Causes of Financial Difficulty

People can be hard on themselves when they are unable to pay their debt obligations.

They often feel a sense of failure and embarrassment that they borrowed money with good intentions, but are unable to repay it. After struggling through a pandemic and its effect on employment, businesses and the cost of everyday items, we all understand a little better that sometimes life changes can significantly impact our finances through no fault of our own.

It may make you feel a bit better to know you are not alone. Many people struggle to repay debt due to a variety of reasons. The most common causes of financial difficulty are:

• Loss of employment or income reduction
• Illness or medical problems resulting in reduced income or increased costs
• Separation or divorce
• Mismanagement of finances – overspending and use of credit
• Unexpected expenses
• Helping family and friends
• Tax debt due to failing to set aside funds from self-employment income to pay personal income tax and HST collected

If you are struggling to pay your debt, contact a Licensed Insolvency Trustee for a free initial assessment to review your financial situation and explore solutions.

The Bankruptcy and Insolvency Act was enacted to provide relief to honest but unfortunate debtors. Filing a personal bankruptcy or consumer proposal could allow you to move forward with a financial fresh start.

By 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)