Both interest rates and the overall rate of inflation have come down from the highs recorded during 2022, but most Canadians and their families are still living with a significant degree of financial stress. While the overall rate of inflation may be down, the cost of food – the most non-discretionary of expenditures – continues to outpace that general rate of inflation. According to Statistics Canada, the cost of groceries has risen by 27.1% over the past five years.
When the budgets of Canadian families are pushed beyond the point that day-to-day costs can be covered by income, families often turn to credit as a way of making ends meet. According to statistics compiled by Equifax Canada, the average per-consumer non-mortgage debt (meaning credit cards, lines of credit, and car loans) rose to $22,321 during the third quarter (July to September) of 2025. The difficulty, of course, is that paying off such debt – or even being able to make required payments on that debt – is almost impossible when the need to use credit arose because available income was already insufficient to cover increases in the cost of living.
The difficulty Canadians are having in managing their debt loads is borne out by statistics compiled by Equifax Canada with respect to debt repayment delinquency rates (defined as missed payment(s) which are more than 90 days past due). Those statistics show that such delinquency rates on non-mortgage debt during the third quarter of 2025 were up by 14% when compared to such rates for the third quarter of 2024. And, while some of the highest year-over-year increases in delinquency rates on non-mortgage debt were reported for consumers under the age of 36 (up by 18.55%), Canadians over the age of 35 aren’t, however, immune to missing payments on their credit card, line of credit, or car loan obligations. For those groups (aged 36 to over 65), the average delinquency rate for the third quarter of 2025 was up by 11.1% when compared to the same quarter in 2024. Not surprisingly, across all age groups, the greatest increase in delinquency rates occurred in urban centres where the cost of living is highest, including Toronto and Vancouver. And, finally, as noted by Equifax, “[T]he holiday season is a time when credit card spending typically rises $300-$500 per consumer and previous Equifax data shows that missed card payments increase by roughly 7 per cent come January.”
When individuals or families need to turn to credit to meet day-to-day financial obligations and then have difficulty repaying or even servicing that debt, the worst-case scenario is insolvency. And it is the case that an increasing number of Canadians are reaching the point at which they see their available options narrow to the point that they must consider making a consumer proposal or even declaring bankruptcy. Statistics released by the Office of the Superintendent of Bankruptcy for individuals for the month of September 2025 (available at https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/statistics-and-research/insolvency-statistics-canada-september-2025) shows that consumer insolvencies increased by 10.6% during that month, as compared to figures from September 2024.
Neither individuals who are struggling with debt nor their creditors want to see things reach a point at which the debtor is insolvent. Individuals or families who are unable to manage their current debt obligations should be aware that there are viable options open to them – and equally, that there are courses of action which should be avoided.
Where an individual or a family feels overwhelmed by debt, it’s inevitable that they will be vulnerable to approaches which promise to make the problem go away – and which may even include offers to provide funds which can be used to repay existing debt. The website of the Financial Consumer Agency of Canada (an agency of the federal government) at https://www.canada.ca/en/financial-consumer-agency/services/debt.html and https://www.canada.ca/en/financial-consumer-agency/services/debt/debt-settlement-company.html contains a warning about using the services of such “debt settlement companies”, making the following points:
- Companies or agencies can’t guarantee they will solve your debt problems.
- Companies or agencies can’t quickly and easily fix your credit score.
- Companies should not (as they sometimes do) encourage you to take out a high-interest loan to pay off your debts.
- Companies and agencies may misrepresent services they offer as being part of a government program.
These warnings are based on the fact that debt settlement companies are for-profit businesses, not service providers. They collect fees from consumers who are in financial difficulty, sometimes making unrealistic commitments with respect to what they can accomplish. For instance, while such companies may promise to negotiate with creditors in order to reduce any amount owed, or the interest rate payable on existing debt, the fact is that creditors are not obliged to speak to or negotiate with a debt settlement company with respect to another person’s debts. Debt settlement companies may promise to “fix” a poor credit rating or credit report, but they have no actual power to do so. And the fees owed to such companies will almost certainly have to be paid, whether or not they can actually produce the results they promise.
That reality does not, however, mean that there is no help for individuals and families seeking to find their way out of debt, or that it’s necessary to pay large fees or to take on additional debt to do so. In fact, in almost every community of any size, there will be a credit counselling agency which can assist consumers with debt management and debt repayment and, equally important, will help the individual or family to establish financial management practices (like setting up a family budget) to ensure their future financial stability.
Such credit counselling agencies operate on a not-for-profit basis and provide their services at little or no cost to individuals or families who seek their assistance. Where credit counselling is needed, a credit counsellor will work with an individual or family to help identify the options which are available to them and the pros and cons of each option.
Most credit counselling agencies are members of Credit Counselling Canada (to be a member of Credit Counselling Canada, an agency must be accredited and must operate only on a not-for-profit basis), and a listing of their member agencies and locations can be found on the Credit Counselling Canada website at https://creditcounsellingcanada.ca/locate-a-counsellor/?cc=ON.
If you would like help with dealing with the CRA or would like to know more about taxable benefits, please feel free to call us at (905) 305-9722 or email us at info@eigenmachtcrackower.com and we will help you out!
