributed their main type of debt to payday loans in the 2020 BC Consumer Debt Study).
• 72% of people surveyed said overwhelming stress was how they knew their debts were becoming a problem.

Common Issues Driving Consumer Debt in BC

Four of the five top-reported causes of problem debt for consumers polled in the 2024 BC Consumer Debt Study may be related to issues outside the individual’s immediate control:

• Almost 1 in 4 people surveyed said the direct main cause of their debt was using credit for essential costs of living income could not cover (24%).
• Illness, injury or health-related problems (11%), marital or relationship breakdown (7%) and job-related issues (7%) were also direct main causes of debt identified by survey participants.
• 27% of British Columbians polled in the study attributed the direct main cause of their debt to overextended credit due to general financial mismanagement.

Debt Problem Warning Signs

An emotional cue was the top warning sign of a debt problem for most people:

• Over 7 in 10 individuals surveyed (72%) said overwhelming stress was how they knew their debts were becoming a problem.
• Other top signs of a debt problem reported by consumers included: Only making minimum payments (58%) and seeing debt balances remain almost the same every month, despite making payments (55%).

4 Budget Issues That Point to a Debt Problem

Impacts of Problem Debt on Consumers

The BC Consumer Debt Study series reveals the devastating effects that money problems can cause consumers, with impacts experienced far beyond financial transactions. The effects of dealing with problem debt as reported by individuals polled included:

• Almost 4 in 5 people (79%) said their mental health suffered because of being in debt, and 3 in 5 individuals (60%) said their self-esteem suffered by being in debt.
• Over 4 in 5 people (84%) said they had a constant worry about debt.
• 78% had anxiety, 69% feelings of helplessness or hopelessness, and 61% had depression because of debt stress.
• Close to half (48%) of respondents said being in debt caused their physical health to suffer.
• Roughly 1 in 7 individuals said they experienced suicidal ideation because of their debt-stress.

Consumers Delaying Seeking Debt Help

Almost 4 in 5 people (79%) said their mental health suffered because of being in debt and despite this, only 6% of individuals said they sought help as soon as they knew they had a problem.

• 41% of consumers polled in the 2024 BC Consumer Debt Study said they waited more than two years before seeking help – a 51% increase since the 2018 BC Consumer Debt Study.
• Most survey respondents (62%) say they waited to seek professional debt help because they wanted to manage debt on their own.
• More than half (54% and 51% respectively) said they waited because they felt ashamed they couldn’t handle the debts they incurred or were embarrassed to ask for help.

Misinformation remains a concerning barrier for individuals dealing with overwhelming debt:

• More than 1 in 4 consumers surveyed (27%) said they delayed seeking help for their debts because they didn’t know where to seek help.
• Nearly a third of individuals polled (32%) said they waited to seek professional debt help because they thought there was no solution to their situation. 

Learn About Debts You Can Include in a Consumer Proposal 

Solving Debt Problems

• Roughly 1 in 3 people surveyed (34%) tried to deal with their debts by applying to extend credit limits on existing debts.
• 26% of consumers said they applied for consolidation financing, while 25% used payday or instalment loans, and 5% asked family or friends to co-sign a consolidation loan (5.2%).
  • 33% of people said they borrowed from family or friends to make debt payments.

Individuals who recently used a legal debt relief process were surveyed for the 2024 BC Consumer Debt Study, with 85% of respondents who ultimately reorganized their debts using a Consumer Proposal, and 15% who sought debt forgiveness through Personal Bankruptcy.  The debt relief option of choice for consumers has changed remarkably in recent years, with Consumer Proposals now far outpacing bankruptcy.

• Over 90% of individuals polled in the 2024 BC Consumer Debt Study expressed satisfaction with their choice to file a Consumer Proposal or Personal Bankruptcy to deal with their debts.

Real Stories – Learn More from BC Consumer Sharing their Personal Stories

Where to Get Safe, Professional Debt Help

Blair Mantin, President of Sands & Associates, the firm of Licensed Insolvency Trustees who perform the debt study series, says that solving a debt problem independently can be nearly impossible for many people, and that unfortunately many consumers become overwhelmed and are unaware of the support available to them.

As Blair explains, BC residents are encouraged to seek support and solutions from a Licensed Insolvency Trustee at the onset of a debt problem, and consumers should know that:

• You can connect directly with a Licensed Insolvency Trustee local to your area to seek free, confidential debt advice and explore all your options for dealing with debt.
  • No referral or payment is necessary to have a free consultation, and there are no pre-qualifiers to meet.
• Consumers should be on guard against debt settlement agents and third-party referral sources that attempt to sell inferior or unregulated debt help services.
  • Licensed Insolvency Trustees are Canada’s only official debt help experts, fully qualified and endorsed to provide guidance on dealing with your debt, and a range of debt management services.
• You don’t need to be facing an extreme financial situation to seek information from a Licensed Insolvency Trustee – anyone can get free, confidential advice about their situation and options.

Sands & Associates believes that open conversations and non-judgmental support are key to removing barriers for people struggling with debt. If you are feeling worried or stressed about your debt, or want to explore debt management solutions and resources, connect directly with a Licensed Insolvency Trustee local to your area for a free confidential consultation.

Sands & Associates is BC’s largest firm of Licensed Insolvency Trustees focused exclusively on non-judgmental debt help for consumers and our full suite of services is available by phone, video, or in person at a local BC office near you.

The post New Debt Study Uncovers How Debt Problems Impact BC Consumers appeared first on Sands & Associates.

Where Your Credit Score Comes From

Your credit score is a constantly changing number (between 300 and 900, with 900 being the best) that is calculated based on your credit history, and you’ll gain or lose points depending on your actions.

• Credit scores are intended to help a lender decide whether they will offer you credit, how risky it may be to do so, and the borrowing terms they will offer you.
• Because Canada’s two credit bureaus have access to different information and use their own formulas to calculate your score, you probably won’t have the same rating with both agencies.

Credit bureaus don’t disclose the exact algorithms they use to calculate your score, but some of the factors from your credit history they use include:

• Payment history: This is the most important factor. Do you pay all your bills on time, every time?
  • Note that ‘non-credit’ accounts such as your cellphone plan and special accounts like your mortgage can provide information to credit bureaus. If you’re keeping your account paid up to date this may not offer you any benefit, but, if left unpaid, these accounts are likely to reflect negatively on your credit history and score.
• Credit usage: How much credit do you have, and what types of accounts? How much of your available credit are you using? Have you gone over your limit?
• Length of history: How established are your accounts?
• Credit seeking: How many ‘hard’ credit checks are noted in your report within the last three years? Have you been seeking a lot of credit in a short period of time?
  • Credit checks are categorized as ‘hard’ or ‘soft’ hits. Hard hits may refer to checks done as you apply for credit, and soft hits may happen when a business wants your report to update a record, or when you ask for a copy of your report.

By having a general idea as to what influences your credit score, you can understand some of the actions that you’ll want to take, and which to try to avoid.

Learn More About Credit Reports (and How and Why to Check Yours)

Common Causes of Low Credit Scores

By understanding that your credit score is largely influenced by your payment history, you can consider why your score might be low. Do any of the following scenarios sound familiar?

• Making payments late, not making the full payment required, or having a payment bounce.
• Going over your borrowing limit.
• Using a high proportion of your available credit, which lenders may view as risky (even when your payments are being made as required).
• Having unpaid accounts passed to collections.
• A lot of credit checks being done, which lenders often interpret as urgent credit seeking.
• Not having enough credit history established, or closing a longstanding account which results in losing the credit history, resulting in too little information for potential lenders to consider your credit use.

Difficulty in managing debts and payments may not be the only cause of a low credit score. On the contrary, steps you may take to keep control of your finances can cause a lower credit score, such as:

• Having minimal credit history, or only having one type of credit account: This means lenders have less credit history to consider in assessing your lendability.
• Closing a credit account you are no longer using: You will lose any positive payment and credit history associated with this account.

Can I Do Anything About my ‘Bad’ Credit?

Any time you don’t pay your debts as agreed your credit score will be impacted in some way, but, if you’ve had trouble with this, know that while positive information for active accounts can be kept on your credit report indefinitely – negative information does expire.

