Financial hardship: what to do if you are struggling

Posted on 9 June 2023

Written by Samantha Galea

There are many circumstances in life that can lead to financial hardship. A cost of living crisis, rising interest rates, a loss of employment, or unexpected medical bills are all examples of reasons any of us could find ourselves struggling financially. Financial hardship can be a very stressful situation, and one that is important to manage so that your mental health is not affected. No matter how bad you may feel your financial situation is, there is always a solution. At Spergel, our experienced Licensed Insolvency Trustees have been helping Canadians gain debt relief for over thirty years, so we are very familiar with nearly all types of financial hardship. In this article, we share the best way to manage your finances to prepare for difficult situations, and how you can quickly gain the support you need for a fresh financial future.

How can you avoid financial hardship?

Although some financial situations cannot be avoided, there are a number of strategies you can implement into your everyday expense management to try and prevent financial hardship. Planning a pathway to handling your debt is an important step, as well as budgeting and saving so that you can be prepared for challenging financial situations. Here are some of our top recommendations for avoiding financial difficulty:

Create a budget

Getting started with a budget can help you to take greater control over your finances. Knowing exactly how much money you have coming in and going out can help you to understand what you can truly afford. By listing out all your expenses and income, you may realize you can cut out some expenses in order to keep some funds aside. By doing so each month, you can be better prepared for unexpected situations.

Handle your debt

If you have debt without a plan to pay it back, you should consider a repayment strategy. Assess your budget and the amount you have each month to go towards debt repayment. Two popular strategies in Canada include the debt snowball method and the debt avalanche method. Each respectively focuses on tackling your smallest debt first to create a sense of achievement and motivation; or tackling the most expensive debt first. This will vary by individual depending on the kinds and amount of debt owed. If you are unsure where to start, speak to a Licensed Insolvency Trustee at Spergel. Licensed Insolvency Trustees are the only individuals in Canada legally able to file all forms of debt relief, so are well placed to review your circumstances and advise you on the best method for you.

Avoid getting into more debt

When you already have a challenging financial situation, it can be tempting to take on more debt to get your others paid. At Spergel, we often see Canadians get themselves into a ‘payday loan cycle’. This is where they resort to taking out more expensive short term payday loans to temporarily resolve other debts. This can lead to an even more damaging situation, as payday loan debt carries an extortionate interest rate when not repaid in full and on time. Adding to your debt can only make things worse, and can often lead to more stress. Look at all available options before committing to borrowing more money. If you do need to borrow more, ensure you fully understand the associated costs – some financial products are cheaper than others. Ensure you only borrow what you absolutely need to. If in doubt, book a free consultation with a Licensed Insolvency Trustee at Spergel. We can advise you on the best action to take in your situation.

Cut down your expenses

When you need to be careful, reducing your expenses can help you to avoid financial difficulty. Scrutinize where your money goes, and see where you can pull back – even if temporarily. Making simple changes like avoiding takeouts in favour of cooking, and buying second hand clothing can make all the difference. Cutting back your expenses will help you to increase your savings, repay debts, or plan towards your financial goals.

Create an emergency savings fund

An emergency savings fund is a pot of money you put aside in case of unforeseen circumstances. This could be to assist with a sudden loss of unemployment, or emergency expenses required on a home or vehicle. If you do not currently have an emergency savings fund, you should start to accumulate one by putting any additional funds you have aside. None of us know when an emergency may be around the corner, so having a fund aside to rely on can be a huge relief for when you need it.

See how you could increase your income

When you need more funds or need to speed up repaying your debts, gaining additional funds can make a real difference in preparing for financial hardship. Increasing your income can be as simple as selling unwanted clothes or furniture, or taking on a side hustle like dog walking or baking. It can provide reassurance in challenging times, and offer stress relief. Once you have a pot aside, ensure you look after it and put the funds aside either for debt repayment or towards your savings.

How do you tackle financial hardship?

