Blair Mantin, a Licensed Insolvency Trustee and Vice-President of Sands & Associates was a recent guest on Vancouver’s Breakfast Television. Debt is a fact of life for most Canadians, with recent Statistics Canada research indicating that Canadians have reached a record-high level of household indebtedness – and that this debt level doesn’t seem to be declining any time soon!
As Blair explains, many Canadians may be managing just fine, making minimum payments each month – but how do you really know when your debts are becoming a problem?
Watch the clip below, and read on for more information about identifying the warning signs of a debt problem:
- Not knowing how much you owe and to who:
- For many people who come to see Sands & Associates, there is a moment of ‘catharsis’ when we sit down together and open the stacks of bills that they’ve been too scared to face for so long. If you find yourself ignoring the inevitable bills each month, or are in a situation where you are unclear about who you owe and how much, this is a big warning sign that things may be going off track.
- A good place to start to get control, is to pull your credit history report. There are two bureaus in Canada (Equifax and Transunion) and both are required to give you free access to your credit report once a year.
- Even if you think you know who you owe, it’s good practice to check your credit report to ensure you haven’t been the victim of identity theft or had your personal data compromised or breached.
- Get the forms here.
- Using credit to pay credit
- Often when people find themselves unable to pay their debts, they actually deepen the problem by taking on more credit and using it to pay existing debts.
- A prime example is PayDay loans – the idea of a payday loan, is a short term small-dollar loan to get you through to payday. The problem is that the interest and fees are normally so high (calculated at 443% by Consumer Protection BC ) that an individual needs to take out a second payday loan just to pay off the first! Often this cycle multiplies and it’s not uncommon for people to have even 10-15 payday loans outstanding at a single time.
- If you’ve used a PayDay loan more than once in the past six months, this is a strong risk factor for bigger financial difficulty.
- Collection calls/threats of wage seizure
- If you begin to miss payments on your debts, creditors will normally first try to work with you nicely – after all, you’ve probably been a customer for a long time and they want to keep you. Once about 3 months of missed payments have gone by, most banks and credit card companies will essentially ‘give up’ on the customer relationship and get collection agents involved to convince you why you should pay this debt.
- This can be very difficult as, obviously, if you could have paid the debt, you would have already done so. Having an individual (or several individuals) call you morning, noon, and night, literally 7 days per week is of course, incredibly stressful.
- There is generally little to be gained by engaging in conversations with collectors. Talk to an expert who really understands how collections work – like a Licensed Insolvency Trustee. The Province of BC has special consumer protection legislation that allows you to stop collection calls simply by sending a standard letter saying that you don’t agree to this method of contact (ie Phone calls). We have the standard letter available here.
- Physical and emotional stress symptoms
- The cost of debt is much more than just financial. Debt impacts our work, our relationships, our families and our physical and mental health. A 2017 survey of our clients at Sands & Associates found that 97% of people seeking help with their debts were experiencing some form of ill-effect symptom including depression, discouragement, fear, feelings of hopelessness and anxiety.
- Know that there is a solution to every single debt problem! Understand that Canadian law gives you the right to a financial fresh start – no matter how bad things seem, you are entitled to a ‘do over’.
- Making just minimum payments
- The final warning sign might not seem like one at all. After all, making minimum payments each month is exactly what you’re supposed to do, right? Well, the problem is that if all you’re able to pay each month is the minimum payment on your debts, you are most likely on the ‘never-never’ plan for financial freedom. With interest rates on credit cards being where they are, even a $6,000 debt can take up to 40 years to clear if just the minimum payments are made! For some store-branded credit cards, the interest rates are so high (24% or more) that the debts will double on their own every 3 years if you do nothing about it.
- If you find yourself paying just the minimum each month, talk to a Licensed Insolvency Trustee who can help you understand your legal rights to get you off the minimum payment hamster wheel.
Who We Are:
Sands & Associates is BC’s leading firm of award-winning Licensed Insolvency Trustees, with a focus on assisting individuals and small businesses to regain control of their finances. Founded in 1990 and operating from a network of local offices throughout the province, we take pride in our empathetic and non-judgmental approach to providing debt options.
A debt-free future IS possible. Take the first step, book your free confidential debt consultation to discuss your situation and get real debt solutions.