Timing for common ‘negative information’ to expire in BC is as follows, and this can vary depending on the province / territory and credit bureau:

• Late payments and NSFs both show for up to six years from the date reported (even if you pay the past-due balance).
• Collections accounts will be removed six years from the date of your last payment.
• Judgments from court action show for six years as well.
• Bankruptcy is only shown on your credit report temporarily, for just six years after you are discharged (released).
• Credit counselling plans show for two years after your debts included in the plan are paid off.
• A Consumer Proposal will show for only three years from the date you finish it, or six years from the date it was filed (whichever is soonest).

Fortunately, as your credit history is constantly being updated, you have opportunity to take the right steps in establishing a good payment history – the combination of a strong payment history and time are the main keys to a good credit score. People who have trouble making payments, experience debt collections or judgments, and even file for personal bankruptcy can and do move on to establish a fresh credit history sufficient for new mortgages, vehicle financing, credit cards, etc. often within a quicker timeframe than they thought possible.

Consumer Proposal VS. Credit Counselling – Understand the Key Differences

Tips to Improve Your Credit Score

To create a positive payment and credit history that will grow your credit score, aim for the following, and remember to give yourself time:

• Build an account history with consistently positive credit use:
  • Make your full payments as required on time – every single time – even if your account is in dispute.
  • Reach out to your lender right away if you think you’re going to have trouble making your required payment.
• Don’t have too many credit accounts and use less than half (under a third is even better!) of the credit limit you have available on your accounts.
• Limit your hard credit checks to only what is necessary (i.e. rather than applying for many credit products, do deep research and apply only for the products that suit you best).
• Establish a consistent employment history.
• Accumulate some savings.
• Request a copy of your credit report from each credit bureau and check them for errors and fraudulent activity once a year.
  • If you find any errors or fraud, take the steps to have these issues flagged and corrected.

For many people focused on establishing a positive credit history and score, the single best thing you can do is get your debt paid off as soon as possible. Once your debt is cleared you can a) reset your debt-income balance and b) focus on establishing a new, positive credit history that is manageable and not costing you interest.

Consumers should understand there is no way to ‘fast track’ repairing your credit history. Companies that advertise such services are likely a scam, seriously misrepresenting their abilities, or trying to sell you a service or even financing that is unnecessary and/or very expensive. Watch out for anyone who:

• Makes promises or guarantees about what they can do for your credit score.
• Tries to pressure you into purchasing services or high-interest financing.
• Asks for upfront fees for their services, or who wants to charge you a referral or administrative fee to connect you with another professional.

Unqualified Debt Advisors – What Consumers Need to Know

The Number One Way to Improve Your Credit – Focus on Paying Off Your Debt

If your current debt repayment plan would require more than five years for you to pay off your non-mortgage debts, connect with a local Licensed Insolvency Trustee for some free advice.

• You can get professional insights and advice into solutions to help you get debt under control so you can move forward and bring your other financial goals into focus.
• There is no cost to talk confidentially to learn about your options, and no referral required.

How Can a Licensed Insolvency Trustee Help?

Licensed Insolvency Trustees are Canada’s only officially designated professionals dedicated to helping people solve debt problems, and we can support you in this in a few different ways, including (but not limited to):

• Assessing your financial situation and exploring your options to deal with your debt, including refinancing, focused do-it-yourself payment plans, credit counselling, Consumer Proposals and more.
• Helping you understand your rights and remedies with regards to a debt or creditor, as well as resources and legislation that can aid you in your specific situation.
• Working together on a debt solution such as a Consumer Proposal.
  • Formal debt solutions allow many people to get their debts paid off and establish a solid credit score faster than if they were to continue trying to pay down their debt at their current pace. What’s more, you can potentially save thousands of dollars in interest charges.

Pay Off Debt Faster with a Consumer Proposal

A Consumer Proposal for example, can be used to consolidate virtually all your debt (everything from consumer credit cards, payday loans, lines of credit, etc. to government debts like CERB overpayments, tax balances and more) and cut the amount of debt you need to repay down to an amount that is affordable for you.

You’ll have up to five years to pay this reduced balance off, which is often as little as 20% of your balance, with zero interest or added fees. This can offer you advantage in several ways, short and long-term, allowing you to:

• Improve your cashflow and household budget immediately by significantly reducing your debt payment to one consolidated monthly payment that you can afford.
  • With a reduced debt payment, what else could use your financial attention? Savings, retirement, or simply more breathing room to meet your day-to-day living costs?
• Stop ongoing interest charges and/or penalties.
• Ease financial anxiety and debt-stress.
• Gain peace of mind by having a clear plan to pay off your debt and a definite debt-free date.
  • Consider what goals you have – or could have – once you’re debt-free!

In less than an hour a Licensed Insolvency Trustee can help you assess your situation and put together a customized debt-free plan, solutions, and resources to help you better manage your debt so you can move forward with your life. Your debt-free future could be closer than you think!

Take charge of your debt – book your free, non-judgmental debt consultation with a local Sands & Associates debt help expert now.

The post Bad Credit? Here’s What You Can Do appeared first on Sands & Associates.

Having polled over 1,700 participants who recently restructured their debts using a legal debt solution, the 2023 BC Consumer Debt Study offers a unique view into consumer debt issues in the province. Blair Mantin, President of Sands & Associates, the firm of Licensed Insolvency Trustees who undertook the study, joined CTV News to discuss the study’s findings.

Watch the clips here and learn more below:

Recent BC Consumer Debt Problems – by the Numbers

• The 2023 BC Consumer Debt Study’s largest proportion of participants (36%) said they had $25,000-$49,999 of debt (excluding vehicle loans/mortgages) when they started a formal debt relief process.
• Almost 3 in 5 people (58%) said credit card debt was the main type of debt they had, nearly five times higher than the next debt type.
• Close to 1 in 8 individuals (12%) claimed payday or instalment loans was their main type of debt, and tax debt (personal income tax, GST, etc.) took the third spot at 11%.

Credit cards and payday loans can be considered interest-heavy credit, and consumers can easily develop a borrow-repay-borrow cycle that is often impossible to break with interest rapidly accumulating. 

Dos and Don’ts for Credit Cards and Managing Your Credit Card Debt – Read More

What Are Some Common Causes of Personal Debt Problems?

The common causes of debt revealed in the 2023 BC Consumer Debt Study expose the vulnerability of many consumers when it comes to their ability to financially weather personal and economic challenges. Five of the top six common causes of debt as reported by insolvent consumers relate to triggering events or circumstances that are likely beyond an individual’s clear control:

• Just over a quarter of BC consumers polled (27%) said their debt was caused by overextended credit due to general financial mismanagement.
• Closely following, the second-most reported cause of debt for 1 in 4 consumers (25%) was using credit for essential costs of living income could not cover.
• Following these, the remaining top six causes of individuals’ debt were attributed to: Illness, injury, or health-related problems (11%); Marital or relationship breakdown (7%); Job related issue (5%) and Pandemic-related job loss or reduction in work hours (5%).

95% of individuals participating in the 2023 BC Consumer Debt Study said their household has been impacted by recent inflation increases, with the largest proportion (88%) noting inflation has their household now spending more on necessities such as food and gas.

• Half (50%) also say their household is no longer able to accumulate as much savings, leaving consumers further exposed to difficulties in meeting unanticipated financial needs.

There was a bright spot in the findings; however, with over 4 in 5 people (87%) saying their insolvency filing (making a Consumer Proposal or declaring Personal Bankruptcy) has helped them manage day-to-day finances despite noticeable rising costs.

What Happens When You Can’t Pay Your Debt? Learn More

Steep Costs of Unmanageable Debt – Coping with a Debt Problem

Individuals participating in the 2023 BC Consumer Debt Study reported a range of ‘symptoms’ brought on by their unmanageable debt, including:

• 4 in 5 people (83%) said they had a constant worry about debt.
• Nearly 4 in 5 people (79%) said their mental health suffered by being in debt, and 3 in 5 (61%) said their self-esteem suffered because of being in debt. Almost half of respondents (49%) said debt caused their physical health to suffer.
• Over three-quarters of individuals surveyed (77%) said they experienced anxiety from the stress of debt; also 66% feelings of helplessness or hopelessness, and 61% depression.
• Almost 1 in 6 people (16%) said they experienced suicidal ideation because of their debt-stress.

Debt Warning Signs and Delays Seeking Debt Help

Over 7 in 10 people polled (71%) said overwhelming stress was how they knew their debts were becoming a problem – and despite this, more than 96% of survey respondents did not seek professional help right away. 

• Most respondents (64%) said they waited to seek professional debt help because I wanted to manage my debt on my own.
• Further top reasons individuals said they waited to seek professional support were: I felt ashamed I couldn’t handle the debts I had incurred (56%) and I was embarrassed to ask for help (51%).

