Latest research shows consumers are adding more debt than a decade ago while household incomes are barely keeping pace and leading many Canadians to look for debt relief through bankruptcy or other alternatives.
Toronto, ON -- (SBWIRE) -- 10/04/2012 -- Canada's collective household debt is now 135 percent higher than it was 10 years ago. Over the same period, the country's per capita income increased by just 54 percent. Simple arithmetic dictates that this disparity cannot persist for much longer. In fact, the Bank of Canada recently warned that the uncontrolled growth of Canadians' household debts poses a major risk to the country's continued prosperity.
The average Canadian household's debt now exceeds its income by a factor of 1.5. The recent experience of the United States suggests that this is unsustainable: In the late 2000s, after U.S. households had been racking up debt via home equity lines of credit and supposedly low-interest credit cards for the better part of a decade, a sudden drop in housing prices brought the country's economy to its knees.
Much of Canada's household debt can be attributed directly to the country's housing market. Of a total national debt load of $1.65 trillion, about 70 percent is tied up in mortgages and home equity loans.
Over the past decade, the value of these products has risen tremendously. According to the Bank of Canada, Canadian households earn over 8 percent of their total disposable income from home equity loans. While this influx of easy money has helped to juice the economy in provinces like Saskatchewan, Alberta and British Columbia, it poses serious risks to the country's economy as well.
Many people who borrow against their homes quickly find themselves struggling with more debt than they can afford. Some home equity loans and mortgages feature unnaturally low teaser rates that rise suddenly after pre-determined intervals. When this happens, borrowers often must throw out their entire budget calculus and start from scratch.
Households struggling with high secured debt loads may find themselves making poor decisions with other forms of credit. To compensate for income lost to mortgage and auto loan payments, many borrowers choose to run balances on their credit cards or take out unsecured personal loans to make ends meet.
This piling-on of debt may quickly spiral out of control. Credit card users who charge everyday expenses like groceries, clothing and utility bills tend to see their balances grow each month.
For indebted consumers who finally max out the home equity lines of credit that have kept them afloat, escaping from debt without outside assistance may prove difficult. As their balances continue to expand and their creditors' collection agencies begin calling to demand prompt repayment, they may find themselves faced with some stark choices.
Unfortunately, many prudent Canadians believe that bankruptcy is the only answer to a major debt problem. While bankruptcy is a viable method of debt relief that may be suitable when other options have been exhausted, there are several lower-impact alternatives that may save borrowers thousands of dollars.
Of these alternatives, debt settlement is especially well-regarded. Maple Leaf Debt Helpers, a leading Canadian debt settlement agency, provides its customers with effective debt relief that often requires smaller investments of time and money relative to debt consolidation loans or credit counseling.
Although each case plays out differently, debt settlement from Maple Leaf Debt Helpers may take as little as 12 months to complete and slash customers' total debt loads by up to 60 percent. Unlike credit counseling agencies or debt consolidation loan providers, which merely work to reduce the annual interest rates on their customers' obligations, debt settlement providers like Maple Leaf Debt Helpers negotiate directly with creditors to reduce their clients' principal balances.
To learn more about the advantages of debt settlement, call the company's toll-free hotline at 1-877-710-3328 or visit http://mapleleafdebthelpers.ca/.
Maple Leaf Debt Helpers