“Going Bankrupt and Rebuilding Credit in Canada” is a series written by Common Cents Mom (Hollie Pollard) who, in her own words, “really had no sense when she was young but she is a fast study and is learning that you can recover from financial mishaps.” Hollie shares what she is learning and doing on her blog Common Cents Mom.
The Road to Bankruptcy
I wish I knew what I know now when I was a young woman just starting to make financial choices. I wish there had been more talk about managing money but that didn’t happen and well, the next 20 years were filled with financial mishaps.
Many things can happen that can change your financial future in the blink of an eye. One can prepare the best they can and still things can get out of hand. I want to share my experience so that maybe someone can avoid a few of the pitfalls that can lead to bankruptcy . Did you know every year 100,000 Canadians declare bankruptcy? This year I am one of them.
My road to bankruptcy began when I was 18 and took out my first loan. It was a student loan so I could go to university. As a teen, credit cards were also sent my way. Back in the 80’s it was easy to get credit. I am sure today it still isn’t that hard. I then left school a little early as my mother got cancer and I took care of her. I then married and divorced and was busy raising a child with special needs all the time accumulating more debt and loads of interest along the way.
My word of warning to Canadian students: before you go for that loan, look at the cost of borrowing versus your expected pay and then knock at least $10,000 a year off that (because we all think we will get a decent job) and see if you really can afford to pay it back. I went to school for 4 years and took out $13,000 in loans. Well that nice little loan turned into a $40,000 debt. Interest over years adds up.
There are many things that lead to the road to bankruptcy:
- illness: either your own or the need to care for a close family member
- a weak economy
- poor money management choices
All those are just some of the factors that can contribute to getting you in financial trouble.
How do you recognize if you are on the road to bankruptcy? Ask yourself these questions:
- Are you living in overdraft or taking out payday loans?
- Do you really know how much debt you have?
- Are you fighting over money?
- Are you avoiding picking up the phone?
- Are you spending more in a month then you earn?
If you recognize yourself as a Canadian in financial trouble you are not alone. Over the next month we will look at what can be done to get you and me back on the road to financial health.
The series will include:
Part 2: Consolidation and Other Alternatives to Bankruptcy
Part 3: Bankruptcy Defined
Part 4: Rebuilding After Bankruptcy
Thanks Hollie! We look forward to the rest of the series. Click here to go to part 2.