Tips to Manage Rising Consumer Costs 

Increases in essential costs of living aren’t a new foe for British Columbians, with day-to-day expenses from rent to groceries to gas having noticeably risen in recent years. Although most people can’t substantially cut their living expenses, there are some things you can try to gain some financial breathing room.

Prioritize Your Household Budget

A monthly personal budget that’s balanced to your specific situation and goals is a cornerstone of having control of your finances. Whether you already have a budget, or you are putting one together for the first time, create a budget to plan:

• Anticipated regular income
  • If your income varies use your lower earnings as an estimate, and don’t bank on irregular cash injections such as tax refunds.
• Fixed expenses such as rent and vehicle payments
• Categorizing and managing monthly variable expenses like groceries and personal spending
  • Be sure to budget a monthly allowance to cover irregular expenses, such as annual insurance renewals.

Once your new budget is decided, track your actual income and spending to see whether adjustments should be made to get your budget plans and financial realities in-line. Also pay extra attention to your personal spending habits, and related emotional drivers. For example, you may want to unsubscribe from retailer emails that compel you to spend more simply because there’s a sale you don’t want to miss out on.

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Reconsider Your Non-Essential Costs 

Beyond your grocery cart, scrutinize expenses you have control over, and reconsider whether you will continue spending money on non-essentials you may decide no longer make the cut. Costs to evaluate might include:

• Tiers for services such as TV and digital streaming, shopping and app subscriptions
• Banking costs, including credit card fees, interest rates, and balance protection insurances
  • There are many options for free banking, and no-fee credit cards.
  • Depending on your circumstances, it may not be worth having balance protection insurance, as premiums are based on your balance and in many cases the coverage does little to reduce your balance.

Debunking Common Consumer Debt Myths – Learn More

It’s important to remember that budgeting is intended to be a tool used to your benefit, not a punishment – and deciding on your spending priorities, needs and wants, are important components that everyone should consider, regardless of income levels.

Book Your Free Consultation

Tips for Future and Emergency Financial Planning 

After weathering a global pandemic and aggressive inflation, many consumers are feeling weary about what they can do to future-plan. While we can’t control all the external influences, taking charge of what is within your power can help you mitigate unforeseen challenges that may come.

Keep Your Income Taxes Filed (and Paid) Up-To-Date

Even if you don’t expect to owe, it’s in your best interest to keep paperwork and personal tax filings up to date (and clear any balance payable as soon as possible). For example:

• Many government credits and benefits rely on Canada Revenue Agency (CRA) information
• Your Notice of Assessment from CRA is often the best way to easily prove your income for housing applications

Learn About Tax and Canada Revenue Agency Debt Forgiveness

Focus on Becoming Debt-Free

Paying down your personal debt is one of the most positive ways to improve your finances – and taking debt-stress out of the equation is doubly good for your wellbeing. Depending on your situation, you may consider strategies such as:

• Restructuring your debt, such as with a balance transfer or debt consolidation (consumers do also have options to consolidate without borrowing)
• If you’re stuck just making minimum payments on your debts each month, carefully review your account statements to understand if you are truly making progress. Sometimes as little as $10 from a $200 monthly payment actually goes to reduce the principal, the rest is eaten up by interest or fees
  • Making just minimum payments on even a $5,000 credit card debt can be a decades-long repayment plan.
• If you’re making only (or not much more than) minimum monthly payments on your debt and/or it will take you more than five years to pay off your non-mortgage debts, understand these are indicators that your personal debt situation is risky, and you may benefit from getting information and support from a Licensed Insolvency Trustee.

Do the “Rule of 60” Math

• Divide your total non-mortgage debts by 60 – does the number look like a monthly payment you could afford in order to pay your debts off in five years? If that five-year figure barely fits your budget (or doesn’t fit at all) then you can likely assume you will need a solution that will cut your debt.

Take 30 minutes to talk with a local Licensed Insolvency Trustee about your options and resources to help you get your debt paid off. Many consumers are surprised to learn about the solutions available to them, like a Consumer Proposal that both consolidates and reduces your debts, and it’s free to have a confidential consultation and get advice from a qualified professional.

Know that you are not alone – BC Licensed Insolvency Trustees are here to offer you resources and support. You can live free from debt and its overwhelming stress. Connect with a caring, non-judgmental Sands & Associates debt expert today to talk about your debt-free plan.

Book Your Free Consultation

The post How to Manage Personal Debt and Finances Through Economic Instability appeared first on Sands & Associates.

• Every day we provide debt advice and guidance to consumers with a range of needs, and a common thread is that “knowing is not owing” – people need to have the facts so they can make informed decisions about their unique situation.
• Even if you don’t consider your debt a problem, it’s important to understand your rights and responsibilities – owing money is stressful, there are many ins and outs when it comes to debt, and unfortunately what you don’t know can hurt you financially.

Read on as we break down 10 of the most common consumer debt myths and misconceptions. 

Myths About Debt You Owe

Myth: Creditors Can Always Sue You Over a Debt Owed

Fact: Canadian law sets out a statute of limitations on debt.

In BC, the Limitations Act caps 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 two years or more since 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.

Myth: Co-signing Debt Makes You Responsible for Half

Fact: By co-signing a debt, you become equally responsible for repaying 100% of the unpaid balance to the lender.

When you co-sign a debt, if the original borrower doesn’t 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 – not half. This type of liability is known as ‘joint and several’.

• Read your applications and lending agreements carefully to understand the terms of borrowing and who is responsible for what – these can change depending on the lender and whether they are considering an application/account for “additional cardholders” or “co-borrowers/co-applicants.” Always check the fine print!

