Your finances sometimes feel like a house of cards. One setback could cause everything to collapse, leaving you with debt you can’t repay. Fortunately, you can find debt relief success by contacting a Licensed Insolvency Trustee (LIT). The government licenses these professionals to help individuals and businesses with financial difficulties. A consultation with a LIT has given many Canadians the tools they need to regain control of their finances and rebuild their lives. Let’s look at some of their personal debt stories to see how a LIT can help you.
Canadian Household Debt
Life in Canada is really expensive right now. It’s no wonder so many are carrying significant amounts of debt. The average salary in Canada was $68,500 in 2022. After deducting federal and provincial taxes, the average take-home pay was $59,300. While this may sound like a lot of money, things change when you consider the debt picture of Canadians.
The average amount of Canadian household debt, excluding mortgages, is $41,500. According to one study, Canadians pay 14.97% of their disposable income towards debt. Debt repayments eat up more income than grocery costs, which stand at 11% of income.
Some households are managing well and have no problem paying off debt. Others are having a hard time. If you’re in a difficult situation and want to know how to get out of debt, help is available. How you got into debt isn’t as important as knowing solutions are available.
These clients found debt relief success, although their circumstances were different. Their stories highlight the fact that whether your debt is due to a divorce, overspending, business debt, tax debt, or an addiction, there’s light at the end of the tunnel. By sharing these diverse stories, we hope to inspire and encourage individuals facing various financial challenges to seek help and explore the potential debt relief solutions available to them.
Divorce Debt
James, a 44-year-old from New Brunswick, went through a painful divorce. The marital breakdown was not the only source of his stress. Although James earns a good income, suddenly being responsible for all of his living expenses was hard since he was used to having two incomes.
Additionally, James took responsibility for most of his joint debt with his wife. His child support is automatically deducted from his pay, leaving him with less money to manage his expenses. He was struggling to pay a:
- $35,000 of credit card debt
- $700 cell phone bill
- $3,000 high-interest loan
James considered Bankruptcy but heard so many things that he didn’t know what to believe. He was afraid that he’d permanently ruin his credit, and his creditors would seize his car. Overwhelmed by his financial situation, he called Allan Marshall and Associates and booked an appointment with a LIT.
James’ Trustee explained all the debt relief options available to him. Once he realized that some assets are exempt from Bankruptcy, he decided that would be his best option. James kept his car because its $3,700 value falls below the maximum allowable value for a car.
His Bankruptcy payments were far less than the debt payments he was making. Filing for Bankruptcy has allowed James to become debt-free. It has also relieved him of his financial stress so he can focus on his children instead of his debt.
Tax debt
Jeff has been a self-employed flooring installer for over twenty years. Recently, a series of setbacks left him with unmanageable debt. First, two clients who owed $40,000 refused to pay him. Then, the Canada Revenue Agency (CRA) audited him. The audit disallowed many of his previous deductions, which left him owing income taxes and HST.
One company that owed him money went out of business, and the other still refused to pay. This left Jeff unable to buy the materials he needed to run his business and pay his employees. Pursuing legal action would cost him more than he was owed, and he didn’t have money for lawyers’ fees.
With little income coming in, Jeff relied on credit cards to pay his expenses. Unfortunately, the CRA took legal action against him and seized his bank account because he fell further behind on his income taxes and HST.
Realizing his financial situation was deteriorating, Jeff took action. He contacted a LIT at Allan Marshall and Associates. At the time, Jeff owed:
- Credit Card 1-$6,289
- Credit Card 2-$7,042
- Credit Card 3-$8,001
- Credit Card 4-$8,514
- Canada Revenue Agency-$7,854
After reviewing his options with his LIT, Jeff decided he wanted to repay some of his debt rather than file for Bankruptcy. With the help of his LIT, he reduced his debt from $37,700 to $18,000 by filing a Consumer Proposal. The CRA also removed the freeze on his bank account. His new payment, was $300 monthly for 60 months.
Jeff achieved debt management success by getting rid of his debt with an affordable payment, allowing him to focus on his business and keep all of his assets.
Overspending
As a 35-year-old single mom, Lisa did her best to minimize the impact of her divorce on her children. She used her $2,000 monthly income to pay her $800 monthly mortgage payment, living expenses, and debts. She was expecting a raise at work, but unfortunately, that fell through.
Without her expected raise, Lisa was left in a vulnerable position. She began using credit cards to cover expenses and extras for her children since she didn’t want them to feel anything had changed.
Lisa eventually realized she couldn’t keep up with her expenses and pay her debts. When she reached out for help, she had a:
- $24,000 car loan
- $8,700 credit card
- $18,900 Mastercard
Lisa’s LIT empowered her by helping her understand her debt relief options. She ultimately decided that a Consumer Proposal would best suit her needs since the payments would be manageable and her creditors would get some of their money back. Most importantly, Lisa could keep her house and other assets. This decision made her feel in control and confident about her financial future.
Lisa’s Consumer Proposal reduced her debt from $51,600 to $12,000. After making 60 interest-free monthly payments of $200, she is now debt-free.
The financial education she received from her two counselling sessions gave Lisa a much better understanding of budgeting and living within her means. Lisa’s financial stress is gone, and she has stuck to a budget. To her relief, her children haven’t even noticed a difference.
Getting Debt Help
Debt relief success depends on finding the right people to help you with the best solutions for your needs. At Allan Marshall and Associates, our Licensed Insolvency Trustees have been helping people eliminate their debt for more than 30 years. Too much debt can cause stress and anxiety and affect your relationships. If you’re in this situation, book a free consultation by calling us at 1-888-371-8900 or contacting us online. We are a family-oriented company that has experience with what life can throw you. We’ll work with you to get rid of your debt so you can rebuild your finances.
