According to the Office of the Superintendent of Bankruptcy Canada, the total number of insolvencies (bankruptcies and proposals) in July 2014 was 1.5 percent higher than the total number of insolvencies in July 2013. While it isn’t a huge increase, it still spells hard times for a lot of families. Although each situation is unique, some of the most common reasons why people file bankruptcy in Canada are:
Mismanagement of Money
The number one reason people go bankrupt in Canada is the overuse and misuse of credit cards. Consumers are attracted to credit cards because of the many benefits they offer when used and managed well. The downside of credit cards is that many consumers misuse and mismanage their cards. These consumers engage in impulsive buying and spend more than they can afford. This can lead to serious debt problems, which are exacerbated by the high interest rates and late fees associated with carrying a balance on the card. If you have a credit card, or maybe even several credit cards, manage them wisely before your debt gets out of hand.
Divorce
Divorce or other serious relationship problems can also lead to bankruptcy. Divorce often means a significant loss of income or the stress of paying for two households instead of just one. Both parties are 100% responsible for the remaining household debt, no matter what. Many Canadians are not prepared to deal with even a small drop in the amount of money they bring home each month. If this sounds familiar, please do not hesitate to contact our office to discuss personalized debt repayment options.
Unexpected Crisis
A job loss, reduction in hours, major expense, health issues or other unexpected crisis are other causes of bankruptcy. Sometimes, a home repair or medical bill can put enough stress on the family budget to cause individuals and families to seek bankruptcy. Make sure you some savings set aside for occasions like this. It may just help you to avoid bankruptcy.
If you and your family are having financial difficulties, now is the time to form new habits that will help you avoid a bankruptcy. If you still find yourself struggling to get out of debt, contact our office for a free initial consultation. We will review all options with you, and together, we will decide which is the best debt repayment option for you.