Myth: Marrying Someone Makes You Responsible for Paying Their Debt

Fact: One spouse is not responsible for repaying the debts of the other spouse solely by virtue of marriage or cohabitation.

You are responsible for repaying debts you’ve 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 “marry into” a debt.

Am I Responsible for my Spouse’s Debts? Learn More

Myth: You Should Always Buy Insurance Protection

Fact: Credit card balance protection insurance often isn’t “worth” its cost.

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 – one of these Licensed Insolvency Trustees often caution against is ‘balance protection insurance’.

• Even if you don’t 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%.
• The other issue is that in most instances where you’d 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 – but very little of these payments will reduce the balance you owe on the card.

Myth: Incorporating Your Business Fully Protects Owners Personally

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.

This personal liability can include debts such as:

• Wages; GST and payroll remittances
• Debts you have signed a personal guarantee for

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 protecting their personal assets and liabilities if they incorporate their business.

Myths About Managing Debt

Myth: There’s No Forgiveness or Renegotiation Option for Government Debts

Fact: You can have government debts reduced and cleared by filing a Consumer Proposal (or forgiven through bankruptcy).

A Consumer Proposal is a legal debt consolidation remedy 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. Government debts like taxes, business GST, student loans, benefit overpayments and more – 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.

Myth: Minimum Payments on Credit Cards are Enough

Fact: Making just minimum monthly payments may keep your account in good standing, but it’s not enough to get debt paid off without incurring considerable interest costs.

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 – and avoidable –  interest charges.

• 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.
• If you can only afford minimum payments each month, you very likely have a debt problem and should talk with a Licensed Insolvency Trustee as soon as possible.

Compare Your Debt Options

Enter your total amount of debt (excluding mortgage and car loan) and we’ll show you a list of options.

Myth: Your Credit Score is a Reliable Indicator of ‘Financial Health’

Fact: A credit score is essentially a numeric rating used by lenders to determine whether they will loan money, and at what cost.

Part of the problem with taking a ‘good’ 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.

Myth: Debt Consolidation Must be Done by Borrowing

Fact: You can consolidate your debt without borrowing or interest by making a Consumer Proposal.

Many people considering how to manage their debts believe their options amount to consolidation loans, credit counselling programs, or bankruptcy – but these are not your only options!

• Consumer Proposals are an effective debt solution that allows you to consolidate your debts, repaying what you can afford, with the unpaid balance being forgiven by your creditors.
• 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).

Myth: Canada has Government-Sponsored Debt Relief Programs

Fact: The Canadian government does not offer grants or programs for personal debt repayment other than the options provided by a Licensed Insolvency Trustee.

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’s designated debt help professionals – Licensed Insolvency Trustees – namely Consumer Proposals (to consolidate and cut debt) and bankruptcy (to get debt forgiveness), as well as some student loan relief administered through Canada Student Loans.

Get Information and Advice About Your Debt and Debt Options 

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 – you don’t need a referral to talk confidentially with us.

• Sands & 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.
• 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! 

Get solutions, support, and a debt-free plan that’s right for you.

The post Debunking Common Consumer Debt Myths appeared first on Sands & Associates.

What Professionals Offer Consumer Debt Management Services in Canada?

There are two types of debt help professionals in Canada: Licensed Insolvency Trustees and informal debt service providers, who may use many different titles.

• Titles like credit counsellor, debt advisor, or debt consultant are not regulated ‘professionals’ and anyone can use these names to purport to offer debt management and related services.

Licensed Insolvency Trustees: Established as Canada’s only official debt help professionals and the people who can administer legal solutions that allow you to have some, or all your debts forgiven.

• Common debt solutions and relief Licensed Insolvency Trustees provide to individuals include Consumer Proposals (a specialized type of non-borrowing consolidation where you can consolidate and cut your debt without interest or added fees), and personal bankruptcy for full debt forgiveness.
• With a Consumer Proposal you can avoid both bankruptcy and more borrowing – and:
  • Consolidate and cut virtually all types of debt, from credit cards to tax debt, CERB overpayments to payday loans, overdrafts, student loans and more.
  • Offer to repay what you can afford (often as little as 20-50% of your total balance) over a period up to five years, and creditors will agree to forgive the unpaid balance so you can move on with your life.
  • Pay no further interest, consolidation costs, or professional fees.
  • Legally protect your assets and stop creditors from pursuing you for payments (including garnishments and seizures by even government creditors such as Canada Revenue Agency).

Consumer Proposals are an advantageous debt solution of choice for people who may have previously considered filing for bankruptcy, or are looking at costly consolidation loans to manage their debt.

Credit Counsellors: May offer different types of debt help services through for-profit and non-profit organizations.

• Although they may include free education as part of their offerings and resources, credit counsellors charge for their debt management services (such as monthly debt repayment plans) and these costs may include: Fees for initial set-up, monthly maintenance, application, membership, and more.
• You may need to pay fees even if creditors refuse to negotiate or make a deal with you through your credit counsellor.

Debt Consultants: These agents may operate in a few ways, one by offering debt settlement services like a credit counselling repayment plan, another is by acting as an agent for a person who wants to work with a Licensed Insolvency Trustee on a Consumer Proposal.

• Some credit counsellors and debt consultants may say they are certified by an accreditation body, but there is no certification body in the debt advisory sector that is widely recognized or reputable.
• Agents may hold a business registration and pay license fees to operate as a debt repayment agency, but this is not the same as being part of a fully regulated profession.

Insolvency filings across the country are on the rise as consumers face a slew of financial challenges contributing to problem debt. At the same time, the Government of Canada has published observations about debt advisor services, flagging specific concerns about the risks unregulated advisors pose, especially where consumers are looking for Consumer Proposals and bankruptcy relief.

Should I Work with a Debt Settlement Agent or Credit Counsellor? What’s the Difference?