Other top-identified signs of a debt problem reported by consumers were more transactional:

• Only making minimum payments (60%).
• Seeing debt balances remain almost the same every month, despite making payments (55%).

A lack of visibility around legal debt help resources was also a significant barrier that contributed to individuals postponing seeking professional support, with a third of survey respondents (34%) saying I thought there was no solution to my situation; more than 1 in 4 (27%) I didn’t know where to seek help and 17% I had misinformation about how the Consumer Proposal and/or Bankruptcy process worked.

Debt Forgiveness with Personal Bankruptcy: Step-by-Step

How Did People Attempt to Solve Their Debt Problems?

Despite the significant personal impacts of their debt issues, fewer than 4% of people polled said they sought help right away from a debt help professional, and, in this time, individuals attempted a variety of different tactics to solve their debt problems.

• Many people turned to more borrowing to try to manage their debt, with over a third of survey participants (36%) saying they applied to extend credit limits on existing debts and 34% who borrowed from family or friends to make debt payments.
• More than 1 in 4 individuals (26%) applied for consolidation financing; 25% used payday or instalment loans, and 4% asked family or friends to co-sign a consolidation loan.

Participants in the 2023 BC Consumer Debt Study overwhelmingly used a Consumer Proposal to legally consolidate and cut their debt (81% of study respondents), and over 90% of all individuals surveyed said they were satisfied with their decision to eliminate their debts with an insolvency process.

More people than ever before are choosing to use a Consumer Proposal to consolidate and cut their debt, rather than file for bankruptcy. 

Learn More About Consumer Proposals

Getting Debt Help – Where Consumers Can Get Qualified Support

Blair Mantin, President of Sands & Associates, says that, unfortunately, it can be frustrating and discouraging for consumers who attempt to self-manage their debt for too long, and that overwhelmed consumers are highly vulnerable to inferior, unregulated, and even illegal services sold by debt settlement agents or debt advisors.

• Consumers are encouraged to get impartial and accurate advice from a Licensed Insolvency Trustee at the onset of a debt problem.
  • Licensed Insolvency Trustees are Canada’s only established debt help professionals and are fully regulated, qualified, and endorsed to serve Canadians with a range of debt management services and advice.
  • You do not need to be dealing with an extreme situation to seek support from a Licensed Insolvency Trustee, and consumers can get free, confidential advice at any point.
• Connect directly with a local Licensed Insolvency Trustee to better understand your situation, get accurate information, and explore all possible options in a free, confidential debt consultation.
  • No referral, payments, or third-party agents are necessary. 

Non-judgmental debt support for individuals and a full suite of debt help services is available to you. Connect with a caring local debt expert by phone, video, or in-person – book your free, confidential consultation today.

The post New BC Study Explores Personal Debt Problems in the Province appeared first on Sands & Associates.

Findings from the 2023 BC Consumer Debt Study were released today, presenting a unique exploration of consumer debt issues in the province. The eleventh annual study surveyed over 1,700 people from around the province who recently restructured their debts using a Consumer Proposal, or filed for Bankruptcy, inviting these individuals to share honest personal insights into their experiences dealing with debt, and finding solutions to these difficulties.

Conducted by Sands & Associates, the BC Consumer Debt Study series is the only study of its kind focused on BC and, according to Sands & Associates President and Licensed Insolvency Trustee Blair Mantin, the annual studies offer an opportunity to understand the realities of the financial challenges people across the province face, and the many facets of a debt problem. As Blair explains:

“As Canada’s debt help professionals, we know that when debt is unmanageable it carries impacts to a person that are far beyond account balances or credit scores. People’s mental health, relationships, physical health and more suffer seriously under this burden, and the emotional beating they take often causes them to struggle alone for months and even years.

In our current post-COVID, high inflation environment consumers are constantly facing a barrage of financial challenges and if uncontrollable debt is one of them, we know that things can deteriorate quickly. It is critical for people to have support, know where and how to access it, and have confidence in the resources available to help them resolve a debt problem and move forward with life.”

Click here to read the full 2023 BC Consumer Debt Study report

Click here to view and download the 2023 BC Consumer Debt Study infographic

Consumer Debt Issues in BC – Highlights from the 2023 BC Consumer Debt Study 

The largest proportion of participants in the 2023 BC Consumer Debt Study (36%) said they had $25,000-$49,999 of debt (excluding vehicle loans/mortgages) when they started a formal debt relief process.

• 30% of all study participants described their credit rating as ranging from ‘good’ to ‘excellent’ at the time of making a Consumer Proposal or filing Bankruptcy.
• Close to 3 in 5 people (58%) said credit card debt was the main type of debt they had, almost five times higher than the next debt type.
• Roughly 1 in 8 individuals (12%) claimed payday or instalment loans was their main type of debt, the highest proportion of this type of debt in the BC Consumer Debt Study series history.

Other trends may indicate consumers have become less able to accumulate and maintain a large debt-load, and that the access to Consumer Proposals as a debt management alternative to Bankruptcy has increased substantially:

• 2023’s study had the highest number of participants ever indicating their debt levels were below $25,000 when they started a Consumer Proposal or Bankruptcy, while the number of people who indicated having debt levels of $100,000 or more was the lowest ever.
• The proportion of Consumer Proposal filings (over Bankruptcy) in BC has increased significantly over time. As illustrated by respondents in the BC Consumer Debt Study series, Consumer Proposals as the solution of choice rose from 20% of respondents in 2012’s study, to a whopping 81% of respondents in 2023. 

Behind the Debt: Economic Issues and More

Consumers appear vulnerable to a range of personal and economic issues outside their immediate control that may create financial strain that ultimately develops into a debt problem:

• Just over a quarter of BC consumers polled (27%) said their debt was caused by overextended credit due to general financial mismanagement.
• Closely following, the second-most reported cause of debt from 25% of consumers was using credit for essential costs of living income could not cover.
  • The proportion of individuals attributing their debt to a reliance on credit for living expenses increased from 20% in 2022’s study.
• The remaining top six causes of debt identified by consumers were: Illness, injury or health-related problems (11%); Marital or relationship breakdown (7%); Job related issue (5%) and Pandemic-related job loss or reduction in work hours (5%).

95% of the 2023 BC Consumer Debt Study respondents indicate their household has been impacted by recent inflation increases, with the largest proportion (88%) saying inflation has their household now spending more on necessities such as food and gas. Half (50%) also say their household is no longer able to accumulate as much savings, leaving consumers exposed to future challenges in meeting unexpected financial needs.

Signs and Symptoms of a Debt Problem 

More than 7 in 10 people polled (71%) said overwhelming stress was how they knew their debts were becoming a problem. 

• Other top-identified signs of a debt problem as reported by consumers were: Only making minimum payments (60%); Seeing debt balances remain almost the same every month, despite making payments (55%) and Accumulating more debt on credit accounts (37%). 

Study participants disclosed a range of personal impacts to coping with unmanageable debt, including:

• A constant worry about debt was present for over 4 in 5 people (83%).
• Almost 4 in 5 people (79%) said their mental health suffered by being in debt, and 3 in 5 (61%) said their self-esteem suffered because of being in debt. Nearly half of respondents (49%) said debt caused their physical health to suffer.
• 29% of people polled said the stress of debt caused them to alienate themselves from family or friends, and 30% said their relationships suffered due to debt-stress.
• Over three-quarters of those surveyed (77%) said they experienced anxiety from the stress of debt; also 66% feelings of helplessness or hopelessness, and 61% depression.
• Almost 1 in 6 people (16%) said they experienced suicidal ideation because of their debt-stress. 

Managing a Personal Debt Problem 

Although over 90% of people polled in the 2023 BC Consumer Debt Study said they were ultimately satisfied with their decision to eliminate their debts with an insolvency process, arriving at this positive solution unfortunately often takes an extended time – over 96% of survey respondents did not seek professional help right away. 

• Most respondents (64%) said they waited to seek professional debt help because I wanted to manage my debt on my own.
• Other top reasons individuals waited to seek professional support were: I felt ashamed I couldn’t handle the debts I had incurred (56%) and I was embarrassed to ask for help (51%).
• A lack of public awareness of debt management resources also remains a significant issue, with a third of survey respondents (34%) saying I thought there was no solution to my situation; over 1 in 4 (27%) I didn’t know where to seek help and 17% I had misinformation about how the Consumer Proposal and/or Bankruptcy process worked.

