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The Path To Bankruptcy And How To Avoid It

In the last decade, over one million Canadians have declared insolvency. Canadian households are facing ever-higher debt loads and not just because housing prices have been pushing mortgages ever higher. Younger Canadians are graduating from school with more student loans while Canadian families are taking on more and more unsecured bank loans, lines of credit, and payday loans, often to pay for school, make down payments, or cover expenses from job loss.

There are many paths to bankruptcy and while some are avoidable, some are not:

#1 Job Loss – Losing your job or your business is one of the leading causes of personal insolvency. You may think that it will only take a few weeks to find new employment, but it can wind up taking months or even longer to find a job in a similar pay grade. In the interim, Canadians often rely on payday loans and lines of credit to cover living expenses.

#2 Medical Emergency – Even though Canadians largely avoid the steep medical costs many Americans face in a medical emergency, personal injury and disease can be financially devastating, from medication costs and physiotherapy to the inability to work. As Canadians focus on their recovery, they’re often unable to work, relying on debt to live and letting utility bills go unpaid.

#3 Poor Credit Use – While job loss and medical injury are impossible to predict, even careful savers can wind up in debt if they go on too long. Poor credit use is the most easily avoidable path to bankruptcy and credit counselling at David Sklar & Associates can help you adjust your habits and budget appropriately. Interest payments can make credit spiral out of control and beyond your means to pay, whether it was a bad car loan or excessive credit card use. If you see your credit card bills growing with no way to stop them, give us a call today.

At David Sklar & Associates, we’re not here to judge how you got into your financial situation, we’re here to help you get out of it. A Licensed Insolvency Trustee should be the first place to go for help if you’re thinking about bankruptcy. Avoid turning to debt consolidation loans that can simply replace your debts with yet another high-interest loan. Licensed Insolvency Trustees can help you settle your debts, and you may not even need to declare bankruptcy if you seek help early enough.

Even if you’re insolvent, you can still avoid declaring bankruptcy and protect your assets by filing for a Consumer Proposal. Consumer Proposals are the first course of action we try to take at David Sklar & Associates. In a successful Consumer Proposal, we come up with a manageable monthly amount that you can pay back to your creditors for up to five years. If they accept, which creditors typically do, you will only have a portion of your debt to pay while interest stops accumulating. They’re not as widely known as bankruptcies, having only become possible since the 1990s, but today they represent nearly half of all insolvencies. You don’t have to declare bankruptcy, but the sooner you get help the better your chances.

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If your debt problems seem insurmountable – we can help. At David Sklar & Associates, our Licensed Debt ProfessionalsTM have the experience and knowledge to help you get out of debt. During your consultation, we will help you understand what your current financial situation is, how best to fix it, and how to move on to a better life. With six offices in the Greater Toronto Area – we are here to help.

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