Back in March, the Toronto Star reported that Canadian consumer debt had reached a new record high in the last quarter of 2016. According to the article, which reviewed a recent Statistics Canada report, “the amount of household credit market debt rose to 167.3 per cent of adjusted household disposable income in the fourth quarter, up from 166.8 per cent in the third quarter.” This means that, on average, Canadians owe $1.67 for every $1 of disposable income.
With this in mind, it should come as no surprise that an increasing number of Canadians are seeking debt relief as a way to deal with their financial woes.
It isn’t even just debt that is causing concern for Canadians. While many may currently be meeting their monthly payment obligations, a recent study done by TransUnion determined that even a 1% increase in interest on mortgages could be seriously problematic for the average Canadian family. According to their study, approximately 27% of 26 million credit-active Canadian consumers are not well-equipped to handle a rate increase even of the smallest amount.
This could be a major concern if the interest rate goes up again, as it did a few weeks ago. Given the way interest rates are tied to long-term bond rates in the U.S. – rates the U.S. Federal Reserve has been saying are about to increase – there is no way to be sure that our rates won’t increase again.
As mentioned, with Canadian consumer debt continually increasing, the number of Canadians looking for viable debt relief options is also increasing. Consumer proposals and personal bankruptcies have proven to be practical options for many, for a variety of reasons, most notably the possibility of reduced overall debt, single monthly payments and halted interest and collection action.
If you’re loaded in debt, there is no time like the present to speak to a financial professional about your options for debt relief. Waiting until things become even worse won’t help – it will only contribute to the problem. If you are drowning in debt, just barely making minimum payments, missing payments, receiving collection calls or threatening letters, you’re badly in need of some help.
If you’re stressed about your current financial situation or what could happen if interest rates increase to 1% or higher and you won’t be able to meet your existing financial obligations, get in touch with Spergel today. We can help walk you through the available debt relief options. Call 310-4321 for a free consultation.
TransUnion, A Deeper Understanding of Payment Shock Dynamics, 2016.