The president of the largest firm of licensed insolvency trustees in the province is raising awareness after his firm found that, of those who his team asked, 40 per cent said the waited for more than two years to seek professional help, even as four in five of those individuals said the debt caused their mental health to suffer.
Blair Mantin’s firm, Sanda & Associates, conducted a survey of 2100 people who recently made an insolvency filing. This is the 12th year in a row the firm has collected survey responses about debt.
27 per cent said their debt was due to overextended credit and general financial mismanagement, while 24 per cent said the main cause of debt was using credit for essential costs of living not covered by income. Health problems, marital breakdown and job-related issues also ranked highly as causes of debt.
56 per cent of those polled said credit card debt was the main type of debt they had, which was more than 4.5 times more frequent than pay-day loans (12 per cent).
The time to start reaching out is when you realize you won’t make headway or will be stuck making minimum payments for decades, Mantin said.
“The banks would you making all those minimum payments, but you’re not doing yourself any favours,” Mantin said, adding that you can have a conversation with a professional to at least learn what your options are.
Bankruptcy is not the only option, with alternatives such as consumer proposals which can restructure the debt while maintaining a sense of pride, according to Mantin.
Consultations with a licensed insolvency trustee should always be free of cost, and if someone who says they are some sort of debt advisor is trying to charge you upfront, then that is a red flag. Mantin said the cost of the service should be rolled into one’s new payments after restructuring.
“When you do decide to move forward with a licensed insolvency trustee, everything is set by the government. Basically, instead of you making any debt payments—so sometimes people are paying hundreds and maybe even thousand dollars a month in minimum payments—we’re able to do a consumer proposal to bring that debt down by probably 70 cents on the dollar, so maybe now they are paying two or three hundred dollars a month, and all of the costs of that proceeding are included in what they can afford to repay,” he said.
Mantin was on CFAX 1070 with Adam Stirling today (Jan. 21):