$200 Away from Bankruptcy

  • By Bonnie Hooley, B.S.W., C.I.R.P.

Two hundred dollars in today’s world is not a lot of money. For some, it is a pair of sneakers. For others, it can seem like a great sum of money and they may only be $200 away from bankruptcy. Surveys continue to show, year after year, that nearly 50% of Canadians are just two hundred dollars or less away from being insolvent. The same studies show that for Saskatchewan and Manitoba it is likely to be closer to 56%!

Yes, 56%!

How can this be when we are talking about one of the most prosperous countries in the world?

Those numbers are staggering and need further analysis.

The Definition of Insolvency

First of all, what exactly does being insolvent mean?

The Bankruptcy & Insolvency Act of Canada, defines an insolvent person as someone who is not bankrupt, owes more than $1,000.00 and, who for any reason, is unable to meet their financial obligations as they generally become due.

That may be fine as a clinical definition, but what does being insolvent really look like to the average Canadian?

Ahmed is a hard-working laborer attempting to provide for his family. He lives modestly, spends frugally and is very careful with his money. For Ahmed, being $200.00 away from bankruptcy means he has to choose between buying his child the glasses she needs or buying meat for his family this month.

Brenda has a business degree and is working her way up in a small brokerage firm. She has managed to keep on top of her student loan payments and was careful when purchasing her vehicle not to spend lavishly on the newest, flashiest model. For Brenda, being $200.00 away from bankruptcy means that she may not be getting the cavity in her tooth fixed until the New Year when group insurance will once again kick in.

Claudio runs a small snow removal company. He has some older equipment he maintains with the experience he has gained from working on machines. He relies on the muscle power of his two employees for most of the jobs they complete. For Claudio being $200.00 away from bankruptcy means that he has to choose between giving his deserving workers a raise and laying someone off.

Effects of Being $200 Away from Bankruptcy

The pressure on these people must be incredible. Most of us can muddle through a tight situation for a week or two, but when you are walking a tightrope week after week, the pressure can be too much. Rather than enjoying this great country we live in, we become fixated on making it to the next pay day.

Financial stress can directly affect your physical health. It is not uncommon for people to go without necessary medication because of low cash flow. The stress affects your emotional health, leads to anxiety and takes a toll on your mental health. Is it surprising that a quarter of Manitobans suffer from mental health issues?

Financial stress affects your sleep, your job, your family relations. Financial stress has been directly linked to marriage break up.

This is not an issue that we can ignore.

Who is at Fault?

Our society likes to point fingers and lay blame. Who is responsible for this issue affecting half of our country?

Should we be laying blame on these people who are walking so close to the ledge? If they had just worked a little harder, saved a little more, spent a little less, would they have found themselves in this predicament?

That sort of blame would work if we were dealing with a tiny segment of the population who has been irresponsible with their money. The argument does not fly when we are talking about half of our country!

We are not dealing with a problem that affects only low-income people, it is a problem that is affecting lower, middle and higher income earners who lack savings.

An Observation

For years I have worked with many people who have been pushed to the brink with debt problems. Well-intentioned people. Honest and unfortunate debtors, who seemed to do everything right, yet ended up in dire financial trouble. Most were living within their means, paying their debts as they become due and even saving for the rainy days. Yet for many, it was not enough to stop them from finding themselves faced with an emergency that left them in a place where they could not dig themselves out of debt.

While my experience shows me that you cannot protect everyone from finding themselves in that situation, it has shown me there is help for those who do.

Available Solutions

When more than half of our society is $200.00 or less away from bankruptcy, we are talking about a systemic problem that has set most of us up to struggle.

Fortunately, our society has recognized this issue and has built into our legislation, assistance for those people who are over their heads in debt.

Licensed Insolvency Trustees (LIT), have been licensed by the government to help such individuals. They have years of experience and training to assist people in these situations and to help them find the best way to relieve this financial pressure.

The misconception is that LITs are only there to assist people with bankruptcy. The reality is that the majority of the people we meet with do not end up filing an Assignment in Bankruptcy. Instead, we are able to find other options for them – perhaps a simple re-organization of their finances, better budgeting, or a Consumer Proposal.

In Conclusion

We know that too many people are struggling with an overwhelming financial strain.

We know that this is a systemic issue that, in many instances, is more about how our society is structured than individual actions.

We also know that there is help for the 56% of Manitobans that are struggling financially. Give us a call today. We can help you through the crisis.

Bonnie Hooley, B.S.W., C.I.R.P.

Bonnie has worked in the insolvency field since 1980. She is a graduate of the University of Manitoba, with a degree in Social Work. In 1999 she attained her license as a Licensed Insolvency Trustee. Bonnie has her Foundation Studies in Accounting from the Certified General Accountants (CGA). She is Read More Bonnie has worked in the insolvency field since 1980. She is a graduate of the University of Manitoba, with a degree in Social Work. In 1999 she attained her license as a Licensed Insolvency Trustee. Bonnie has her Foundation Studies in Accounting from the Certified General Accountants (CGA). She is a member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) and Past President of the Manitoba Association of Insolvency and Restructuring Professionals (MAIRP). Bonnie has served on various boards within her community. Her hobby is quilting, her passion is Christ. Close

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