A variety of different tactics were used by BC consumers polled, as individuals attempted to solve their debt problems on their own, often turning to more borrowing as a solution:

• Over a third of survey participants (36% and 34% respectively) said they applied to extend credit limits on existing debts and/or borrowed from family or friends to make debt payments.
• A quarter of individuals (26%) applied for consolidation financing; 25% used payday or instalment loans, and 4% asked family or friends to co-sign a consolidation loan.

Outlooks and Attitudes Improved After Solving Debt Problems

In addition to positive sentiments around their choice of a Consumer Proposal or Bankruptcy to manage their debt, more than 4 in 5 participants (87%) said that filing a Consumer Proposal or declaring Personal Bankruptcy has helped them manage day-to-day finances despite noticeable rising costs.

Individuals polled additionally said their experience receiving professional debt help:

• Improved their budgeting and/or savings skills (69%).
• Has made them more confident in day-to-day financial management (59%).
• Gave them a better understanding about credit and borrowing (54%).

Debt study participants were also invited to share their retrospective advice to others, and to provide words of encouragement to others who may be facing similar struggles. We highly encourage readers to browse these personal insights shared, as highlighted within the 2023 BC Consumer Debt Study report. 

Click here to read the full 2023 BC Consumer Debt Study report

Click here to view and download the 2023 BC Consumer Debt Study infographic

2023 BC Consumer Debt Study infographic

View the BC Consumer Debt Study series here

For further details about BC Consumer Debt Studies or media inquiries contact Sands & Associates President Blair Mantin.

About Sands & Associates and the BC Consumer Debt Study Series

Sands & Associates was founded in 1990 and has grown to become an award-winning leader in the debt help industry, now BC’s largest firm of Licensed Insolvency Trustees focused exclusively on debt services for consumers and small businesses.

Taking a non-judgmental “debt smart with heart” approach to helping individuals deal with a debt problem is the foundation of Sands & Associates’ beliefs, and we feel that understanding the extent of a financial crisis is a crucial step in providing the right solutions and support to people in need.

It is our goal that the BC Consumer Debt Study series will continue to highlight challenges faced by individuals across the province and encourage members of professional and government organizations to take active steps to reach consumers in need early, and with the right support to achieve better outcomes.

Supportive debt relief services and debt restructuring solutions are available for BC residents via telephone, video, and in person at local offices throughout the province. Connect with a qualified local Sands & Associates debt expert today – book your free, non-judgmental debt consultation here.

The post Increasing Number of Consumers Turning to Credit for Costs of Living, with Impacts to Mental Health and More – Latest BC Consumer Debt Study appeared first on Sands & Associates.

Read on to learn about the credit counselling and financial literacy resources available to individuals working with a Licensed Insolvency Trustee on a personalized debt-free plan.

Goals of Financial Counselling Sessions with a Qualified Insolvency Counsellor 

Licensed Insolvency Trustees help people deal with their debt, and if you’ve decided to work with a Licensed Insolvency Trustee on a debt solution like a Consumer Proposal (a special type of debt consolidation) or personal bankruptcy (a legal debt forgiveness solution), you’ll complete two one-on-one financial counselling sessions as part of either insolvency process – and there is no added cost to you for this service.

The “Insolvency Counselling Program” is intended to help people boost their financial literacy, gaining confidence in their ability to manage their personal finances, and provide tools and resources for ongoing future success in money matters. After completing a Consumer Proposal, or exiting personal bankruptcy, people have a financial fresh start and can move forward with their lives – debt-free.

Who is a Qualified Insolvency Counsellor?

The Licensed Insolvency Trustee who is ultimately responsible for your Consumer Proposal, bankruptcy, and related counselling sessions may lead your counselling sessions themself, but most often these private, one-on-one sessions are led by a Qualified Insolvency Counsellor who works closely alongside your Licensed Insolvency Trustee. This is a registered professional financial counsellor who has:

• Successfully completed a practical course for this unique type of counselling.
• Proven to and been registered by your Licensed Insolvency Trustee as possessing the necessary training, experience, knowledge, skills, and competencies to lead insolvency counselling.
• Completed ongoing professional development training every two years.
• Demonstrated that they are of good character.

Quality of care and service is of the utmost importance in these matters, and your Licensed Insolvency Trustee cannot register anyone as a Qualified Insolvency Counsellor who is involved with activities that may be a potential conflict of interest, or could potentially negatively impact the people they are counselling.

4 Questions to Ask When Choosing a Credit Counsellor

Financial Counselling Topics – Stage 1: Budgeting and Planning

Your first confidential counselling session with a Qualified Insolvency Counsellor will usually take place shortly after you file your Consumer Proposal or declare bankruptcy (somewhere between ten and 90 days), and this one-on-one session might be done in-person, or remotely via videoconference (or over the phone).

Budgeting is the focus of this conversation, and the goal here is that you’ll come away with information and support to help you create and maintain a functional household budget realistic for your personal situation.

• A balanced budget is an important financial tool, and every consumer should have one. Budgeting isn’t about restricting what you can and can’t do, it’s about making confident and thoughtful decisions about how you will use your income.
• No two situations are the same, and it’s important to consider and strategize the different components of your budget to find what works best for you and your household.
• In a Consumer Proposal your debt will be combined then cut into one consolidated (usually) monthly payment, (or in a bankruptcy most people pay a minimal administration fee), and this is typically a substantial reduction from the multiple payments you may have previously been trying to manage in your budget.

How Much Debt will a Consumer Proposal Eliminate? Learn More

This first financial counselling session is a great opportunity to work with a professional to fine-tune your new spending and saving plans, and maybe even learn some new tips and best practices. Your Counsellor will plan to review your budget together with you, and offer support such as:

• Mapping out a plan for record-keeping, and how you will track and check-in and evaluate your estimated VS actual income, expenses, and general budgeting in future.
• Developing strategies to adjust your budget, and for managing unexpected changes to your budget or impacts to your income.
• Addressing any other circumstances or financial difficulties you may want extra guidance on or support / resources for.

Financial skills take time for everyone to learn, and there are often some trials and errors along the way. Once you’ve got a solid understanding, you’ll be in that much better a position to make well-informed and confident decisions about money matters that impact you and your family.

Consolidating Debt with a Consumer Proposal: Step-by-Step

• As well as these two credit counselling sessions that are done as part of completing your Consumer Proposal or bankruptcy, there is an optional self-directed online learning program available to help you get the most out of this opportunity for individual learning and support.
• The online modules offer an introduction to the topics that will be covered in depth during these private sessions, and if you’re able to become comfortable with some of these materials before your sessions, you’ll have more time for tailored resources and support with your Counsellor.

Financial Counselling Topics – Stage 2: Goals, Spending and Credit 

Your second one-on-one session with a Qualified Insolvency Counsellor is done at least 30 days after the first, and again may be done in-person, or remotely. While the first session was all about budgeting stages, strategies, and tools, this second session focuses on your future planning and providing you support to continue moving forward with (debt-free!) success.

Your Counsellor will check in with you about how you’re doing with your Consumer Proposal (or bankruptcy), your new budget, and together you’ll review several other key financial literacy topics, which include:

• Financial goal setting
  • Why, and how to set SMART (specific, measurable, achievable, relevant, time-bound) goals.
  • Specific support in creating a plan to achieve these goals.
  • Strategies to help you meet your spending and savings goals.
  • Identifying, avoiding, and mitigating potential financial risks that could get in the way of your future financial success.
• Spending habits
  • Practical ways to prioritize spending, and spending systems.
• Using and managing credit as a tool
  • Best practices for using credit well.
  • Considerations and questions to ask lenders before borrowing.
  • Breaking down and comparing the costs of borrowing.
  • Types of credit that are considered high-risk.
• Understanding credit scores and reports
  • Establishing a responsible credit history and habits.
  • How and when to check your credit history reports.
  • Steps you will want to take after your Consumer Proposal (or bankruptcy) is complete.

A lot of people worry they have no way to get out of debt – or that by working with a Licensed Insolvency Trustee they may compromise their future financial goals or ability to get credit in future, but the reality is that with options like Consumer Proposals, or even bankruptcy, most people are able to get to debt-free much sooner than if they were to continue trying to chip away at their debt on their own.

The financial fresh start of these processes allows individuals a means to take back control of their finances and make the most of their income. Without the constant nag and weight of burdensome debt, not only to personal finances, but wellbeing, there is much more space to look to the future with optimism.

