Canadians in debt

Debt is, according to the Canadian Oxford English Paperback Dictionary, a sum of money owed, a state of obligation to pay something owed. If an individual is unable to start paying back a debt when requested to do so, the debt accumulates interest. In banking terms, interest is extra money a person must pay back along with money borrowed from the bank. Interest tends to accumulate over time the longer one takes to start paying back a loan.

2013 is the third year in a row in which paying down debt is a priority for Canadians.

Last year in early October, Canadians were so far in debt that the average household had only 63 cents of disposable income for every dollar of debt, the Globe and Mail reported. The publication said, it was the highest ratio of debt ever recorded in Canada, more inflated than levels in the United States of America and Britain in the early 2000’s.

People believe retiring with debt is not a good idea, said CIBC deputy chief economist Benjamin Tal, The Star reported. Benjamin cited warnings from the Bank of Canada to consumers as one of the reasons Canadians are eager to pay down debt.



How to deal with debt:



KNOW THE WARNING SIGNS. YOU ARE IN DEBT OR CLOSE TO BEING IN DEBT IF…



You constantly go over your spending budget and use your credit card not as a convenience but because it’s necessary.



You find yourself always borrowing money to make it to next pay day.



Your earnings have diminished to pay for outstanding loans.



Creditors pressure you for repayment, sending you letters, and phoning you regularly.



Utility companies discontinue their services to you because of unpaid bills.



THINGS YOU CAN DO :



Talk to your creditors and suggest lower monthly payments for a longer period of time. As long as you keep in touch with your creditors, they will be sympathetic to your situation and will work with you to solve your financial problems.



See a credit counselor. Credit counseling is a service that exists to be utilized by the public. They are different in every province. Set up an appointment with a family or credit counseling service if you are having a hard time creating and sticking to a financial budget.



Ask a bank, financial institution for a debt consolidation loan. This is when all your debts are combined into one loan. Additionally, the bank or financial institution will pay off all your debts and, in return, you make single monthly payments to the bank or financial institution. Look around for a suitable provider. Interest rates vary.



References:



The Globe and Mail



The Star



Industry Canada: Office of the Superintendent of Bankruptcy Canada