Therapy-speak is everywhere on social media and in people’s conversations. But when it comes to debt, financial adviser Christine Conway says shame often keeps people mum.
“Money seems to be one of those last things, people seem to be more open to talking about feelings than their financial situation” said Ms. Conway, a financial planner with Braun Financial Services in Vancouver who said she has seen firsthand how clients will stay silent and either ignore or hide crippling debt.
It’s an issue that delays people from taking necessary steps to solve a debt crisis, according to financial services experts, credit counsellors and new research from the consulting and tax firm MNP. In a recent survey of Canadians, 40 per cent said the stigma of bankruptcy has kept them from seeking help on their debt issues. The situation was worse for younger respondents, more than half of whom admitted to the same.
At the same time, the survey found widespread misunderstandings about the options people have to deal with debt, with 35 per cent of respondents thinking that debt solutions could lead them to lose their home. It also found that 70 per cent of Canadians aged 35-54 are fearful of debt-relief scams.
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Bruce Sellery, chief executive of Credit Canada, said he sees this dual issue of stigma and a lack of knowledge play out every day in his practice. Credit Canada is a not-for-profit that guides people through dealing with crippling debt.
“We live in a consumer culture that values spending, not saving,” said Mr. Sellery, who said people are inundated with images of people’s expenditures on social media, which makes it more difficult to cut expenses by giving up luxuries.
At the same time, people who find themselves in debt are made to feel like they’ve made dumb mistakes, when in reality there are usually other root causes, such as a lost job, major life changes like a divorce, or simply a lack of financial literacy.
“We need to shift it from ‘you’re bad, you’re wrong, you did this to yourself’ to ‘life happened, there are things that you went through and how can we support you on your plan on debt and be inclusive,‘” Mr. Sellery said.
One of the biggest misconceptions is that bankruptcy is your only option. Mr. Sellery said that for most people, considering bankruptcy is like considering a lung transplant when you only have a light cough. It’s a last resort, and there are other options that people have.
For someone with debt that they could foresee paying off, consolidating credit card balances into a lower-interest loan could be a start. For those who can’t keep up with interest payments and foresee their debt only growing, a licensed insolvency trustee can file something called a consumer proposal, in which your debt burden is negotiated to a more manageable amount and paid over a set period of time.
In a survey commissioned by Credit Canada, only 2 per cent of respondents knew that non-profit organizations like Credit Canada exist and can help you with no upfront cost.
“Think about that in a therapeutic context, 100 per cent of people know there’s therapists out there, but only 2 per cent know there’s a category of professionals who work for non-profits that you can talk to for free,” Mr. Sellery said.
Editor’s note: A previous version of this article incorrectly stated that an organization such as Credit Canada can file a consumer proposal. Only a licensed insolvency trustee can file a consumer proposal.