Financial hardship can come about at any time for any of us, no matter our original financial situation. It can come about for a number of reasons, whether it is due to illness or emergency repairs that are needed. Financial difficulty can be one of the most stressful things an individual can experience, and at Spergel we fully understand this. We treat every individual with compassion and understanding, with our first priority being to help you begin a fresh financial future. If you feel that you are experiencing financial hardship, reach out to Spergel – our experienced team have helped over 100,000 Canadians gain debt relief, and we are here to help you too. We will provide you with the information and support needed to make the best decisions for you and your finances. If you believe you are facing financial hardship, here are some of our tips and recommendations for tackling your situation.

Communicate with your bank

In the first case, reaching out to your bank or financial situation to let them know of your financial difficulty can help in a number of ways. Firstly, being clear about your situation may mean they are more lenient towards you when it comes to interest rates and even payment deadlines. Banks will often appreciate your transparency, and will want to help you as it is in their interests too. They can walk you through your options, and discuss any concerns you may have.

Think about deferring your mortgage

If you are tied to mortgage payments each month, you may want to ask your mortgage lender about deferring payments. They may agree, depending on your payment history and your unique circumstances. It can provide temporary relief for your finances while you get yourself back on track. Deferring your mortgage payments should not have an impact on your credit score. You should check your credit report and ensure any mortgage deferral is reported properly to Canada’s two primary credit bureaus, Equifax and TransUnion. It can take a few weeks to reflect properly.

Ask for credit card support

Much like your bank or financial institution, speaking to your credit card provider could be immensely helpful. They may offer you a payment holiday on your credit card debt for temporary relief. Do note that you will still incur interest in this way, although a payment holiday should not affect your credit score. Equally, your credit card provider may allow you to temporarily reduce the interest rate on your credit card. This can help you to prevent racking up interest payments for a period of time. It is well worth speaking to them to explore your available options.

Speak to a Licensed Insolvency Trustee

Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief. This means they are well positioned to review your financial circumstances and recommend an appropriate pathway to debt relief. At Spergel, our expert Licensed Insolvency Trustees have over thirty years’ experience in helping Canadians on their journey to financial freedom. There are a couple of common pathways you can take to substantially reduce or eliminate your debt in Canada:

Consumer proposal

A consumer proposal is a legal form of debt settlement than can reduce your unsecured debts by up to 80%. It is the process of working with a Licensed Insolvency Trustee to suggest an affordable monthly repayment figure to your creditors. Your Licensed Insolvency Trustee will negotiate with your creditors on your behalf. If approved by your creditors, you will only be committed to making your monthly repayments for a period of three to five years. All other debt will be cleared once your consumer proposal is completed. The advantages of a consumer proposal include having full protection from your creditors, and being able to keep your assets. At Spergel, we have a 99% acceptance rate on any consumer proposals we file. This means you have a 99% chance of reducing your debt by up to 80% with us.


Bankruptcy is the legal process of assigning any non-exempt assets you may have over to your Licensed Insolvency Trustee in exchange for the clearance of your debt. Your Licensed Insolvency Trustee will then sell them, with any proceeds going towards your creditors. Advantages of bankruptcy include gaining full protection from your creditors via a stay of proceedings, and a completely fresh financial future. At Spergel, we have been helping Canadians to file bankruptcy for over thirty years.

If you are concerned about facing financial hardship, and do not know where to turn next, book a free consultation with Spergel. Our experienced Licensed Insolvency Trustees treat every individual with compassion, and will review your financial circumstances to advise you on the best action for you to take. The sooner you reach out, the sooner we can help. Reach out today – you owe it to yourself.


Samantha Galea

Samantha Galea is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) who started working with Spergel as a summer student in 2010. With her socio-political background, Samantha is committed to breaking the stigma associated with bankruptcy so that individuals and families can properly understand all of their options on their path to debt freedom. She is also our resident expert on student debt and collection agencies, as well as the manager of our Brampton office. Outside of work, Samantha is an avid reader of historical non-fiction and world traveler.

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