Bank Survey Identifies Lurking Debt Issues

A recent survey conducted by the Canadian Imperial Bank of Commerce indicate that nearly 50% of Canadians that are in debt are trying to determine a way to pay off  their debts ahead of schedule. The results show that Canadians are focused on trying to reduce their debt and that 50% of those surveyed had made a large lump sum payment in the last year to try and reduce their debt levels. The survey also indicated, however, that many Canadians are not seeking financial advice or guidance regarding the management or reduction of their debt (click here for the full story in the Globe and Mail).

This survey raises the concerns about Canadian’s personal debt levels shared by debt help professionals, the federal government and the Bank of Canada alike. That is that Canadians may find themselves with significant debt and financial problems when interest rates eventually rise. Having enjoyed some of the lowest interest rates in history, Canadians have taken on so much debt that they now have the highest debt-to-income ratios in history. When rates go up (and it is inevitable that they will) making the monthly payments on all that debt will become very hard for many people. Many will find themselves unable to make the payments and facing some very real debt problems.

So the CIBC survey should be seen as a wake up call that is consistent with the warning of the federal Finance Minister and the Bank of Canada governor. It encourages all of us to avoid debt problems and a financial crises by getting control of our personal debt loads now – before interest rates rise.

Seeking professional advice from a licensed professional is, as in all areas, wise advise. Canadians should understand all their options to reducing their debt and solving problems if they have already arisen. Budget and credit counselling, debt consolidation, consumer proposals and even bankruptcy are subjects those with high debt levels should understand. Using debt calculators and the resources of many websites is a good place to start. Setting up a free consultation with a professional may be even better.