Misleading Debt Services Being Sold to Consumers

Over the years consumers have endured predatory unlicensed debt services such as scammy companies operating US-based debt pooling, shady agents charging huge upfront fees without results, misleading quick-repair credit rebuilding services and more. Unfortunately, official efforts to curb these issues take time to have an impact and sadly, many consumers suffer the adverse effects before then.

Issues that have recently caught the Federal Government’s eye involve the debt advisory marketplace, and its impact in the insolvency system. There are several concerns within the industry, including consumers being sold and charged for what may be dishonest and less than transparent services, including:

• Being referred to a Licensed Insolvency Trustee (“LIT”) by a third-party agent.
• Insolvency advisory.
• Consumer Proposal exit loans.
• Insolvency filing insurance.

Consumers do not need a third party’s services to safely access impartial advice and solutions through a Licensed Insolvency Trustee. If you hire another advisor for services related to your Consumer Proposal or bankruptcy, understand these are completely unnecessary add-on services, and offered by agents who are not qualified to administer the Consumer Proposal or bankruptcy for you. 

Consumer Proposals are not loans and require no insuring, they are a legal type of debt consolidation solution only a Licensed Insolvency Trustee can administer for you. If you are offered or encouraged to use any type of financing to complete a Consumer Proposal, understand this is not only unnecessary, but counter-productive to cost advantages of a Consumer Proposal (namely, consolidation without borrowing or interest and stopping previous interest charges from accumulating).

Am I Working with a Licensed Insolvency Trustee?

The best thing to do is simply ask “Are you a Licensed Insolvency Trustee?”. You can also use the Government of Canada’s “find an active Licensed Insolvency Trustee” directory, and if you’re located in British Columbia, Sands & Associates can help you.

• It is against the law for an agent to say they can manage a Consumer Proposal (or bankruptcy) for you unless they are a Licensed Insolvency Trustee.

If you’re looking for debt help online, be aware that advertising can be misleading – ‘government approved’ ‘licensed’ and ‘fast credit repair’ are all examples of this. Beyond options a Licensed Insolvency Trustee offers, there is no government debt ‘program’, and ‘quick credit repair’ simply doesn’t exist.

• A Consumer Proposal (or bankruptcy) can ONLY be filed through working with a Licensed Insolvency Trustee, and, as noted – you do not need any sort of referral to connect with a Licensed Insolvency Trustee to explore or start the process.
  • If you’ve been advised against a Consumer Proposal by anyone other than a Licensed Insolvency Trustee, you should get a second opinion from a Licensed Insolvency Trustee.
• Your credit rating is related to your credit history, and building a credit history that demonstrates responsible credit use simply takes time and careful habits, such as:
  • Paying all your bills on time.
  • Keeping credit balances under 50% of your total credit limit.
  • Having a consistent employment history.

Understanding Credit Reports and Scores in Canada – Learn More

Recap – Key Takeaways for Consumers Seeking Qualified Debt Advice

1. Most creditor counsellors and all Licensed Insolvency Trustees will offer you a free consultation to help you come up with a plan to manage your debts – but it’s essential to understand:

If you choose to take advice from or work with any sort of debt help professional other than a Licensed Insolvency Trustee, there are considerable gaps in regulations and consumer protection.

• In BC some provincial guidelines exist around people who charge a fee to negotiate with a creditor on your behalf, but, legally, anyone can provide debt management advice services, and there is no federal authority regulating people calling themselves credit counsellors, debt agents and the like.
• Credit counselling organizations are heavily bank-funded, and some may promote their plans over other options you have, as they make money from creditors, usually a flat percentage commission of the debt they recover. Remember: Non-profit does not mean a charity, and it doesn’t speak to quality or reputation either.

2. No referral is required to talk with a Licensed Insolvency Trustee and receive qualified free, confidential advice about your situation and all your options. It is highly recommended that you connect directly with a Licensed Insolvency Trustee local to your province.

• Licensed Insolvency Trustees are professionals who provide specialized debt support and debt management services under the authority of federal regulations and legislation, operating without the limitations of credit counsellors and other debt agents.

Dealing with a debt problem can feel overwhelming, but you are not alone. Whether you are interested in consolidating and cutting debt with a Consumer Proposal, debt relief through personal bankruptcy, or aren’t sure what options are available to you – you can turn to a Licensed Insolvency Trustee for support and virtually all debt-related questions and concerns. 

• We will walk you through all options to address your debts including (but not limited to): various repayment and consolidation strategies, supportive resources, credit counselling programs, Consumer Proposals, and bankruptcy.

Sands & Associates’ full suite of debt advice and debt help services is available to consumers at local offices throughout BC, as well as over the phone, or online video – whatever is most comfortable and convenient for you.

Talk with a local debt expert and get a personalized debt-free plan that’s right for you. Book your free, confidential debt consultation today.

The post Unqualified Debt Advisors – What Consumers Need to Know 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.

Watch the clip here, and read more below:

What is a Reasonable Amount of Personal Debt?

There’s no ‘magic number’ when it comes to understanding how much debt is too much; for some people their debt problem shows up as $20,000, for another $5,000 – or even $100,000 for someone else – and much depends on each person’s unique situation.

Rather than relying on a specific number, consider not just your ‘on paper’ finances, but also how well you are coping with managing your debt and whether you are making clear progress towards paying your debts off.

