How to Deal with Debt Problems

How to Deal with Debt Problems

Debt is a fact of life for many Canadians. You may have a mortgage, an outstanding credit card balance or two, a vehicle loan, student debt or a line of credit. Even if your debt load more than one of these types of debt, if you have a concrete plan to pay off your debt (especially your high interest debt), you’re paying more than the minimum amount each month, and you’re able to regularly contribute to short and long-term savings goals, debt may not be a problem for you.

Unfortunately, for too many Canadians, something unexpected occurs. They face a job loss, divorce, accident, serious illness, or even a once-in-a-lifetime pandemic. An emergency of any kind can quickly turn manageable debt into problem debt.

In this episode of the BDO Financial Wellness Podcast, we speak to BDO Licensed Insolvency Trustee Jennifer McCracken about problem debt. Jennifer covers different strategies for dealing with debt on your own, how to know when you need help, and what she tells people who come to her seeking debt advice.  To learn more about our conversation, read the full transcript below.


Financial Wellness Podcast Transcript


Hello, and thanks for joining us. This is the BDO Financial Wellness podcast, and I’m your host Tera Beljo. In this episode, we’re talking about problem debt. How do I identify the warning signs? And what to do if it happens to you?

If you’re in debt, you’re definitely not alone. Debt happens to a lot of Canadians in various forms and for a number of reasons. People borrow to better their lives by taking out mortgages or student loans, they borrow a little or a lot based on wants and needs. Sometimes people borrow out of desperation. But what should you do if your debt becomes a problem or is causing you and your family financial hardship?

Earlier this week, I got to sit down with Jennifer McCracken, a Licensed Insolvency Trustee with BDO Debt Solutions to talk about causes and solutions for problem debt. Jennifer works in BDO’s lower mainland offices in British Columbia. She and the debt professionals in BC, along with BDO teams across communities in Canada help Canadians find the best solution for their debt problems. Welcome Jennifer.

Jennifer McCracken:


Debt problems tend to happen slowly over time, and to be coupled with a significant life event


Hello! So let’s just jump right in. For the majority of Canadian households, we know that debt just doesn’t happen overnight. We’ve seen this in our own surveys about debt and affordability and for a number of reasons, debt continues to accumulate month after month, year after year and so on. So would you talk a little bit about what you and the local teams see in the BDO offices, especially in BC, as well as across Canada? And in your experience as a Licensed Insolvency Trustee, what causes debt problems?

Jennifer McCracken:

You know, I always say one of the simplest answers to this is that it typically is a combination of a significant life event and maybe a little bit of financial mismanagement or inability to meet just basic living expenses. Where I live, in BC, the cost of living is actually quite high. So you have a lot of individuals that are already living paycheque to paycheque, or they’re struggling a little bit with just having an emergency fund and setting money aside.

Then what will typically happen is debt will accumulate slowly over time. Once you have debt, it is difficult to pay off and retire it in full. Then you factor in some type of life event. So whether it’s a marital separation, a divorce, a health issue, and that’s where things really get off the track. So for most individuals I meet, they’ve been struggling with debt for a really long time.

And I would say that a lot of Canadians generally, they probably feel like having debt is really normal. It’s a really normal way of living. There’s some Canadians that would look at that and go, “Oh my goodness, it’s not normal to have debt,” but for a lot of folks, it is. It’s just because it’s the cost of living, it’s the cost of raising a family, and they’re bridging the gap, you know? So it tends to happen slowly over time, and it tends to be coupled with some sort of significant event in their lives.

Feeling ashamed of debt can lead people to deal with their debt problems alone


I mean, we talk about this a lot within our marketing team, when we’re talking about what we’re going to do, do you think shame plays a big role in it as well? Like you don’t want to talk about it? You don’t want to reach out for help?

Jennifer McCracken:

Oh, a hundred percent. You know, one thing I find a lot in my meetings, is that an individual …we’ll sit down and we’ll get a bit of their background. As soon as they start talking about their financial situation, they’ll start welling up and crying and they’ll go, “Oh my goodness, I never normally cry,” or “I’m so embarrassed that I’m crying.” I’ll always say to them, “Let me guess. you probably have not talked about your debt to anybody.”

So the moment they start talking about it, the emotions come in. So they’re carrying so much baggage around with it. They’re thinking about it day in and day out, before they sleep, in the shower. When they start talking about it, all those emotions that come with it come out. They’ve been keeping it all bottled up inside. So yes, the reason they keep it bottled up inside is they feel shameful for it.

That’s the other thing that I like to encourage individuals, whether I’m doing a podcast, or speaking, or talking with my clients, or a face-to-face. Unfortunately, debt is a part of our existence for a lot of Canadians. So really it’s around finding a solution, it’s around saying, “Look, I want to be debt-free. I want to change my life.”

So actually having debt, in a weird way, can become a transformative part of people’s lives. Because when they get that under control and get that tackled, other parts of their life seem to come into play. So it is generally a warning sign there are other things going on in people’s lives, but also, it can be the motivating thing to make change, a really significant change, in people’s lives.

What are some warning signs of debt problems?


Yeah. I could see that. So speaking of warning signs, what are a few other warning signs that could help people determine if their debt has become a very serious problem?

Jennifer McCracken:

You know, that is an awesome question, and I think more people need to ask this, or they need more awareness across the country about this because I’m going to give you some examples and I guarantee you people listening, probably every single person is going to go, “Yep. Yep. Yep.”

