At LCTaylor Licensed Insolvency Trustees, we frequently hear from individuals whose lives have been impacted by illness, injury, or disability. The reality is that debt and disability often go hand in hand.
Health challenges can limit your ability to work—or prevent you from working at all. And when your income is reduced or eliminated, everyday expenses can quickly become overwhelming.
The Financial Burden of Disability
Disability-related expenses—such as medication, specialized equipment, and mobility aids—can strain even the most carefully managed budget. While disability insurance can provide some financial relief, it often replaces only a portion of your income and may have time limits.
If you are receiving provincial or federal disability assistance, you may already know how difficult it is to make ends meet, especially as the cost of living rises. Too often, people in this situation turn to credit to cover shortfalls, leading to unmanageable debt.
When Debt Becomes Unmanageable
If you find yourself unable to keep up with debt payments, you are not alone. Many Canadians face the same challenge, and solutions exist.
At LCTaylor, we recommend speaking with a Licensed Insolvency Trustee (LIT) to explore your options. We offer free, no-obligation consultations—in person, by phone, or via video call—to review your financial situation and help you choose the best path forward.
Two options that may be available to you are:
- A Consumer Proposal
- Bankruptcy
Both offer legal protection from creditors and a structured way to eliminate debt. Let’s look at how each works for individuals on disability income.
How a Consumer Proposal Works for Someone on Disability
A Consumer Proposal allows you to negotiate a settlement with your creditors through your Licensed Insolvency Trustee. You’ll agree to repay a portion of your debt in manageable payments over a set period—without losing your assets or income.
Proposals are typically funded by your income, but in some cases, they can be funded by a lump sum payment. The key advantage? Payments are based on what you can afford—not on interest rates or the total debt amount.
For individuals on a fixed disability income, this can be an effective way to regain financial stability while maintaining essential expenses.
How Bankruptcy Works for Someone on Disability
If your income barely covers your basic living costs and you cannot afford a repayment plan, Bankruptcy may be a better option.
When you file for bankruptcy, certain assets may be sold to repay creditors. However, many assets—including those essential to individuals with disabilities—are protected under federal and provincial law.
What Assets Are Protected?
- Registered Disability Savings Plans (RDSPs): These funds are exempt from seizure, except for contributions made in the 12 months before filing.
- Mobility & Health Aids: Wheelchairs, mobility scooters, and other necessary medical equipment cannot be taken in bankruptcy.
- Basic Personal Assets: Most disability benefit payments fall within government-set exemption limits, meaning they are not used to determine bankruptcy payments.
In many cases, a first-time bankruptcy lasts only nine months—providing a fresh start in less than a year.
Next Steps: Getting the Help You Need
Dealing with debt on a limited income can feel overwhelming, but you don’t have to navigate it alone.
A Licensed Insolvency Trustee can review your financial situation and outline all your options, including Consumer Proposals, Bankruptcy, or alternative solutions.
If debt is weighing you down, let’s find the right path forward—together.
Book Your Free Consultation Today
Call us at 204-925-6400 or ✉ email questions@lctaylor.net to book a free, no-obligation consultation. Let’s work together to secure your financial future.
Take the first step toward financial peace of mind. We’re here to help.
Leigh C. Taylor, LIT