If you are experiencing any of the following, consider this a sign your debt may be reaching a problem stage, or is potentially on its way to an urgent crisis:

• Often feeling stressed or worried about your debt.
• Making only (or slightly more than) minimum monthly payments on your credit card debt.
• Carrying debts with payments that use up a large portion of your regular income or that would take more than five years to pay off (non-mortgage debt).
• Regularly relying on credit cards (or using payday loans) to meet costs of living, or taking on more debt. (This could be increasing credit limits or considering a consolidation loan to manage debt.)
• Owing a government creditor such as Canada Revenue Agency a balance you can’t afford to pay off.
• Having multiple years of unfiled tax returns, especially if you are self-employed.
• Uncertainty as to who you owe debt to and how much is owed or just avoiding account balances altogether.
• Having borrowed against most of your home equity to consolidate or manage debts.
• Receiving collection action, including calls, wage garnishments or pending court dates.

Debt can snowball over time and because people get used to adapting to cope and manage the situation, dealing with a debt problem daily can all too easily start to feel ‘normal’. It’s important for each of us to do a financial check-in periodically and be honest in how we’re doing.

Identifying and cutting off a debt problem before it’s severe can save you untold amounts of time, stress – and of course money! Take an hour to connect with a Licensed Insolvency Trustee and get some qualified advice about managing your debt, and a personalized debt-free plan.

Debt Options Calculator – Compare Four Ways to Pay Off Your Debt

I Think I Have a Debt Problem – What Should I Do?

The first thing to understand is that if you think you have a debt problem – you’re almost always right. And if this is the case, the second thing to know is that the problem is almost always going to get worse if you don’t take some action.

Talking with a local Licensed Insolvency Trustee in your province is the first and best thing to do.

• Avoid trying to ignore the problem, or assuming you don’t qualify for help.
  • Consumers can access a Licensed Insolvency Trustee directly for support any time at no cost, there are no eligibility requirements to seek advice.
• Be cautious about where else you seek debt advice. Licensed Insolvency Trustees are the only government-qualified debt help professionals.
  • Advertisements from debt consultants and credit counsellors can be misleading and may imply a company is part of a ‘government program’, which is not the case. The only ‘government programs’ to deal with debt are those accessible by working with a Licensed Insolvency Trustee.
  • Be on guard for high-pressure sales tactics, up-front fees, high-interest loans, and unrealistic promises.

Talking with a Licensed Insolvency Trustee

Every day Licensed Insolvency Trustees provide advice to people who are dealing with problem debt or looking to pay off their debt with less interest and/or in less time.

• There is no cost to talk confidentially with a Licensed Insolvency Trustee and get guidance on the options available to you.

When you connect with a Licensed Insolvency Trustee it is our responsibility to ensure you are aware of and understand all your options. We help people make informed decisions on how to address their financial difficulties and move forward. We’ll review potential solutions such as:

• Credit counselling programs, and negotiating directly with your creditors.
• Consolidation loans, and consolidation without borrowing using a Consumer Proposal.
• Bankruptcy, and other laws or resources that may help you resolve your situation.

Many people have a difficult time asking for help or feel embarrassed or ashamed to be struggling with their finances. Please know, you owe it to yourself to get debt help and you are not alone. Licensed Insolvency Trustees are your best allies – here for you with solutions and support, not judgment.

What would your life look like, without debt? Take an hour to learn about your options and get a debt-free plan that’s right for you. Book your free, confidential consultation with a non-judgmental expert at Sands & Associates.

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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.

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Blair Mantin, Sands & Associates President and Licensed Insolvency Trustee shares more about helping consumers deal with a debt problem:

“Debt is a problem like many others in that it does have a solution – and we’re here to help you understand all of your options and move forward with the plan that’s right for you and your situation. We believe that financial issues can happen to anyone, and that you owe it to yourself to get debt help.

For over 35 years Sands & Associates has been a part of our local communities, supporting BC consumers facing debt challenges. Our team of Licensed Insolvency Trustees, Insolvency Estate Managers and Qualified Counsellors is made up of professionals who are not only qualified and experienced in helping people get out of debt, but committed to doing so in a way that makes everyone feel respected, heard, and valued.

Whether you are facing an urgent debt issue or looking for a better way to pay off your debt, Sands & Associates is here for you with support, solutions – and no judgment.”

Sands & Associates offers complete debt relief services at local offices throughout the province, as well as over the phone and online. Book a free, confidential and non-judgmental consultation today to get advice and a plan to be debt-free.

Do I Qualify for Debt Help? 

If you need debt advice or think you might have a debt problem, a Licensed Insolvency Trustee is the right professional to help you. Simply get in touch with a local Licensed Insolvency Trustee directly to request a free one-on-one consultation to talk about your situation and get confidential advice.

You don’t need to meet any qualifiers or be facing an extreme situation, such as being sued by a creditor, to seek debt help from a Licensed Insolvency Trustee. Some common situations that we help with include, but are not limited to:

• You’re experiencing stress about your debt and ability to make your monthly payments.
• You’ve been looking for ways to manage your debt more effectively.
• You worry about escalating creditor action or increasing account balances.
• You’re not able to pay much more than the required minimum monthly payments on your credit card or other balances.
• You make payments each month but are then forced to use your credit again to pay regular bills or household expenses.
• You’ve consolidated your debt but still feel financially squeezed.
• You feel prevented from moving forward because of old debts, or debts that are taking you a long time to pay off.
• Your current pace of debt repayment will have you making (non-mortgage) debt payments for more than five years.

In less than an hour we can help you understand your situation, explore all your options to deal with your debt, and help you take the next steps in the plan you choose. Get started today with a free, confidential debt consultation. 

Debt Relief for Canadians

In Canada, consumers have two different options for debt relief that will allow you to have some – or all – of your debts completely forgiven and legally extinguished. These options are:

Filing a Consumer Proposal: This legal consolidation solution offers consumers debt relief with a plan that will:

• Consolidate virtually all your debt without borrowing, interest charges or added fees.
• Allow you to repay your creditors the portion of your debt that you can afford, in full and final settlement (cutting up to 50-80% of your total consolidated debt is common).
• Prohibit creditors from pursuing you for payment, collections, or ongoing interest.
• Provide a debt restructuring plan of up to five years, with a clear debt-free end date.