Meet some of the people whose lives have been changed working with Sands & Associates

More About Debt Help Services from BC Licensed Insolvency Trustees 

Getting confidential debt advice from a qualified expert couldn’t be easier – simply reach out and contact a Licensed Insolvency Trustee local to your area. All Licensed Insolvency Trustees offer a free confidential consultation where you’ll have opportunity to better understand your situation and explore ALL your options.

Sands & Associates serves all of BC and offers our full suite of debt help services in person at local offices throughout the province, as well as over the phone or video conferencing.

• Take an hour and talk with a Licensed Insolvency Trustee; we can give you a debt-free plan that works for you and your unique situation, and, as Canada’s only appointed debt help professionals, offer you additional resources and insights you may not otherwise be aware of.
• No referral is necessary to connect with a Licensed Insolvency Trustee. If you are asked to pay any referral fee this should be a warning you are not talking with a Licensed Insolvency Trustee.

You Are Not Alone in Dealing with Debt – We Are Here to Help You 

You do not need to be behind in your debt payments to seek professional debt solutions or use a Consumer Proposal to consolidate your debt. In fact, many people we work with have never missed a payment and hold a good credit rating, but realize that at their current rate of repayment, they will be facing years or decades of debt payments.

If, however, you are dealing with a serious or urgent financial issue such as a creditor who is threatening you with legal action for a debt, or already garnishing your wages, we can work with you to quickly implement a solution that will stop these collections immediately.

Learn More About Wage Garnishment

Some questions or concerns we commonly address include (but are certainly not limited to):

• Debts are generally worrying you, or your household is being negatively impacted by debt.
• Your monthly debt payments aren’t enough to pay off your (non-mortgage) debt within five years.
• Ways to consolidate and/or cut debt.
• What options exist to deal with a specific creditor or whether a debt is collectable?
• How you can get debt relief or forgiveness by your creditors.

You don’t have to try to interpret all your rights and remedies to deal with your debt, a Licensed Insolvency Trustee is your go-to resource, and we provide safe accurate advice and information to consumers every day.

Many people feel embarrassed about their financial situation, or worried about being judged or even scolded about having difficulty managing their debt; please, know that Sands & Associates is a judgment-free zone.

We believe that a money problem can happen to anyone at any time, and that everyone deserves the opportunity for help and a financial fresh start to move forward and live their best life! You owe it to yourself to get debt help, and we are here for you.

Connect with local debt experts who care – book your free, confidential debt consultation with Sands & Associates today.

The post Financial and Credit Counselling with a Qualified Insolvency Counsellor appeared first on Sands & Associates.

What is the Bank of Canada, and What Do They Do?

The Bank of Canada is the country’s central bank; it is a special type of Crown corporation belonging to the federal government that exists “to regulate credit and currency in the best interest of the economic life of the nation” with their primary role being “to promote the economic and financial welfare of Canada”.

Monetary policy is a core Bank of Canada function, and two main instruments used in this are its inflation-control target and the key policy rate:

• Inflation is the persistent rise in average price levels over time, and the Bank of Canada aims to maintain a stable price environment – a low, stable, predictable inflation is their goal. With price stability and low inflation, prices change so slowly there’s no major effect to how people spend, save, or invest.
• The Bank of Canada adjusts its key policy interest rate up or down as needed to achieve its inflation target. Doing so influences financial institutions’ interest rates, borrowing and spending, and pressure on prices.

What Does the Bank of Canada’s Interest Rate Mean for Other Banks?

Financial institutions borrow from each other and can also use the Bank of Canada, and by setting their policy rate the Bank of Canada encourages financial institutions to borrow and lend amongst themselves near the policy interest rate too. What this means is that although the public doesn’t borrow with the Bank of Canada, their policy rate affects interest rates on products such as:

• The prime rate for loans and lines of credit
• Mortgage rates
• Interest on savings and deposits

When the Bank of Canada changes their rate, lenders will generally adjust their prime rates shortly after.

• Prime rate is the annual interest rate our major banks and financial institutions use to set their interest rates for variable credit products, including loans, lines of credit and mortgages with a variable rate.

How Interest Rate Increases Impact Common Consumer Credit Products

Depending on which products (types of debts) you have, and whether your debts have fixed or variable interest rates, the impact of an interest rate increase can vary widely, from very significant to having no impact at all.

• When you have a fixed-rate debt you agree to pay the same interest rate over the course of your repayment term, regardless of shifts in the economic market.
  • One benefit with this type of borrowing is that you’ve got stability in paying the same interest rate (until you need to renew, such as with a mortgage at the end of a set term).
• With variable interest rates, as the prime rate goes up or down, so does the interest you’re being charged on your debt. When you apply for credit with a variable interest rate the lender will offer you an annual interest rate tied to the bank’s prime rate.

Below is a breakdown of different types of common consumer debts, and how they may be impacted (or not) by interest rate changes:

Mortgages

The biggest impact of interest rate increases is likely to be felt by homeowners who are carrying variable interest rate mortgages.

• On a variable rate mortgage, quite simply, most payments will see an increase because of rate hikes. Most banks adjust quite quickly – people might see the impact even by the next month.
• Just a small interest rate hike can be very impactful. For someone with a variable mortgage of 2-3%, even a 1% increase in interest rates can translate up to a 50% increase in the interest being charged on the mortgage.

Conversely, on a fixed rate mortgage, your payments will not increase as you have ‘locked in’ the rate you will be charged over the term of the mortgage. At renewal time however, you can expect that the rates you locked in at previously may no longer be available and your new interest rate upon renewal could be significantly higher.

Can I Get a Mortgage After a Bankruptcy or Consumer Proposal?

Lines of Credit and Home Equity Loans

Most lines of credit (whether secured against your home or not) are offered with a variable rate, which means there is a direct impact of an interest rate increase.

• Higher payments will be required immediately, and this can be very significant – especially if you are financially stretched and are capable of paying just interest only on your line of credit.

Vehicle Financing

Most vehicle loans are structured with a fixed interest rate, meaning that payments wouldn’t change at all.

Although an interest rate hike won’t cause a direct increase on your monthly vehicle financing payment with a fixed interest rate, individuals with vehicle financing should be aware that:

• If you decide to trade-in your vehicle before the end of your financing contract, you may absorb the ‘negative equity’ (i.e., the value of your vehicle, less the amount you still have to pay on the original loan contract).
• New loans applied for following an interest rate hike will most likely have higher interest rates, and as a result will come with an increased cost to borrow.

If you do have a vehicle financing contract with a variable interest rate component, normally a rate-hike will mean extending the time you’ll make payments so that the additional interest rate costs are paid. 

An Overview of ‘Seize or Sue’ and Vehicle Loans in BC – Learn More

Student Loans

If you have a fixed-rate student loan you won’t be impacted with increases in your interest rate or monthly payments, but following increases in prime rates, future student loans can become more expensive.

However, if your student financing is using variable rates, both your interest rate and minimum payments will increase with interest rate hikes.

Are Credit Cards Impacted by Interest Rate Changes?

Most credit card terms are set without regard for prime interest rates and if your only debt is on credit cards then your monthly payment requirements are unlikely to be impacted by an interest rate increase.

With standard credit card interest rates hovering near 20%, the very real danger of interest when it comes to credit card debt is that the interest charged is always expensive, regardless of fluctuations in the Bank of Canada rate.

• If you’re not paying off your credit card in full each month you accrue interest charges – a cost of borrowing – and then only a portion of your payment goes towards paying down the amount you actually charged on the card.
  • In some cases, just $10 of what you pay each month goes to reduce the balance; the remainder covers interest and finance charges that reoccur each month.
  • Check your monthly credit card statement to see a breakdown of how long it will take you to pay off your credit card balance if you only pay the minimum payments each month. The number might surprise you!
• If you miss a payment, you could find your bank raises your credit card interest rate because of the ‘delinquency’. Increases of up to 5-10% are not unheard of.

Dos and Don’ts for Credit Cards and Managing Credit Card Debt

What Can I Do About Rising Interest Rates?

The single biggest and best thing you can do to prevent or mitigate being impacted by interest rate increases is to pay down as much of your debt as possible – and even if you’re mainly carrying debts not likely to be impacted by rate hikes, the sooner you get out of debt the better.

