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debt relief

Photo by Shurkin Son

Debt has become increasingly normal in Canada. Almost everyone has some level of debt, whether it’s a student loan that they’re repaying slowly or a mortgage on their home.

One report shows that the average consumer debt in Canada has reached over $21,000, not including mortgages. After the recent rise in inflation over the past several years, it’s become tougher for Canadians to pay off their debt or stop relying on credit cards to fill in the gap.

Despite how common debt is, there may be a point at which it becomes unsustainable, and you need to find debt relief options to get out of it. These are some of the top warning signs that your debt has become too much.

1. You Are Insolvent

When you’re insolvent, it means that you are no longer able to meet your debt obligations to your creditors. You do not have enough assets to pay off all of your liabilities (debts), or you do not have enough income to meet debt payments when they are due. Insolvency is a requirement if you plan on filing for bankruptcy in Ontario, although there are other debt relief options that you should explore first.

2. You Consistently Miss Payments or Pay Late

Missing debt payments because you don’t have the funds to pay them is a sign that you should seek out debt relief sooner rather than later. It’s even better to explore your options before you miss a payment. When you’re barely making it work, one surprise expense can throw everything out of balance.

3. Your Utility Providers Are Threatening to Cut Off Service

Getting calls from your utility providers about debts owed is another major warning sign that things are about to get worse. In Ontario, electricity companies cannot turn off services during the winter, but they can after April 30. Delay disconnection if you can. It is in your best interest to seek out debt relief before you get disconnected from an essential service.

4. You’re Getting Collection Calls

Collection calls may come from your original lender, a collection company that has been hired by your creditors, or a company that has purchased your debt. These calls can be stressful and disruptive, and they’re a sign that you’ve fallen far enough behind on your debts that your creditors are starting to take action.

5. Creditors Are Pursuing Wage Garnishments

Creditors who are owed substantial amounts may find it worth taking on the legal expense of pursuing wage garnishments. The CRA may also garnish your income if you have outstanding tax debts.

6. You Can’t See a Way Out of Debt for Years to Come

You may be able to keep up with your debt payments for now, but if you sit down to budget your way out of debt and realize that it’s going to take you years to make any progress, you may want to seek out debt relief as a way to take back control of your finances and kickstart the process.

7. Your Credit Score Is Already Low

Missing payments, reaching your credit limits on credit cards and lines of credit, and carrying large quantities of debt can all lower your credit score, making it difficult to apply for new loans, get a mortgage, or even rent an apartment.

It’s time to consider your debt relief options if you’ve experienced any of these warning signs.

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