Credit Counselling Society

July 09, 2007 14:06 ET

Bankruptcy Rates Up

How to Avoid Insolvency

Attention: Assignment Editor, Business/Financial Editor NEW WESTMINSTER, BC, PSA--(Marketwire - July 9, 2007) - According to Industry Canada's Superintendent of Bankruptcy, the national bankruptcy rate rose 6% in May 2007 over May 2006. Although the personal bankruptcy rate has declined in some regions over the past few years it has risen overall by 200% in the past 20 years.

Consumer bankruptcy filings of 2446 in May 1987 to 7476 in May 2007 indicate a development that has some experts worried about the future. Scott Hannah, CEO of the Credit Counselling Society, the non-profit debt solutions service, suggests that the strong economy and higher home prices may give some consumers a false sense of security as they rely on their home equity and lower interest rates to borrow money. More consumers may be extending themselves beyond their means and ability to repay their debt. An overview of Canadian Insolvency report from the Superintendent's office states the most frequent liabilities by consumers filing for bankruptcy are credit cards (87.4%) and loans (77.5%). "A perceived increase in net worth can translate into borrowing and spending. This can spell trouble for some consumers." Notes Hannah. "Without a solid financial plan and wise money management practices, people can become over extended and face financial disaster when the economy and market conditions shift. An increase in interest rates, a slower economy, or loss of a job can place people in a situation they didn't prepare for and ultimately into bankruptcy. It can happen to anyone."

By planning ahead consumers can avoid the common pitfalls that lead to financial difficulties. "We recommend people explore their options early to ensure they can resolve their financial situation without bankruptcy" says Hannah. "People are often surprised to learn where they spend their money. By tracking spending to identify costs that can be reduced or eliminated the average person could save hundreds of dollars each month." For those people who have reached a near critical situation Hannah suggests they look at selling some assets, take on a second job or rent a portion of their home. "By showing creditors they have the means to repay the debt many people can reduce their interest costs and penalties and move forward on a repayment plan. Sometimes this can make the difference between insolvency and financial stability."

About the Credit Counselling Society

The Credit Counselling Society is a non-profit organization dedicated to helping individuals and families find solutions to their debt and money problems. They provide free credit counselling and confidential guidance for debt repayment and credit education to consumers across Canada. The Credit Counselling Society is federally registered as a Canadian Charitable Organization and licensed in the provinces of British Columbia, Alberta, Manitoba and Saskatchewan. For more information, visit www.NoMoreDebts.org or call 1.888.527.8999.
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/For further information: http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/vwapj/StatsBooklet2006-EN.pdf/$FILE/StatsBooklet2006-EN.pdf
http://strategis.ic.gc.ca/cgi-bin/sc_mrksv/bankruptcy/statistics/new_bank_s?screen10=show&lang=e&java=TRUE&Go=Monthly+Statistics/ IN: ECONOMY, SOCIAL

Contact Information

  • Scott Hannah, Credit Counselling Society
    Primary Phone: 604-636-0211
    Secondary Phone: 604-527-8999
    Toll-Free: 888-527-8999
    E-mail: scott@nomoredebts.org