The 4 Most Common Reasons Canadians Go Bankrupt
Insolvency is increasingly common in Canada. Canadians have one of the highest debt-to-income ratios in the world, and it’s putting a strain on families. One startling statistic suggests that half of Canadians are only $200 away from insolvency.
Insolvency can happen to anyone. Below are the leading causes of insolvency.
#1 Business Failure – When you go into business for yourself, you take on a lot of risks. Closing down your own business is one of the leading causes of insolvency in Canada. Even if you’re able to settle your debts when you sell off your business or its assets, you’re still faced with a loss of income and no severance pay. Getting back into the job market after being self-employed is often harder than people expect. After years of working for yourself, the job market has changed and often become more competitive.
#2 Job Loss – Unexpected job loss can be just as devastating as losing your business. Financial experts recommend saving up to a year’s salary in case of job loss, but for many individuals, that’s just not possible. An extended period of unemployment can lead to high credit card bills that you’re not able to repay, even when you find employment down the road.
#3 Divorce and Separation – Separation is a difficult emotional time for anyone who goes through it, but it also can be difficult financially. It doesn’t help that high debt itself can take a toll on relationships, but there are other factors at work as well. The sudden need to rely on a single income without splitting expenses can come as a shock to people who have been married or in a relationship for years. It’s not easy to go back to the single life, not just emotionally, but in all your habits, from eating on a budget to rent. Legal costs can also contribute to financial woes, but usually, underlying debt and suddenly higher expenses are bigger problems. Relationship experts and finance experts agree: it’s usually not a good idea to file for bankruptcy and divorce so that they overlap.
#4 Medical Conditions and Injuries – Even in a place like Canada with universal healthcare, injuries and medical conditions can lead to insolvency because they prevent you from working. This kind of income loss is not only unexpected, there’s no telling how long it might continue until you recover.
Whatever the cause of insolvency, you should talk to a bankruptcy trustee, now known as a Licensed Insolvency Trustee, about bankruptcy and consumer proposals. There are many benefits of a consumer proposal if you can no longer afford to keep up with credit card bills and other debt payments.
Going into insolvency doesn’t mean you can’t get out. A bankruptcy trustee in Ontario can help you file for bankruptcy or a consumer proposal. Firms like David Sklar & Associates in Toronto exist to help consumers with insolvency. Bankruptcy trustees in Ontario are the only professionals who can file for a bankruptcy or consumer proposal in Ontario on your behalf. It doesn’t matter why you wound up in debt in the first place. Talk to bankruptcy trustees like David Sklar & Associates to get out. Stop struggling with debt you can’t control and seek out expert advice. You can start on the path to debt freedom today.
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