So what causes the average Canadian to become insolvent (unable to pay their bills as they become due)? Believe it or not, it has much less to do with financial literacy and more to do with mental health, physical health, and over-reliance of credit. We polled our staff and trustees to come up with the most common causes of personal insolvency, and we’re presenting them to you to let you know that not only are you not alone in your struggle, but there is help available by contacting the BNA Debt Solutions team today.
Separation and Divorce
The BNA Debt Solutions team often sees divorce scenarios through a “chicken or the egg” lens, with financial issues being a major reason for the split, and the split leading to even larger money problems down the road.
This is another “chicken or the egg” scenario, where coping with the stress of a large debt leads one to overload their pleasure-seeking brain centres with drugs, alcohol or the rush of gambling. All of those vices cost money, which can result in even more debt, or liquid cash going to pursue an addiction instead of paying down bills.
Just like debt, no one sets out to become an addict, but once trapped into the cycle, it can be difficult to break free.
Loss of Income
A loss of income can lead to stress within the home, compounding other factors towards insolvency such as divorce and addiction issues.
Very often we see Albertans with above average incomes dealing with tremendous CRA debt for many reasons, and the federal tax agency can be quite aggressive in recovering outstanding debts.
Overuse of Credit Cards
Illness, Death, and Supporting Loved Ones
For some, financial trouble starts with time off work recovering from their health problems. During that period they may resort to using credit cards to bridge the gap in their finances. After they are back to work, they quickly realize that even with a steady income, paying down the debt incurred while they were ill is not feasible. Others may not be able to return to full-time work and find that their disability income is not sufficient to pay their debts as they come due.
A death of a loved one can also set back finances drastically, between time off for bereavement, and funeral expenses.
We also see a growing number of Canadians who are supporting elderly parents, or sending money overseas to support their family. They may feel it is their “duty” to take care of their loved ones, but are finding it harder to keep their own households afloat in addition to helping others, and feel a sense of shame or “unworthiness” if they are not able to support others in their lives financially. This leads to borrowing, opening lines of credit, or overusing credit cards to make up for income shortfalls.
Give us a call today at BNA Debt Solutions to talk about your debt options no matter what the cause. We are here to help.