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Millions of Canadians put off seeking help for their debts because they feel ashamed.
A new survey from insolvency experts MNP reveals that 46% of respondents said they would be too embarrassed to ask for help and a third said they would hold back due to the stigma of bankruptcy.
But not getting help when debts become too much to cope with, means Canadians risk serious financial trouble.
“Unmanageable consumer debt or financial hardship is extremely lonely and isolating because the guilt prevents people from talking about it. Unfortunately, our survey shows those who are most in need of help are the least inclined to ask for it,” says Grant Bazian, president of MNP.
That is highlighted by the survey results with 61% of Canadians who rate their personal debt situation as bad and more than half 54% who are financially insolvent saying they would be embarrassed to ask for help if their financial situation was serious enough to consider bankruptcy.
“The number of people filing has increased, but this doesn’t reflect the magnitude of the consumer debt challenges in the country because so many people delay getting help until they are in an absolutely dire situation. By the time they speak with a professional, many may be forgoing basic necessities to avoid filing a Consumer Proposal or Bankruptcy,” says Bazian.
The report shows that 30% of those struggling with debts do not know what to do or who to turn to when things get desperate; rising to 47% among those most in need including those who are insolvent at the end of the month.
But there is also a trust issue with 52% of all respondents and 58% of 18-34 year olds, saying that they find trusting professional companies to help get them out of debt.
“The trust issue may stem partially from a lack of financial literacy and awareness about debt relief options in Canada,” says Bazian. “Many people – particularly young people – don’t know there is a regulated system in place to help severely indebted individuals regain financial stability. Licensed Insolvency Trustees are the only professionals authorized to offer relief options such as Consumer Proposals and Bankruptcies,” says Bazian, adding that Canadians should be wary of any companies that aggressively market quick-fix debt forgiveness.”