Declaring Bankruptcy: Where an individual can’t afford to repay a portion of their debt through a Consumer Proposal, personal bankruptcy is an alternative option for debt relief that can allow you to have up to 100% of your debts forgiven (even government debts):

• You do not need to ask your creditors’ permission to file for bankruptcy, and you will get immediate protection from your creditors.
• Most bankruptcies in Canada take only nine months to complete, and you only pay an administrative cost which is usually broken into payments over this time.
• Bankruptcy does not permanently impact your credit history, and you can usually re-establish a positive credit history within two or three years.

These two debt relief solutions are only available through working with a Licensed Insolvency Trustee and are the only options available for consumers to legally have their debts forgiven. Don’t be fooled by other agents or advertisements! Ask “Are you a Licensed Insolvency Trustee?” 

You don’t have to solve your debt problem alone – everyone deserves to live with dignity, and without the overwhelming stress of debt. Speak with a Licensed Insolvency Trustee about your concerns and get guidance and a personalized debt-free plan so you can move forward and live your best life – without debt.

Connect with a friendly, local debt expert who cares and get started with the debt-free plan that’s right for you – Book your free, confidential debt consultation today.

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What is a Consumer Proposal, and How Does it Consolidate my Debt?

A Consumer Proposal is a legal debt relief option that allows you to consolidate your debt and make an agreement with your creditors to settle your debts in full by repaying what’s affordable for you. After you repay the portion of your total consolidated debt as agreed, your creditors will consider the unpaid balance legally forgiven.

Consumer Proposals can be used to consolidate virtually all types of debt – and you can often cut your debt considerably – anywhere from 50% up to 80% or more – including (but not limited to):

• Credit cards, overdrafts, lines of credit, payday loans
• Government debts such as income tax debt, business GST debt, CERB overpayments
• Student loans (government and bank-loaned)

To do a Consumer Proposal you’ll work with a Licensed Insolvency Trustee who will help you come up with a fair Consumer Proposal offer, and will then manage communications with your creditors and facilitate their payments. You’ll also receive guidance and support throughout the Consumer Proposal with two detailed financial counselling sessions forming an integral part of the process.

Consumer Proposals are very flexible and are tailored to fit each person’s unique circumstances – for example, you might offer a single lump-sum payment, or offer monthly payments for as long as 60 months (five years). Here’s an example of what a Consumer Proposal might look like for you:

If you have various debts that total $25,000 and you’re trying to pay them off in five years with an interest rate of 18%, you would need to make payments of around $635/month for five years…

• Meeting with a Licensed Insolvency Trustee, you decide you can afford to pay around $200/month on your debt, so you offer your creditors a Consumer Proposal where you’ll repay a total of $7,500 – 30% of your debt – by making monthly payments of approximately $210/month for 36 months.
  • Your debts are frozen, with no more interest charges from your creditors, and no borrowing is involved, so you’re not paying any interest costs on the consolidated balance either.
• These payments ($210 per month in this example) are all you need to pay towards your debts being consolidated in your Consumer Proposal – there are no added fees or costs; you make just the one simple monthly payment.
  • If you have a mortgage or vehicle financing agreement that you are going to keep, you can continue to pay these as usual, outside of your Consumer Proposal.
• Once you’ve completed all the terms of your Consumer Proposal – that’s it! Your creditors will be required to legally write-off the unpaid balances and your debts are considered cleared!

Try our Debt Options Calculator to See More Consumer Proposal Examples

Do I Need a Loan to do a Consumer Proposal?

A Consumer Proposal is NOT a loan or borrowing agreement, it is a legal debt solution – and it can only be filed by working with a Licensed Insolvency Trustee; no other professionals or agents are authorized to file a Consumer Proposal for you.

If you are interested in consolidating (and cutting) your debt with a Consumer Proposal and the representative you are working with offers you a loan, this should be a red flag that:

1. You may not be talking with a Licensed Insolvency Trustee, but rather a debt agent or third-party referral source – who may eventually introduce you to a Licensed Insolvency Trustee; and,
2. You may be pressured to pay for financing or other services that you simply don’t need.

Licensed Insolvency Trustees are not lenders, we are Canada’s only officially recognized and qualified debt help professionals:

• You do not need any sort of referral or additional agent working with you to do a Consumer Proposal or connect with a Licensed Insolvency Trustee – just get in touch directly with a Licensed Insolvency Trustee local to your province.
• You do not need to make payments to any agents to ‘build up’ money towards your Consumer Proposal – this suggestion would also be a red flag that you may not be dealing with a Licensed Insolvency Trustee.
  • Most Licensed Insolvency Trustees will recommend either that you make your first monthly Consumer Proposal payment at the time you sign your official Consumer Proposal documents, or shortly after.
  • At Sands & Associates we do not charge any upfront fee to start your Consumer Proposal – you just start paying the proposal once it’s been filed, and you are no longer required to make any payments on the debts consolidated in the Consumer Proposal, which places most clients in a much-improved financial situation right away.

As well as debt agents who charge unnecessary fees for referrals or ‘pre-Proposal’ administrative services, there are also lenders (and their referral agents) who might offer or encourage you to take out a loan to pay off or ‘exit’ your Consumer Proposal. These are unnecessary and, in some ways, un-do some of the key benefits you gained from consolidating your debt with an interest-free Consumer Proposal.