• Calculate your “Rule of 60 Math”: Add up your total (non-mortgage) debt then divide that number by 60.
  • Is that figure a monthly payment you could afford to pay so that you’ll have your debt paid off in five years (60 months)?
  • If that hypothetical payment is not affordable for you, or you think it would be difficult to consistently manage, connect with a Licensed Insolvency Trustee about your options for dealing with debt – especially if you’re already in (or are approaching) a position of being over-extended.
• If you’re a mortgage holder, you may want to research options for locking in your mortgage to a fixed rate. Though often more expensive in the long-term, a fixed rate mortgage can give you certainty for your budget.
  • Be sure to shop around for the best rates and consider using a mortgage broker.
• Proceed with caution if you’re considering restructuring your debts with consolidation loans or balance transfers – it’s important to fully understand the full costs of borrowing before signing any documents.
  • If your credit history has been impacted by an unfavourable debt to income ratio you may find it difficult to qualify for a line of credit or consolidation loan at a low interest rate, or at all.
  • Make sure you can realistically stick to the budget needed to get your debt paid off and are not simply delaying an inevitable cash-crunch.

Learn More About Credit Reports and Scores in Canada

Consolidate and Cut Your Debt – Without Borrowing

Although you might consider a new loan or line of credit, a Consumer Proposal provides a welcome alternative to consolidate your debt without turning to more borrowing and paying interest charges:

• A Consumer Proposal allows you to pay off your consolidated debts without any further interest charges, and your creditors will agree to accept repayment of typically as little as 20-50% of your balance due, in full settlement of your accounts.
  • Virtually all types of debts can be consolidated and reduced with a Consumer Proposal – from credit cards to lines of credit, overdrafts, income tax debt, CERB overpayments, student loans and more.
• Your credit history or credit score are not factors for eligibility, and no co-signer is needed.
• You can pay off a Consumer Proposal early at any time without penalty.

Connect with a local BC Licensed Insolvency Trustee to learn more about Consumer Proposals and explore your options.

Licensed Insolvency Trustee Blair Mantin Talks Interest Rates and Debt Solutions

Sands & Associates President and Licensed Insolvency Trustee Blair Mantin joined Global News and Breakfast Television Vancouver to discuss what Canadian consumers should know about interest rates and debts, including what you can do to deal with problem debt. Watch the clips here:

Sands & Associates’ local office network serves communities across BC, and our full suite of debt help services is available online, by phone, or in-person. Connect today at no cost to discuss your situation and learn about your options.

The post Understanding Interest Rates – and Why They Matter if You Have Debt appeared first on Sands & Associates.

The team of professionals at Sands & Associates is deeply committed to making a positive difference in communities across the province, providing resources, guidance, and expertise in a non-judgmental space and communicating with kindness in a straightforward approach. We believe that everyone deserves to make informed decisions and receive the necessary support to manage their finances confidently.

Our concept of supportive and empowering debt help services has been described as “Debt Smart with Heart” and it is our privilege to provide a safe space for people to talk about their financial challenges and help solve those issues. You owe it to yourself to get debt help – connect with a local Sands & Associates debt expert now.

Learn About Your Options with a Qualified Professional

Licensed Insolvency Trustees are Canada’s only debt help professionals fully qualified and federally endorsed to assist and guide consumers and business owners in assessing all their options to deal with debt, from debt consolidation services to debt relief solutions and more.

By connecting with a Licensed Insolvency Trustee local to your province you can safely get accurate advice about your situation and solutions to deal with your debt and move forward with your life.

• No referral is required to speak confidentially with a Licensed Insolvency Trustee and get advice about your situation, and information about solutions and resources to help you manage your debt.
• All Licensed Insolvency Trustees offer a free one-hour consultation for you to get one-on-one support and answers to your questions.

Many people struggle with asking for help, or don’t know where to turn for support, and we believe that normalizing conversations about debt and money problems is an important piece of taking the shame and stigma away from debt-stress. If you are feeling the strain or stress of debt – know that you are not alone, and that there are solutions.

Meet people who changed their lives working with Sands & Associates and hear their real stories

Who Do Licensed Insolvency Trustees Help?

Your financial situation does not need to be ‘bad’ to qualify for help from a Licensed Insolvency Trustee. Sands & Associates helps people across BC – any BC resident can have a free, confidential consultation to talk about their situation, needs, and get a plan to become debt-free.

Some common situations we help people resolve include, but aren’t limited to:

• You’d like general information about how you can pay off your debt.
• You need guidance about your legal rights or remedies in dealing with a specific debt or creditor.
• You are concerned about escalating collections or legal action by a creditor, such as a wage garnishment or bank account seizure.
• You feel trapped in a debt cycle or can’t make substantial progress in paying down your debt.
• You think you may need debt forgiveness or formal debt relief.
• You’re considering debt consolidation or some type of debt restructuring solution.

If you decide to move forward with a Consumer Proposal or personal bankruptcy, we can work with you throughout these processes, and if you prefer to work on a self-directed plan, we will provide you with information on any additional resources that can help you be successful.

What to Expect at a Debt Consultation with Sands & Associates

Whether you have a specific goal, concern, or general questions – your meeting will focus on reviewing your financial situation together and providing you with all the information you need to make a fully informed decision about a range of options to deal with your debt.

At Sands & Associates our goal is for you to understand the options that are available, assess which feels like the best fit for your situation, and together build your plan to get out of debt. Some of the possible debt management solutions we’ll discuss will include, but are not limited to:

• Focused do-it-yourself approaches such as: budgeting, prioritizing specific debts, utilizing available assets, resources such as BC’s statute of limitations, etc.
• Refinancing solutions and strategies.
• Debt repayment plans offered by credit counsellors and other types of informal debt agents.
• Consolidating and cutting debt with a Consumer Proposal.
• Personal bankruptcy, where full debt forgiveness is appropriate or other options unsuitable.

In under an hour you’ll get a personalized debt-free plan and have a clear outline of your next steps.

Debt doesn’t have to last forever – move forward with a debt-free plan that works for you. Book your free debt consultation today.

The post Office Spotlight: Sands & Associates Prince Rupert appeared first on Sands & Associates.

What is a Credit Report, and How Does it Get Created?

Your credit report is a recap of your credit history, and also contains personal and financial information about you. Your credit report gets created by credit reporting agencies (also called “credit bureaus”) when you apply for credit or borrow money for the first time, and lenders continually send information about your accounts to at least one of two credit bureaus.

Canada has two main credit bureaus, Equifax and TransUnion, and these are private companies that gather and store information from your creditors about your financial experiences in Canada.

• Credit bureaus sell consumer credit reporting information to their members, which may include lenders such as banks, auto leasing companies, retailers, and other financial institutions.
• Lenders, cellphone providers, insurance companies, landlords, some employers (such as where you will be working with finances), and other organizations may ask for your consent to access your credit report. These credit checks are often referred to as either ‘hard hits’ or ‘soft hits’.
  • Hard hits may refer to checks done when you are applying for credit
  • Softs hits may happen when a business requests your report to update a record, or when you request your own credit report

What Information is in my Credit Report?

Your credit report will contain information about your credit accounts, how you use them, and your payment history, which may include:

• Inquiries from credit checks in the last three years
• Credit accounts you use and when you opened the account, including credit cards, lines of credit, loans
• How much you owe and if you have exceeded your credit limit
• Whether you make your payments on time, if you have missed payments, or had NSF payments
• If an account has gone to collections, and registered liens and judgments against you
• Debt management plans such as credit counselling programs, Consumer Proposals or bankruptcy
• If a bank account has been closed “for cause”, such as money owing or fraud by the account holder
• Alerts for identity verification, fraud, and consumer statements

Providers for other ‘non-credit’ accounts like cellphone plans can also provide information to credit bureaus; a mortgage account and payment history may show up on your credit report too, but not always. Unpaid though, these are highly likely to be found in your credit report.

Some of your personal information will also be included in your credit report, such as your:

• Name and date of birth
• Current and previous addresses and phone numbers
• SIN, driver’s license, and passport numbers
• Employment history such as employers and job titles

What’s the Best Way to Consolidate my Debt? Read More Here

What is a Credit Score, and How is it Calculated?

Credit scores are calculated based on information in your credit report and essentially assign a ‘grade’ on how well you use your credit, with the objective of helping lenders decide whether to extend you credit, how risky it is to extend you credit, and the terms (such as interest rates) by which credit may be offered to you.

Your credit score is a rating number that ranges from 300 points to 900 points, with 900 being the best. Because your credit history is constantly being updated, your credit score will change over time – generally it takes 30 to 90 days for your credit report information to be updated:

• You’ll gain points with actions that demonstrate responsible credit use, like making your full payments on time.
• You can lose points by actions that indicate unstable credit use, such as making your payments late.

