Ignoring Debt

Ignoring Debt | By Guest Author: Linda Stern, Licensed Insolvency Trustee

Are We Ignoring Debt Problems?

For many years now, Canadians have taken full advantage of low interest rates and hedged our bets on real estate. With rising home prices, many of us have borrowed heavily without giving due diligence to the discipline of also saving. Our collective debt sits at a record $1.82 trillion. Interest rates are now creeping up. And this leaves a number of us unable to pay our bills while servicing our debts. Economists have sounded alarm bells about this for a while now. Regardless, the problem persists. Could we simply be ignoring debt? What’s really going on?


Shame has a lot to do with this. Your comfort zone may leave you isolated and dealing with the problem in silence. Most definitely this is an uncomfortable topic to bring up at the dinner table with friends and family. Credit counsellors will agree that debt problems are nothing to be ashamed of. They can happen to  anyone. Even when you are careful about your spending, a sudden life event such as an illness, a marital breakup or a job loss, can suck you down a spiral of uncontrollable debt.

Yet, because of the stigma and shame, many choose not to be open about it. And this makes matters much worse. Leaving debt to fester invariably leads to collection calls. Your creditors may start legal actions against you. Worse still, they have the right to escalate the matter to your employer and your pay cheque. Wage garnishments are an extremely distressful and embarrassing consequence of ignoring debt. Many individuals are jolted into action only when this happens. Sadly, shame is one of the worst reasons for not dealing with debt problems. It only leads to more humiliation and emotional spiralling.


You may be ready to face the problem. And when you start looking, you will discover no shortage of resources to help you. From ads, billboards, TV commercials and websites, you will hear about credit counselling agencies, debt settlement companies, debt counsellors and debt relief specialists. Some will even promise to easily cut your debt by 60%-80%.

Like any profession, the debt management industry has its fair share of unscrupulous operators. Information overload and horror stories from individuals who have been financially taken advantage of can simply leave you paralyzed and convinced that no solutions exist for you.

This is far from the truth. With a reputable credit counselling agency, you can receive sound advice, budgeting help, debt consolidation services along with reduced or eliminated interest charges.

Credit Loss

This is a big concern for many individuals who ignore debt. Even when you are prepared to take action, you get cold feet about a regimented approach to spending that may include cutting up your credit cards. For many individuals, credit cards offer a secure place to go for cash shortfalls and emergencies. Losing credit card privileges is a scary proposition.

If you think this through, a consolidated Debt Management Plan might actually involve lower payments than what you continue to fork out each month. By negotiating with all your creditors, your credit counsellor could secure lower interest rates or eliminate them all together. And the difference would tide you over with savings for an emergency fund.

Credit Scores

Individuals with chronic and long-term credit card debt put more weight on their credit scores than they should. Yes, it is true that you will retain a decent credit history if you maintain your minimum monthly payments. However, credit card interest rates are among the highest in the industry.  Continuing to make minimum payments is unsustainable for everybody except the creditor. This debt will continue to climb higher each month, making it impossible to catch up. Paying nothing more than the minimum on credit card bills is the most common reason why people get into debt problems in the first place.

Your credit counsellor will review your situation to recommend a debt management plan, consumer proposal or in the most extreme cases, bankruptcy. All these solutions will impact your credit scores. But this short-term pain is actually long-term relief in disguise. 

Anyone ignoring debt should be more concerned about paying it down rather than keeping a good credit history. Your credit reputation is neither permanent nor carved in stone. It can be repaired and rebuilt within a few years. 

Credit Counselling

Credit counselling sessions are the first line of defense for people battling debt problems.  They are non-judgmental, easier than most believe and entirely confidential. The sessions generally include a free up-front assessment. From there, the counsellor will present solutions that best suit your situation. Your credit counsellor will remain by your side to help you with budget control and staying on top of your savings goals. With true commitment to the process, you can climb out of your debt, no matter how bad it is.

Linda Stern | Licensed Insolvency TrusteeLinda Stern, a Licensed Insolvency Trustee, is a guest blogger for Family and Credit Counselling Services, a blended not-for profit community-based agency offering debt counselling & management as well as family/individual support services within York region.

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