Consumer Proposal ‘Exit’ Loans

Consumer Proposal ‘exit loans’ are often advertised to help you quickly pay off your Consumer Proposal, and in turn, shorten the time it takes until your Consumer Proposal is wiped from your credit history. Many of these ‘exit loan’ providers advertise in a way that creates urgency, over-inflating the importance of fast-tracking a high credit score.

A Consumer Proposal will show on your credit history for three years after you finish paying the Proposal off – OR for six years from the date you started it, whichever comes first. For example:

• If you file your Consumer Proposal in May 2023 and it takes you until April 2026 to pay it off, the Consumer Proposal will be cleared from your credit history in 2029.
• If you file your Consumer Proposal in May 2023 and it takes you until April 2028 to pay it off, the Consumer Proposal would clear from your credit history in 2029.
  • This credit rating impact is similar to the impact of following a credit counselling repayment plan, even though credit counselling debt management plans don’t allow you to reduce your debt.

Learn More About Credit Rebuilding After Your Consumer Proposal

What you need to be aware of is that even though your Consumer Proposal is still showing on you credit history, you are not prevented from seeking new credit. It is still possible to get a new credit card, renew your mortgage, finance a vehicle, etc. during the term of your Consumer Proposal.

• Most people do well to start with a secured credit card with a lower limit that reports payment history to a credit bureau, since this will allow you to have the convenience of a credit card and some credit history benefit – but without the risk of accumulating a big balance.

It’s also very important to understand that there is no real way to instantly boost your credit rating. Your credit rating is tied to your credit history, and building a positive credit history simply takes time, and the right actions. Fortunately, you have control here, with the most important factors being:

• Paying all your bills on time every time
• Demonstrating consistent employment history
• Getting a new credit account and using it responsibly
• Keeping balances under 50% of the total credit limit

These are just a few examples of good credit use habits, and during your Consumer Proposal you’ll have the opportunity to get more resources and tools during your financial counselling sessions with a Qualified Insolvency Counsellor – this is built into the Consumer Proposal process.

Problems with Consumer Proposal ‘Exit’ Loans

While you may be able to take out a loan to pay off your Consumer Proposal early and start rebuilding your credit history sooner, these loans often come at a high cost:

• Using a loan to pay off a Consumer Proposal negates the interest-free perk of a Consumer Proposal.
• Proposal exit loans may be offered at interest rates ranging from as much as 19-32%, or even 40%+.
• Lenders that offer these types of loans are likely to tack on administration and legal fees which might range between $300-$1500, as well as additional (optional) loan protection insurance.
• Loan terms commonly range from 36-84 months and may have minimum terms – so the time it takes you to become debt-free may be even longer than if you had just kept paying your Consumer Proposal as agreed.

Revisiting our prior Consumer Proposal example where you were dealing with $25,000 of debt and had arranged to repay $7,500 in total at $210/month for 36 months – imagine if you’ve paid for one year and have another $5,000 left to pay, then take out an exit loan with a 20% interest rate to finish your Consumer Proposal early. If your loan term was for two years you may be facing:

• Now paying around $255/month for your loan repayment, and the loan’s total interest will cost you $1,100 – PLUS the administration and legal fees – all of which you would have avoided if you’d kept going with your interest-free Consumer Proposal!

Is this worth resetting your credit history two years earlier than planned? For most people – the answer is a clear no!

Whether you’re in a Consumer Proposal or not, the advice of Licensed Insolvency Trustees is often the same: that individuals should prioritize paying off debt and becoming debt-free above a high credit score. Credit scores are always changing, and you may substantially change yours in just a few short years – whereas the costs of carrying debt with interest can take a toll far longer, and can limit how you are able to use your income.

• Carefully consider the costs and reasons for taking out a loan or other financing to pay off your Consumer Proposal before moving forward. In most cases, the high costs of borrowing against the early credit history reset just don’t add up – not to mention that you risk ending up with an unmanageable or long-term debt again!

Some agents will use high-pressure sales tactics to get you into a Consumer Proposal loan, or make unrealistic promises of being able to quickly fix your credit rating. If you still want to work with an agent, be aware that unregulated and unlicensed debt agents often charge individuals thousands of dollars for unnecessary services, or services they are not qualified to provide – both before, during and after a Consumer Proposal. Be on the lookout for tactics such as:

• Offering you financing with high fees and high interest rates.
• Encouraging you to stop making your bill payments to accumulate a lump-sum settlement.
• Suggesting you use your credit to pay their fees.

Also, if anyone besides a Licensed Insolvency Trustee recommends you NOT file a Consumer Proposal, ALWAYS get a second opinion. Remember, only a Licensed Insolvency Trustee is authorized to advise you on a Consumer Proposal, and file one for you. The best thing to do is simply ask “Are you a Licensed Insolvency Trustee?”

What Does it Mean for Me if My Spouse Files a Consumer Proposal? Learn More

How Can I Finish my Consumer Proposal Early, Without a Loan?

With a Consumer Proposal, you’ll have a clear debt-free date in five years or less – and some people complete their Consumer Proposal ahead of schedule. Absolutely – if you can or want to – you can pay off your Consumer Proposal early, at any time, with no penalty or hassle.

If you want to aim to finish your Consumer Proposal sooner than planned, you might:

• Increase your monthly payments or increase your payment frequency – say from monthly to biweekly, so you get in extra payments.
• Make additional payments as you have extra cash available, whether from your regular income, or even from irregular funds like a tax refund.

Get Advice About Consumer Proposals and Other Debt Solutions

If you’re wondering about ways to consolidate or settle your debt or want to learn more about how a Consumer Proposal could work for you the next step is to connect directly with a local Licensed Insolvency Trustee in your province. Remember, there is no cost or commitment required to have a conversation with a qualified professional (a Licensed Insolvency Trustee) about your situation and all the options you have.