Your score may not be the same at each credit bureau since they have access to different information and use their own algorithms and ‘weights’ to calculate your credit score. Credit bureaus don’t disclose the exact formulas they use in calculating credit scores, but some of the factors used include:

• The length of your credit history plus your payment history
• How much of your available credit you use
• The number of ‘hard’ credit checks to your report

To add another layer of mystery, despite having a credit score with each credit bureau, lenders use their own criteria to “score” your credit worthiness – so the credit score you have at each bureau is not likely the same rating as what a particular bank or other lender would use.

Is Being Debt-Free Your Top Financial Priority? Learn Why it (Almost Always) Should Be

Common Credit Ratings

When lenders send information to credit bureaus, they use codes. The codes have a letter to indicate the type of credit, and a number to indicate when you made your payment. You might see these ratings in your credit report:

• R: Revolving credit (such as a credit card)
• O: Open status credit (a cellphone account for example)
• I: Instalment credit (like a vehicle loan)
• M: Mortgage loans
• The numbers range from 0 (too new to rate) to 9 (written off as a “bad debt” / sent to collections / bankruptcy); having a rating of “1” is the best. For example:
  • If you make your credit card payments as due the account would be rated “R1”.
  • If your credit card account has been sent to collection agents, the account would be rated “R9”.

Do’s and Don’ts for Credit Cards and Managing Your Credit Card Debt

How Often Should I Check my Credit Report?

It’s a good idea to check your credit report (from each bureau) yourself once a year so you can spot issues such as:

• Mistakes in your personal information (i.e., spelling of your name, address, date of birth, etc.)
• Errors related to your accounts and payment history
• Accounts that you do not recognize – this could indicate identity theft, or a mistaken identity, such as where account information for someone with a similar name has ended up on your report.

You may have to pay to access your credit reports online, and to see your credit score – this is generally unnecessary. If you want to save the money, you can make a request to get a free copy of your credit report mailed to you.

• Visit the websites of Equifax and TransUnion to access and download forms to request your free copies; there are options to order online, by mail, by phone, or in person.

If you find errors in your credit reports, you should follow each credit bureau’s process to have them corrected. You can also dispute information you think is incorrect and ask the credit bureau to add a consumer statement written by you, to provide an explanation and more detail about items on your report.

Don’t Use Your Credit Score to Gauge Financial Health

Credit scores were originally designed as a tool to be used by banks, and some information about how scores and reports work is proprietary, meaning it is not disclosed to the public.

A credit score alone is almost never going to be an accurate measure of your finances, for example: Your credit score can be high if you keep your accounts in good standing by making your minimum monthly payments, even if behind the scenes you are caught in a ‘borrow-repay-borrow’ cycle.

Instead of relying on how credit bureaus score you and what potential creditors might think, consider how well you’re managing your credit accounts and debts as they impact you and your daily life, such as:

• Do you have a budget that balances and allows you to accumulate savings?
• Are you constantly using credit cards to cover day-to-day expenses you don’t have the cash for?
• Have you been stressed about your debts, or worried about managing all your payments?
• Are you on track with debt repayment that will get you to debt-free in the next five years?

And if you suspect you may have a debt problem – you likely do! A Licensed Insolvency Trustee can help you to understand your situation and explore all your options to deal with your debt and move forward.

Get friendly expert advice and a personalized plan to be debt-free. Book your free debt consultation with Sands & Associates today – online and in-person appointments are available across BC.

The post Understanding Credit Reports and Scores in Canada (Plus When, Why and How to Check Them) appeared first on Sands & Associates.

Findings from the 2022 BC Consumer Debt Study were released today, offering a unique and frank view of consumer debt issues British Columbians face. Conducted by Sands & Associates, over 1,400 individuals from around the province who recently declared bankruptcy or restructured their debts using a Consumer Proposal consolidation plan participated in the study, sharing detailed personal insights into their first-hand experiences dealing with – and ultimately resolving – problem debt.

The tenth in the annual series and only study of its kind specifically focused on BC, according to Sands & Associates President and Licensed Insolvency Trustee Blair Mantin, the study series sheds much-needed light on the realities that money pressures present. As Blair explains:

“Inflation, housing, the global coronavirus pandemic – those are just a few recent widespread issues that can translate into debt for many consumers, on top of common financial pressure events such as a marital breakdown or illness. It’s not one specific group being impacted either, from those early in their careers to seniors well into retirement and everyone in between – debt often appears as a tool to lean on, then turns into a serious issue with a desperate borrow-repay-borrow cycle. Being in debt deeply affects people; we see you, we hear you.

A debt problem can escalate dramatically, and we know as debt help professionals it’s a problem that has well defined solutions. But for the individual struggling, overwhelmed, ashamed – they don’t have the benefit of these insights. And this is part of why this study series is so important. If you’re dealing with a debt problem you’re not alone, and, beyond any account balances, most of all you owe it to yourself to get help when you need it.”

Click here to read the full 2022 BC Consumer Debt Study report

Click here to view and download the 2022 BC Consumer Debt Study infographic

Consumer Debt Issues in BC – Highlights from the 2022 BC Consumer Debt Study

The 2022 BC Consumer Debt Study’s largest proportion of participants (34%) said they had $25,000-$49,999 of debt (excluding vehicle loans/mortgages) at the time they started a formal debt relief process.

• Roughly 30% of all study participants described their credit rating at this time as ranging from ‘good’ to ‘excellent’.
• Almost 3 in 5 individuals (59%) said credit card debt was the main type of debt they had – nearly 6 times higher than the next most common type of debt.
• Payday or instalment loans were reported as the main type of debt for 11% of respondents, making this the second-most common type of debt reported by survey participants for the first time in this study’s history.
• Tax debt and line of credit debt were each cited as the main type of debt for 9% of participants.

Although credit card debt continues to dominate as the most-reported type of debt, the recent increase in payday or instalment loan use is notable: payday or instalment loans were indicated as the main type of debt held by just 5% of 2019 BC Consumer Debt Study respondents, compared with 11% in this year’s study.

Behind the Debt

Uncovering the common causes of accumulated debt reveals much about the difficulties that participants in the 2022 BC Consumer Debt Study faced, particularly as we note that 4 of 5 most reported causes of debt relate to triggering events or circumstances that would generally fall outside an individual’s explicit control:

• 1 in 5 people (20%) polled said the direct main cause of their debt was using credit for essential costs of living income could not cover, while 1 in 4 (28%) said their debt was caused by overextended credit due to general financial mismanagement.
• Following these, causes of debt were attributed to: Illness, injury or health-related problems (10%); Marital or relationship breakdown (8%); Job-related issues (6%).

Although the 2022 BC Consumer Debt Study found the lowest proportion of survey participants who, following pre-pandemic trends, connect the main cause of their debt to job issues alone, a total of 6% of respondents did identify job or business disruptions due to COVID-19 as the direct main cause of their debt. The effects of the COVID-19 pandemic warrant continued observation, as the impacts are likely to continue to be felt by consumers and businesses for years to come.

The Cost of Debt – More Than Just Financial

The emotional toll of debt was the number one sign of a debt problem as reported by consumers in the 2022 BC Consumer Debt Study:

• Almost 7 in 10 people (69%) said overwhelming stress was how they knew their debts were becoming a problem.
• Other signs of debt trouble reported most by survey participants were: only making minimum payments, as reported by almost 6 in 10 people (58%); seeing debt balances remain almost the same every month, despite making payments (53%); accumulating more debt on credit accounts (36%).

Carrying burdensome debt came at a high cost, felt far beyond account balances by most individuals polled. Study participants detailed a range of effects from dealing with debt, including:

• Close to 4 in 5 people (79%) said their mental health suffered being in debt; 63% said their self-esteem suffered as a result, and 47% that debt affected their physical health.
• Over 4 in 5 (82%) said they felt constant worry about debt; 3 in 4 (76%) had anxiety from the stress of debt; 66% feelings of helplessness and/or hopelessness; 60% depression.
• Roughly 1 in 7 people said debt-stress resulted in them experiencing thoughts or contemplation of suicide.

Many people polled also reported effects from debt on their personal milestones and important relationships:

• 30% of survey participants said they had to put life events on hold.
• 30% said their relationships suffered and 29% said debt-stress caused them to alienate themselves from family or friends; 25% said it caused arguments with their spouse or partner about money.

