Why Bankruptcy and Proposals are included in Personal Finance curriculum

Why Bankruptcy and Proposals are included in Personal Finance curriculum
2022 / 02 / 03

The results from a poll conducted by the Angus Reid Institute were released in January 2022 and it found the following:

  • 57% of Canadians reported having a difficult time feeding their family; an increase from 36% of Canadians when the same question was asked in 2019.
  • 39% of Canadians say they are worse off financially now than last year
  • 24% of Canadians say their household debt causes them major stress

I started my career in the field of insolvency 20 years ago while employed with the Canada Revenue Agency; reviewing files and submitting claims for bankruptcies and proposals where the agency was a creditor.  Around the same time,  I enrolled in a Personal Financial Planning course at UNBSJ and I was surprised to see a section covering bankruptcies and proposals.  It actually made perfect sense to cover these topics — nobody ever sets out to file a bankruptcy or a proposal as part of a financial plan, however, it is important to recognize situations where these options should be explored.

Bankruptcies and Proposals are legal means to allow an honest but unfortunate debtor the opportunity to achieve a fresh financial start when faced with debt they simply cannot repay;  in many cases through no fault of their own.  On paper, mathematically, anyone with an average income or higher has the ability to become wealthy over time, however the math gets fuzzy at best when a person is faced with:

  1. Unexpected job loss
  2. Pro-longed period of unemployment or reduced income
  3. Insolvency of an employer combined with a loss of wages payable and/or pension benefits accrued
  4. Health problems
  5. Separation or divorce
  6. Single parent household with a lack of financial or other support from the other parent
  7. Death of a spouse or dependent
  8. Inability to capitalize on higher education after acquiring large student loan debts
  9. Highest rates of inflation in the past 30+ years
  10. On-going pandemic combined with restrictions, lockdowns and forced business closure

If you are stressed about your debt, it is important to understand you are not alone.  If your finances have suffered as a result of one of the factors noted above, it is equally important to realize it is not your fault and you should feel no shame in exploring your options for debt relief.  Filing a bankruptcy or a proposal does not mean you will lose your house or vehicle; both are intended to right size your cash-flow to allow you to create a budget that actually works for you and allow you to set and achieve financial goals that might have been once out of reach.

If you are looking for advice or a second opinion about your debt, it does not cost anything to talk about your options.  For a free consultation, please contact our office today!