• Sands & Associates’ Licensed Insolvency Trustees provide safe, unbiased, and non-judgmental advice and we work with BC residents across the province.
• We will take the time to understand your situation, needs, and goals – our goal is that you have all the information to make the decision about what’s best for YOU and your debt-free plan.
• In under an hour, we can help you better understand your options, and provide you clear next steps – and all of our advice comes at no charge to you.

Get support and solutions – and a debt-free plan that’s right for you. Book your free, confidential consultation with a caring, local Sands & Associates debt expert today.

The post How Do I Get a Consumer Proposal Loan? appeared first on Sands & Associates.

Watch the clip here, and read more below:

Potentially Risky Consumer Debts

Although these two common types of credit can offer a short-term benefit, use caution when taking on these debts, where payments can easily become unmanageable:

Long-Term Vehicle Financing: Many people finance a vehicle, which is not necessarily a problem – but financing terms are now longer than ever. Even though committing to a five, seven, or even eight-year financing term is becoming more common, consider the risks of doing so:

• Making an unaffordable vehicle ‘affordable’ by stretching out payments over a longer term.
• Investing in an asset that will rapidly depreciate (the exact opposite of a mortgage, where your investment is expected to increase in value).
• Extended car payments can take up a big portion of your household income that could be used for savings, retirement, or even paying off other debts.

Credit Card Balances: Your credit has already been used and now you’re committed to the payments – and the worst part about credit card debt – the high interest that accumulates on often long forgotten purchases.

• If you’re not able to pay your balance in full each month it’s easy for credit card debt to add up over time, and this often happens through frequently overspending, sometimes as a direct result of having insufficient income to meet both your household costs AND debt payments.
• The ‘borrow-repay-borrow’ cycle can be almost impossible to break.
• With an interest rate of 24% (a mid-level rate for most bank and department store cards) your debt will double every three years!
• Making only minimum monthly payments (or slightly more than) means even a relatively small balance can take years to pay off. For example, a $6,000 debt could take 40 years+ to pay off making only your minimum monthly payments and you would pay several times more in interest charges than the actual amount that you originally borrowed.

Compare Monthly Payments with Our Debt Options Calculator

Most Risky Consumer Debts

These types of debts can point to an urgent debt problem, either present – or waiting to reveal itself:

Payday or ‘Fast Cash’ Loans: Payday loans are usually a ‘last resort’ type of debt used to meet daily living expenses in a hurry. Because the borrowing fees and interest charges on payday loans are extremely high, using payday loans or ‘fast cash’ advances creates a major risk of kicking off a borrowing cycle that can be even more difficult than credit cards.

• This type of borrowing often leads to people carrying multiple payday loans. It’s not uncommon for people to become trapped in a cycle of payday loans, to have up to a dozen different loans outstanding at the same time.

Canada Revenue Agency Debts: Whether an unpaid balance for income taxes, business GST, or CERB overpayment – an outstanding government debt is not to be taken lightly.

• The government has powerful collection actions at their disposal, and, unlike many other creditors, Canada Revenue Agency can start collection action virtually overnight. You may not learn of pending action until it is already in place, including wage garnishment/seizure, a bank account freeze, or a lien placed on your property.

If you find yourself unable to repay your government debt, or in a situation where collection action is escalating, talk with a Licensed Insolvency Trustee as soon as possible.

Learn More About Solutions for Having Government Debts Forgiven

Consumer Debts to Be Cautious Of

There are two additional types of consumer debt to be cautious of, particularly when it comes to trying to manage debt you already have:

Co-Signing Debt: As Licensed Insolvency Trustees we’re regularly asked when it would be advisable to co-sign a debt for someone else – our answer: almost never!

• Co-signed debts are not a 50/50 liability as many people believe – each person on the account is responsible for 100% of the unpaid debt if the other person does not pay.
• Getting a co-signer when you’re already struggling financially often just introduces additional layers of stress and emotional responsibility – you’ve now given that creditor another responsible party to pursue for payment.
• Conversely, if you’re considering co-signing for someone else, understand that you are potentially letting someone else impact your monthly financial commitments and credit rating.

Read More About Co-Signing Debts

Using Assets as Collateral: Particularly if you are seeking to consolidate debt by borrowing, lenders may require you to pledge to them security over an asset to get a loan.

• Like co-signing, in the event you are unable to meet your repayment terms, your creditor now has additional recourse to collect upon the debt, which could include seizing and forcing the sale of the pledged asset.
• Be especially careful before taking on additional charges against your home equity – you only have so much to borrow against, not to mention potentially leaving yourself vulnerable to an interest rate increase or downturn in the housing market.

Learn More About Options to Consolidate Your Debt

Where to Get Debt Help in BC

If you have concerns about any of your debts or are considering what you can do to manage your debt, reach out to a local Licensed Insolvency Trustee in your province. You can safely get confidential support from a qualified and unbiased professional by contacting a Licensed Insolvency Trustee for a free debt consultation.

Sands & Associates’ team of debt help experts work with people across British Columbia and our full suite of debt help services is available in person from local offices around the province, over the phone, or online – whatever is most comfortable and convenient for you.

Your debt-free future IS possible and may be closer than you think. Connect with a caring, non-judgmental Licensed Insolvency Trustee today – book your free, confidential consultation now.

The post Risky Consumer Debts – and What to Watch For appeared first on Sands & Associates.

As consumers face tough financial demands, Sands & Associates, BC’s largest firm of Licensed Insolvency Trustees focused exclusively on providing debt help services to individuals, is seeing a substantial increase in the number of BC residents seeking professional debt advice and debt relief support. President of Sands & Associates, Licensed Insolvency Trustee Blair Mantin joined Global News to share more on consumers’ growing financial concerns, and what you should know if you’re a BC resident facing a debt problem.