Dealing With Debt

Notwithstanding the significant impacts of debt on survey respondents’ daily lives, reaching out for help was often made more difficult by emotional barriers and a damaging lack of information about options for resolving problem debt. The result is that only 5% of people suffering with a debt burden said they sought help right away from a debt professional.

In addition to wanting to manage my debt on my own (reported by 65% of study respondents) common reasons that caused participants to wait to seek professional debt help sadly included:

• Feeling ashamed I couldn’t handle the debts I had incurred (55%), embarrassed to ask for help (51%), and worried about being judged (40%).
• Over 1 in 4 people (28%) said they didn’t know where to seek help, and 15% had misinformation about how legal debt relief processes worked.

Many survey participants attempted to resolve their debt problems on their own before turning to legal resources, often looking to access more credit as a solution to deal with debt, including:

• A third of individuals polled (33%) tried applying to extend credit limits on existing debts.
• 29% borrowed from family or friends to make debt payments.
• 27% applied for consolidation financing; 6% asked family or friends to co-sign a consolidation loan.
• 23% used payday or instalment loans.

Improved Financial Outlook

The individuals surveyed in the 2022 BC Consumer Debt Study ultimately chose to manage their debts through a formal debt solution (Consumer Proposal consolidation or bankruptcy), and over 90% said they were satisfied, if not extremely satisfied by their choice.

Survey participants expressed notably positive sentiments about their decision and some of the key outcomes from their experience included:

• More than 7 in 10 people (73%) said their experience receiving professional debt help allowed them to improve their budgeting and/or savings skills, and 57% reported being more confident in day-to-day financial management as a result of their experience.
• 53% said they have a better understanding about credit and borrowing.
• 39% also say they are more open in discussing finances and general money matters with others.

Participants of the 2022 BC Consumer Debt Study were also invited to share their retrospective advice, and words of encouragement to others who may be struggling with debt – and we encourage readers to learn more through these deeply personal insights offered, as highlighted within the 2022 BC Consumer Debt Study report.

Click here to read the full 2022 BC Consumer Debt Study report

Click here to view and download the 2022 BC Consumer Debt Study infographic

2022 BC Consumer Debt Study infographic

View the BC Consumer Debt Study series here

For further details about BC Consumer Debt Studies or media inquiries contact Sands & Associates President Blair Mantin

About Sands & Associates and BC Consumer Debt Studies

Since founding in 1990 Sands & Associates has grown to become an award-winning industry leader, now BC’s largest firm of Licensed Insolvency Trustees focused exclusively on debt help services for consumers and small businesses across the province.

Sands & Associates is committed to delivering empowering and non-judgmental support to British Columbians, through our media and financial literacy initiatives and one-on-one consultations. We are proud to be described as having a “Debt Smart with Heart” approach and when it comes to getting debt help, we believe you owe it to yourself. Everyone is entitled to live with dignity, without the overwhelming stress of debt.

Our debt help services are available in person at local offices throughout BC, or remotely by video and telephone conferencing. Connect with a Sands & Associates BC debt help expert today – book your free non-judgmental debt consultation now.

The post Does Debt Impact Mental Health? Latest BC Consumer Debt Study Says Emotional Burden Can Be Substantial appeared first on Sands & Associates.

President of Sands & Associates and BC Licensed Insolvency Trustee Blair Mantin joined Global News BC to address some frequently asked questions about managing debt and share information consumers should know when dealing with some common types of personal debt.

Watch the clip here, and read on to learn the answers to some common personal debt questions, with debt expert insights to help you meet your debt-free goals:

Frequently Asked Questions About Personal Debt 

Every day Licensed Insolvency Trustees connect with people seeking information about debt who may be facing a variety of financial challenges and concerns – from urgent situations with wage garnishments, to looking for ways to streamline debts and make monthly payments more affordable. Here are answers to questions that are among the most common:

“Am I responsible for my spouse’s debt?”

The short answer is – no! You’re not personally responsible for repaying the debts of your spouse or partner simply by being related, married, living together or even their death. It is a common misconception, but rather than through marriage, responsibility for ‘spousal debt’ may be triggered by:

• Debts being deemed as ‘family debt’ under BC’s Family Law Act following separation or divorce, or
• Co-signing or co-borrowing on debts together.

This conversation often leads to an insight that many Licensed Insolvency Trustees wish was better understood by people: Co-signing debt with anyone is usually riskier than you think – so much so that we almost never recommend it.

• Besides adding layers of emotional stress to your finances, by co-signing or co-borrowing with someone (related or not), you become equally responsible for paying back 100% – not half, of the full balance due if the other party does not pay.

What You Should Know About Co-Signing Debts – Learn More

“Do unpaid debts expire eventually?”

In BC there is a Limitation Act, under which the length of time a creditor has to sue you for a debt owing is capped with a two-year basic liability limitation period. You technically will owe the debt, and creditors can continue to call you or report delinquent accounts to credit bureaus for some years to come, but the creditor cannot take legal action against you if it’s been two years since:

• The date the unsecured debt was incurred; or
• The date of your last payment on the debt; or
• The last written acknowledgement of the debt by the person who owes the money (yes, emails count).

It’s important to know certain things can ‘reset’ the clock, and there are exceptions; judgments, child support and debts owed to government bodies are examples of debts not covered.

But – there is another fact people often don’t (but should!) know about debt: There are options to restructure and get forgiveness for government debts – including Canada Revenue Agency balances for taxes, business GST, federal and provincial student loans, CERB overpayment, ICBC debts and more.

• Canada has two solutions for relief and even 100% forgiveness of consumer and government debts: a Consumer Proposal (a legal non-borrowing debt consolidation option) or personal bankruptcy.
• These also stop Canada Revenue Agency from wage garnishments, account freezes and putting a lien on your property.

Debt Solutions for Having Government Debts Forgiven – Learn More

“What can I do to deal with my debt without impacting my credit score?”

Virtually every debt strategy can have some effect to your credit history and score, but simply carrying a bunch of debt can affect your credit score too. Any time you don’t pay your debts off in full in a timely way and according to the original lending agreement, your credit history may be impacted. For example:

• Making only minimum monthly payments on your credit card will keep it up to date (good of course), but it takes a long time to clear debt this way and depending on your balance this could cause you to have a score continually impacted by a high credit utilization rate.
• New credit applications (such as from seeking consolidation financing) result in a ‘hard hit’ that temporarily affect your credit score.
• If you pay off any debts using a credit counselling plan this will be reflected on your credit history for two years; three if you consolidated and cut your debt with a Consumer Proposal; six if you file for bankruptcy (which can result in full debt forgiveness for all your debts).

The anxiety of credit score VS paying down your debt is real. For people concerned both about how to maintain your credit score and pay down debt, it’s helpful to understand that:

• Even if you maintain a ‘good’ credit score, without a major asset, high income, and/or a co-signer, it can be difficult (if not impossible) to get more credit such as a consolidation loan at a ‘best rate’.
• By addressing your debt, you will be doing more for your credit score and yourself; scores are always changing, and you can productively change your score in a relatively short period.
• The sooner your debts are paid off, the faster you can benefit from (often dramatic) improvements to finances. Imagine how different things would be in your household without the burden of debt!

How to Better Manage Credit and Debt, and Mistakes Not to Make – Learn More

What the Experts Want You to Know About Dealing with Debt 

There’s a lot to know about debt and debt strategies, but two things many debt experts (and certainly Sands & Associates’ Licensed Insolvency Trustees) would agree we wish people knew are:

1. You do not have to pay to get honest professional debt advice

Bring your questions to a Licensed Insolvency Trustee and get advice before you make moves in dealing with your debt. You want to be certain you get complete and accurate information from a qualified professional. At Sands & Associates consultations are confidential, without judgment – and always free.

2. A debt problem can happen to anyone at any time, despite “doing all the right things”

You do deserve support, and to be treated with dignity and respect. You are not alone, we are here to help you move forward with your life.

As Licensed Insolvency Trustees one of the main services we provide to people is helping them better understand their personal debt situation, and all their options for dealing with debt. We’ve outlined just a few common questions here, but everyone’s situation is unique and you should never be afraid to seek support from a Licensed Insolvency Trustee so you can make informed decisions about how to move forward.

Sands & Associates is here for you with support and solutions. Get advice from experts who care, and a plan to be debt-free – book your free confidential debt consultation today.

The post Learn the Answers to Top FAQs Debt Experts Hear appeared first on Sands & Associates.