The cost of living has reached astronomical levels in recent years in Canada. Filling up with gas, shopping for groceries, paying bills – all while dealing with rising interest rates – have left Canadians across the country saddled with debt.
“We are starting to see this increase in the number of Canadians who are really taking notice of their level of debt,” Taz Rajan, community engagement partner at Bromwich and Smith, a Canadian debt relief and consolidation service, told Global News from Alberta. “We are certainly seeing more and more Canadians dealing with their debt.”
Consumer debt soared 8.6% in the first quarter of 2022, reaching $2.3 trillion over the past year, according to Equifax Canada’s June 2 report. Market pulse consumer credit trends and information report.
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Also, many people in debt don’t know how to get help. One in three Canadians don’t know where to turn for help, according to a recent Ipsos poll survey conducted on behalf of MNP LTD., Canada’s largest insolvency firm.
Nearly half of Canadians say they would be embarrassed to seek help if their financial situation was bad enough to consider bankruptcy, found the survey, conducted March 9-15 this year, of 2,000 people over the age of 18.
“It may seem like it, but it’s not the end of the world. The sky does not fall. It’s actually an opportunity to conquer that debt and rebuild your value,” Rajan said.
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Stay in touch with your lenders, Rajan says, and remember you are their client.
“Contact your lenders. It’s easier for a company to keep the customer it already has than to get a new one. So answer the calls, open the mail.
According to MNP LTD. President, Grant Bazian, the first step is to overcome the stigma of bad debt.
“I think the first thing they have to overcome is the stigma associated with bad debts. They feel alone, as if they are the only ones suffering from it,” he told Global News. “People spend too much and find themselves in financial difficulty for various reasons. They are not alone.
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The next step is to find the right helper, he added.
“The internet can be so full of so many different resources that it can be mind-boggling to most people. Who do you trust? You don’t know who is credible and who isn’t,” Bazian said, noting that a Licensed Insolvency Trustee is a great option.
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A Licensed Insolvency Trustee is a highly trained federally regulated debt professional.
Talking with someone about your options to help reduce debt often relieves a lot of the anxiety that Canadians struggling with debt face, according to Bazian.
“I think a lot of the anxiety and nervousness goes away because then you understand the ramifications of the choices,” he said.
Debt does not discriminate
Debt does not discriminate, according to Rajan.
“We work with high-end CEOs who make three or $400,000 a year. And then we work with single mothers who get extra income and everything,” she said.
However, according to Rajan, some populations are struggling with higher levels of debt. One being the “sandwich generation”, or parents with young children and also aging parents.
“There’s just less and less pressure in this already squeezed generation,” Rajan said.
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Older generations who are ready to retire but whose retirement plans have gone off the rails – perhaps due to their need to support a child or an unprecedented hit to their investments – have also experienced growing debt problems.
Younger generations may be disproportionately affected. Young Canadians aged 18-34 are most likely to say they don’t fully understand how their finances are being affected by rate hikes, and most likely to say they’ve paid for ineffective financial advice, according to MNP LTD. investigation.
Although it’s common advice, budgeting is an extremely important tool, according to industry experts.
“We’ve heard it 100 times and you’re probably sick of hearing about budgeting,” Rajan said. “It’s really going to help you see where you’re at – what’s going in and what’s going out.”
Another tip is to create an emergency fund, no matter how small.
“We don’t tend to talk about money, we don’t tend to talk about debt,” Rajan said. “I’m here to tell you, start wherever you are. If it’s $50 today, make $50.
Experts predict that the surge in the number of Canadians struggling with debt will continue to rise in the coming months.
“I don’t think we’re leveling off. I tend to think it’s probably going to get worse. You’re going to have more stress with the average Canadian and you’re going to have more people needing to apply for financial assistance,” Bazian said.
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Consumer reliance on credit cards has already increased by 17.5% in the first quarter of 2022, compared to last year, according to the Market pulse report.
“What we’re starting to see, over the next six months to two years, is a little spike in Canadians realizing how bad the debt is and really wanting to do something about it,” Rajan added.
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