Watch the clip here and read on to learn more about what to watch for across the province.

Carrying Consumer Debt? Here’s the Latest You Should Be Aware Of

Creditors Are Significantly Ramping Up Collection Tactics

In 2020 BC courts were closed and many creditors were extending payment deferrals to their customers.  It’s safe to say that this leniency has now passed and it’s back to ‘business as usual’. In 2023 so far, creditors seem to be taking a noticeably more aggressive approach to collections, with legal actions increasing even for relatively low account balances.

• Individuals owing as little as $5,000 are now finding themselves being sued for payments; in previous years this was generally a risk only where a debt exceeded $20,000.
• Local Sands & Associates Licensed Insolvency Trustees are noticing a trend of individuals seeking urgent debt help because creditors owed these smaller balances have taken them to court and obtained wage seizure orders which often make it impossible for an individual to cover their regular monthly costs of living.

What Consumers Should Know: If you are facing a wage garnishment (or the threat of one) by a creditor, a Licensed Insolvency Trustee can help you make a Consumer Proposal or alternatively file personal bankruptcy, both of which will immediately stop this creditor action. 

Learn more about Wage Garnishments and How to Stop a Creditor with a Garnishment Order

The Number of Consumers Turning to Consumer Proposals is Growing Substantially

A Consumer Proposal is a unique type of legal debt consolidation and an alternative to both personal bankruptcy and debt consolidation loans. Working with a Licensed Insolvency Trustee, an individual will make an offer to their creditors to repay the portion of their debt they can afford (often as little as 20-30 cents on the dollar), with no interest charges and no added administration costs.

The Office of the Superintendent of Bankruptcy (the Federal branch that oversees all insolvency filings) released recent statistics which illustrate how popular Consumer Proposals are becoming for cash-strapped consumers seeking to consolidate and cut their debt:

• The number of Consumer Proposals filed in BC in February 2023 compared to February 2022 increased by a whopping 38%. (And the number of bankruptcies filed over the same period declined by 8%.)
  • A Consumer Proposal is now the option chosen by 84% of people who file formal insolvency proceedings, which is a huge jump from 62% of customers choosing this option in February of 2020
• Overall, there was a year-over-year increase of 28% in the total number of BC residents filing formal insolvency proceedings to deal with their debts, which indicates that although many people are struggling, they are increasingly finding relief by restructuring their debts to offer partial repayment, instead of filing for bankruptcy.

What Consumers Should Know: You do not need to be delinquent on your payments to consider a debt restructuring solution like a Consumer Proposal – also, know that bankruptcy is not your only option for debt relief!

Learn more about Consumer Proposals and Whether a Consumer Proposal Could Be Right for You

Canada Revenue Agency (CRA) is Offering More Time to Pay Balances

Prior to 2020, CRA would typically accommodate a six-month payment plan for individuals to repay a balance owing in full, and it was rare for leniency to extend beyond that time, or in getting relief from penalties and interest charges. Now in 2023 CRA has extended this period to as long as 12 months in cases where they believe the six-month plan would create hardship for the individual.

• Despite this increased repayment timeline, however, for many individuals this is still not enough, especially as another trend contributes to the significant growth in Consumer Proposals – people being pursued for a CERB overpayment, with no means to afford to repay the debt within 12 months, even if the interest and penalties are waived.

What Consumers Should Know: If you have an unmanageable balance owing to CRA a Consumer Proposal is the only means of negotiating your debt to CRA (or having it forgiven with bankruptcy). Also, if CRA has begun collections against you, other than paying the debt in full, only a Licensed Insolvency Trustee can help you with options to get them to stop.

Learn more about What Happens if You Can’t Afford Your CERB Repayment

“Buyer Beware” – Impact of Unlicensed Debt Consultants Increasing in BC

Consumer warnings are being echoed by many Licensed Insolvency Trustees as a resurging presence of unlicensed ‘debt advisory’ firms have begun attracting BC consumers. These unlicensed and largely unregulated agents typically take advantage of vulnerable consumers, collecting money from people seeking debt help these agencies simply can’t provide. Here’s how it often works:

• An individual reaches out for help and is charged fees in the range of 1-2% of their total debt. The advisor explains how a Consumer Proposal can work to help them, and after they’ve collected their fee (often over two or three months) the consumer is eventually introduced to a Licensed Insolvency Trustee – the only professional who can actually file a Consumer Proposal.
  • This is completely unethical as every Licensed Insolvency Trustee in Canada offers a free, confidential consultation to review your financial options – and most, including Sands & Associates – will file a Consumer Proposal for you with no up-front payments whatsoever!

Despite advertising promises and even A+ BBB ratings and positive reviews, there is no such thing as ‘government debt grants’ or ‘programs’ beyond what is available to consumers by working with a Licensed Insolvency Trustee.

• When seeking debt advice, you should always ask “Are you a Licensed Insolvency Trustee?”
• If you’re not dealing with a Licensed Insolvency Trustee, it’s highly likely you are unnecessarily paying money that is providing no value, and you may be the victim of a growing scam in BC.

What Consumers Should Know: Licensed Insolvency Trustees are Canada’s ONLY regulated, endorsed, and qualified debt help professionals. You do not need a referral to get safe, free, and confidential advice from a Licensed Insolvency Trustee – simply contact a Licensed Insolvency Trustee local to your province. It should never cost you money to find out what your options are!

Learn about resources and options to help you become debt-free faster – book your free, confidential consultation with a non-judgmental debt expert today.

The post British Columbians Struggling with Unmanageable Debt as Personal Insolvencies Surge appeared first on Sands & Associates.