The Office of the Superintendent of Bankruptcy Canada annually releases a Canadian Consumer Debtor Profile providing details on total insolvency filings; debtor characteristics; median assets, liabilities, income and expenses; and age brackets.  The top five reasons for financial difficulty are noted as loss of income, medical reasons, relationship breakdown, business failure and tax liability with financial mismanagement being named by 69% of the participants.

young couple looking at finances

The causes of financial difficulty noted above are typically at the root of most insolvencies, but the personal circumstances are different for every person and many feel a personal failure in not being able to pay their debt.  The reality is most people carry debt that they are able to pay in the normal course until something in their life changes.  I thought it might be beneficial for people struggling with debt to be able to relate to the following actual causes of financial difficulty of debtors that obtained debt relief by filing a personal bankruptcy or proposal:

  • Hospitalized for an extended time period and unable to continue with a car loan.
  • Mismanagement of business books and records and Canada Revenue Agency served garnishment on customer. Unable to pay living expenses and debt if income garnished.
  • Left full-time employment for health reasons. Sold assets to get by for a couple of months but unable to pay debts on limited Ontario Works income.
  • Suffer from health issues which resulted in excessive spending. Loss of employment and unable to pay debts.
  • Credit card used by another party, but I am left responsible to pay. Funds seized from bank account and unable to pay debt.
  • Separation of marriage and unable to pay debt and living expenses on one income.

I constantly remind debtors that filing a personal bankruptcy or a consumer proposal is not a failure on their part – it is taking control of their situation and allowing them to move forward with a fresh start. Feel free to reach out to us at Taylor Leibow Inc., we are ready to talk when you are.

Kathy portraitBy Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency
and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)