Debt Relief in Canada: More Canadian Households are in Debt – Study

Years ago, Canada had been known around the world as a nation of savers, in fact most Canadians have been able to stockpile at least 20 per cent of their annual income. Nowadays, however, more people are finding it hard to save, with more households finding themselves sinking into debt every day. On the other hand, debt relief in Canada can be achieved through different means, such as arming yourself with the proper knowledge of your choices.

Debt Levels Twice of Annual After-Tax Income

According to the new study from Statistics Canada, more than a third (or approximately 35 per cent) of families now have a debt-to-income ratio of 2.0 in 2012. In simple terms, the overall debt of these households is at least twice that of their annual after-tax income. This was a marked increase compared to 1999, when only 23 per cent of households had this debt-to-income ratio.

The Statscan paper further saw that in 2012, 71 per cent of families had some kind of debt, a considerable increase from the 67 per cent reported in 1999. Furthermore, Canada’s debt-to-income ratio has been reported to have risen further, hitting as much as 163.3 per cent during the fourth quarter of 2014. These numbers came from the Bank of Canada, which cited long ago that an increase in household debt is a key risk to the economy. If not tackled head on, households can be more at risk to any economic shift, including illnesses, job loss or rising borrowing costs.

“Exercise Caution”

Even Canadian Prime Minister Stephen Harper hasn’t been able to ignore the problem of the growing number of household debts, especially now that the nation is facing an uneven housing market. Aside from closely monitoring the housing market, Harper also warned borrowers, especially overexposed people, to “exercise caution in terms of their borrowing.” As of the moment, Canada is second only to Greece as the country with the highest growth rate of household debt.

Options for Debt Relief

Fortunately, there are several options you can choose to help you alleviate your debt problems, and among them is undergoing a debt management plan or an informal proposal. Under this program, both you and your creditor voluntarily agree to reduce your debt, which is achieved through a trusted credit counselor or debt consultant. To undergo an effective debt relief program, you must first seek help from a renowned debt consultant like Blair Greenwood from 4Pillars Debt Consolidation & Credit Rebuilding. Seeking their help is the first step into finding yourself debt-free for the rest of your life.

Sources:

More Canadian families are highly indebted, Statscan finds, The Globe and Mail, April 29, 2015

Even the prime minister is warning Canadians about debt as housing boom turns patchy, Financial Post, May 14, 2015