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Canadian Debt Is Rising – Here’s How It Affects You & What You Can Do About It

If you take a look at Canada’s National Debt clock, you’ll find that our nation’s federal debt levels are currently over $1.1 trillion. You’ll also see that “Your Share” is over $30,000. But what does that actually mean? Are you liable for Canada’s national debt? Does it have any real consequences on your daily life? 

What is Canada’s federal debt status?

Canada’s deficit for the last fiscal year was $314 billion, an astronomical jump from the previous fiscal year of $21.77 billion. This was primarily due to the nation’s struggle with the COVID-19 pandemic.

Am I actually liable to repay Canada’s federal debt?

If you’re asking whether you’re going to get a bill in the mail for “Your Share” of $30,000, the answer is no.

Governments are graced with a long period over which to repay the principal on the debt they borrow. The real issue is the cost of carrying that debt (including interest) and the cost of servicing it.

So how does the rising Canadian debt affect my daily life?

Let’s say interest rates go up. The nation will need to pay more to service that debt. The same is true if that debt keeps accumulating or the revenues that Canada makes as a whole to repay it drop.

If any of the above happens:

  • You will likely have to pay a higher percentage of GST.
  • Your taxes may go up.  
  • Mortgages will be more expensive, making it even harder for you to buy a home than it already is.
  • Private business loans will be more expensive, making it potentially harder for you to find a well-paid job.
  • Spending on health care, education, and social services may be cut.

And how does Canada’s rising cost of living affect me?

Canadians are facing some serious affordability challenges.

As it currently stands, many hard-working Canadians are trapped in a cycle of debt. The latest numbers show that for every dollar of disposable income Canadian households have, they owe $1.73.

What’s more, Canada has hit an 18-year-high inflation rate of 4.4%

And our salaries aren’t keeping up with that inflation. One survey on the salary plans of Canadian employers (excluding organizations planning a salary freeze) shows a projected average annual pay increase of only 2.7% for the coming year. That’s not enough of a bump to buffer the rate of inflation.

In fact, a recent study reveals that 9 out of 10 Canadians are more concerned about the rising cost of living than they are about the prospect of losing their jobs or income security.

Low or sporadic income combined with the nation’s rising cost of living means that Canadians will need to rely on debt to keep up. And when that debt piles up quickly, it may also mean they’ll be forced into insolvency.

What should I do if I’m experiencing financial struggle?

If you’re having money trouble, you should speak to a Licensed Insolvency Trustee (LIT) as soon as possible. The sooner you do, the more options you may have available to you to deal with your debt. 

You don’t have to wait until your debt spirals out of control to get help. Handling your debt now will help protect you and your family against what may happen later. 

Here are 10 reasons you should consider consulting an LIT.

#1. LITs offer you a full range of options.

Many Canadians believe LITs are only for debtors who need to file Bankruptcy. LITs are actually required by law to explain all your debt relief options. They’re also equipped to assist you with everything from simple budgeting through to insolvency.

#2. LITs are the most highly trained and educated debt advisors in Canada.

You can be certain you’re getting the most qualified advice out there when you consult with an LIT. LITs are federally licensed. They possess the education, credentials, knowledge, experience, and skills required to be granted their license from the Office of the Superintendent of Bankruptcy (OSB).

#3. LITs are federally regulated.

The Office of the Superintendent of Bankruptcy also oversees LITs. LITs must adhere to strict ethical regulations that protect Canadian debtors.

#4. LITs can help you if you’re near or at the point of insolvency.

LITs are the only professionals authorized by the federal government to help debtors with filing Consumer Proposals and Bankruptcies. So if you’re already at the point of insolvency, a Financial Advisor or other debt counsellor would not be your best choice. They would likely just refer you to an LIT (and in many cases, they would do so for a fee).

#5. If you file a Consumer Proposal or Bankruptcy, you get legal protection from your creditors. 

Your LIT deals with creditors on your behalf. When you file for insolvency, an automatic stay of proceedings takes immediate effect. This means your unsecured creditors cannot start or continue with any legal or other collection action against you.

#6. Your LIT will help you through the debt elimination process.

If you file for insolvency, your LIT will guide you through the process to ensure that you are successful in discharging your debts.

#7. LITs are less expensive than other debt solutions.

LIT fees are federally regulated when it comes to Bankruptcies or Consumer Proposals. In fact, their fees are included in the Bankruptcy or Consumer Proposal payments. There are no upfront or hidden fees required, as is the case with other debt consultants. 

#8. An LIT makes sure that your rights are protected.

Your LIT does not work on your creditors’ behalf. They work with both you and your creditors to ensure that the debt elimination process is fair for all involved and that all parties follow the rules.

#9. Your first consultation with an LIT is free.

At your initial meeting, the LIT will do a comprehensive review of your financial situation and provide you advice that’s fully tailored to your unique circumstances. You’ll walk away from the consultation knowing what steps to take should you wish to proceed with eliminating your debt.

#10. LITs are easy to connect with.

You do not need a referral to consult an LIT. Just pick up the phone and call a local LIT today.

Allan Marshall and Associates Inc. Can Help You

The seasoned Licensed Insolvency Trustees at Allan Marshall and Associates Inc. have the tools and expertise to guide you through different debt solutions. 

At your free initial consultation, we will review your financial circumstances and advise you of all debt relief options available to you. At the end of the consultation, you’ll have the information you need to make an informed choice on how you want to proceed.

Give us a call today to schedule your free consultation at 1 (888) 371-8900 or send us a message here.

 

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Allan Marshall & Associates Inc.

Allan Marshall & Associates Inc. is a Licensed Insolvency Trustee firm in British Columbia, Alberta & the Maritimes. Our dedicated writing team consists of LIT's, counsellors, and debt administrators that help to write informative articles and answer questions about your debt issues.

We are licensed by the Federal Government of Canada to administer Personal Bankruptcies, Consumer Proposals, other insolvency services such as Credit Counselling. We have the knowledge and experience to assess your situation and offer the best advice for your particular need, whether you are a first time bankrupt or simply struggling to make ends meet.