December 3, 2019
What should you do if you face debt in retirement? We spoke to a Licenced Insolvency Trustee to find out how they helped a retiree whose finances suffered after her husband passed away.
Retirement should be a time to relax and enjoy life. For many, it can lead to unexpected financial challenges. That’s what happened to a client of Nancy Snedden, a BDO Licensed Insolvency Trustee.
Without the right help, money management issues after retirement can become a burden. Financial pressures can add up quickly when you don’t have savings to prepare for the unexpected.
We spoke with Nancy Snedden, to find out how she helped one retiree turn her situation around after the passing of her husband.
Wendy, a pseudonym, is a retired widow in her seventies from St. John’s, Newfoundland, who was struggling to repay her debts.
Wendy and her husband had been married for 45 years before he passed away. They lived modestly in a rented home and always did their best to pay their bills on time. With two pensions, they were able to get by and even save a little money.
When her husband passed away, Wendy’s finances took a turn. Without any inheritance or life insurance to rely on, she was left to survive on a single pension.
Wendy did everything she could to stay afloat. She used up all their savings, gave up on all travel plans and often had to ask her children to help.
Despite all her efforts, her single pension simply wasn’t enough to get by. Eventually her kids encouraged her to get advice from a not-for-profit credit counselling organization.
Meeting with a credit counsellor was a step in the right direction for Wendy.
A reputable credit counsellor can offer a range of services, from one-on-one credit counselling sessions, to group courses or debt management plans (DMPs). DMPs are a service offered by not-for-profit credit counsellors that allow a person to consolidate their debts into one affordable monthly payment. Interest is sometimes forgiven, but DMPs will typically require you to repay 100% of your debts.
Because Wendy’s debts exceeded her means, the credit counsellor referred her to BDO Debt Solutions.
Seeking help from a Licensed Insolvency Trustee would give her more options she learned. One option would be to apply for a consumer proposal, an alternative to bankruptcy in many cases, or file for bankruptcy and eliminate her unsecured debt.
Wendy had a combination of personal and joint debt. She had two personal credit cards ($3,500), two joint lines of credit ($44,000) and a secured car loan.
Bankruptcy worried her because she depended on her car and could not afford to lose it. But she was also uncomfortable with the idea of filing for bankruptcy.
Many who have debt feel guilty about it. Wendy was no exception.
“Many older people who are experiencing a debt problem will avoid seeking help. They feel a lot of guilt. Part of our job is to explain to them that they deserve to live a full life, free from stress. They are more important than their debts. Once people understand that they can start moving forward,” says Nancy Snedden.
When Nancy first met Wendy, she was distraught over her financial situation. She had spent many sleepless nights worrying about keeping up with her bills. Because of the financial strain, she couldn’t afford the things most important to her, like visiting her daughter and grandkids in Prince Edward Island.
She cried during her entire initial consultation. In her words, she felt like a failure.
It took Wendy a few consultations before she was able to decide but given the extent of her debts and her life situation, she decided to file for bankruptcy.
Once Wendy fully understood the bankruptcy process, she was comfortable with her decision. She was relieved to learn that she could keep her vehicle and that her car loan would be excluded from the bankruptcy proceedings. She was also very thankful that her bankruptcy would be completed within two years and that her monthly payments would be affordable.
Wendy understood her credit rating would be affected. But she didn’t have any long-term financial plans that would require credit. Her most important goal was to improve her quality of life.
“Wendy had gone through a very trying time in her life. She was heartbroken and feeling very vulnerable. The collector’s calls were really affecting her. Lenders can be quite intimidating and insensitive to what’s going on in peoples’ lives. A Licensed Insolvency Trustee can help you deal with these situations, without any judgment,” says Nancy Snedden.
In total, it took Wendy 21 months to complete her bankruptcy. Nancy was able to negotiate a monthly payment of less than $200 to cover the administration fees and surplus payments related to her file.
She is now debt-free and able to enjoy her retirement without having the stress of debt or the worry of debt collectors calling.
Debt can often feel overwhelming, but there is always help, no matter how much debt you have. A Licensed Insolvency Trustee, such as Nancy Snedden, and other members of the BDO Debt Solutions team can guide you through all your options.
Our team focuses on offering a judgment-free approach and working to help you understand each option and what it means for your unique situation. Don't hesitate to reach out today for help. The first meeting is always free of charge.
December 3, 2019
What should you do if you face debt in retirement? We spoke to a Licenced Insolvency Trustee to find out how they helped a retiree whose finances suffered after her husband passed away.