1. Carrying balances

So basically carrying balances on your accounts, whether it’s a line of credit account, unsecured account, a credit card, that is actually a warning sign because ideally you wouldn’t have any debt.

2. Making minimum payments

Making minimum payments is a big one. So if you’re not actually able to pay back the purchases within the month that you’ve actually put them on the card, you’re actually now going to be carrying those purchases of the balance forward each and every month. So that tends to be a warning sign as well.

3. Paying bills late

I mean, some very obvious ones are things like when debts go into collection, paying things late, right? “Okay. Well, my phone bill’s due this date, but I already paid my Visa. So now I’m going to pay the phone bill 10 days late.” A lot of clients at my practice use the expression, robbing Peter to pay Paul. They’ll say, “I’ve been robbing Peter to pay Paul for years.”

That’s really generally a warning sign that — I think for a lot of people, it starts to feel like a normal part of their financial existence — but it generally is a warning sign that it would be important if anybody that’s listening has that in their lives to really kind of take stock and go, “Wait a second. Maybe I have a problem with my debt if I have all these warning signs,” right?

Making minimum payments, carrying balances and living paycheque to paycheque can each be a significant warning sign of debt problems 


Now, would you say it’s all of those? Or if it’s one or two of those, it’s like … Is there a ratio that they should be looking at?

Jennifer McCracken:

You know, I would say it’s probably a combination. I mean, not everybody I meet has their accounts in collections. So I give that as an example, but most people I meet actually have been making their minimum payments and paid on time. So a debt and collections is not, “Yes, absolutely. You need a bankruptcy or proposal,” if you have things in collection, that’s not really the case.

But it generally is a combination around making minimum payments, carrying balances and living paycheque to paycheque and also not having a savings plan. So a combination of those things is generally a pretty significant warning sign.

Using online calculators and tracking your balances can help you pay off your credit card debt


Okay. Thank you. So let’s get specific about credit card debt. We know it’s a fact of life for many Canadians. I mean, everybody has a large credit card bill at least once in their lives, but people might be surprised at how quickly debt can become unmanageable when, or if, they have to rely on credit cards to get by. That could be happening, especially with what’s going on now.

So a recent survey from the credit reporting agency TransUnion found that credit card balances have actually decreased, surprisingly, during COVID-19. So this may not be the case in the months ahead. So what’s your advice for people who are currently struggling with credit card debt or are concerned about potential challenges in the months ahead, especially with CERB ending soon?

Jennifer McCracken:

Exactly. So I think this is a bit of a trepidatious time for a lot of people. So there are Canadians that have probably been carrying credit card debt. I mean, it’s obviously good to hear the statistic that the credit card balances have gone down. So I think Canadians have been focused on paying down their debt if they’ve had a decrease in expenses at this time. So that’s a very good thing.

But one advice I give, like, I talked to a client yesterday, she doesn’t need a proposal or bankruptcy, but she just needed these tips around paying off her credit card debt. So certain advice I give people is first of all, “Go online to the online calculators.” We have one on our BDO website. There’s also one for the Financial Consumer Agency of Canada. So you can go on and insert the percentage, the balance owing on the credit card, and then do the number of months that you want to pay it off so you can get a sense of what is the minimum payment I need to make steadily each and every month to have this debt paid in 12 months or 24 months or 36 months.

The other thing I encourage people to do is write down the balances on each account. What is the interest rate now? This is important because you want to tackle…for a lot of people, they want to tackle the high interest accounts first. So you’ll want to go through and do that. The other thing you want to look at is, is there some low hanging fruit? So do you have a credit card that has a $1,500 balance or $1,200? So people will do a combination of paying the smaller balance ones first and then also tackling the higher interest ones just because it’s more costly to have, obviously a higher interest on a credit card, and the higher the balance is, the more interest you’re going to pay.

So that’s typically the advice I give. You know, a lot of people, they’ll say to me, “Well, geez, I’ve had this balance on this such and such card for 15 years.” Like literally they’ve been making the minimum payment for like 15 years. So if you’ve been in a cycle where you’ve attempted to pay down your debt and you haven’t been successful, you haven’t seen the needle move, then you would be wanting to explore your options more with a Licensed Insolvency Trustee because you may need more drastic measures. But the first step is build out your budget, make a plan, implement it, and see what success you have with getting that paid.

Start by paying off the smaller balances and tackle high-interest accounts afterwards


Speaking of budgets, it’s not something that you just kind of set and forget. It’s something you have to consistently revisit. Correct?

Jennifer McCracken:

Yes, yes.


So when they’re revisiting it and they’ve paid that low hanging fruit off, are there any tips or recommendations you have for them to like how to take that money that they’re not paying now, to that low hanging fruit, and a good way to distribute it, or any other tips that you have around the living document that we call a budget?

Jennifer McCracken:

Yeah. So it’s either the snowball method or the avalanche method. This is what we call it in the sort of the financial realm. But if it were me, I would be then focusing on the higher interest account and getting that paid down afterwards. So the low hanging fruit is helpful because you feel a sense of success. It’s one less thing you need to worry about. You can choose to cut up that card when you’re done or go put it in the freezer and say, “Okay, well I need it to reestablish my credit but I’m going to be very cautious about how I use it now.”

Then, I would be tackling the ones that have the higher balances, or more particularly, the ones that have the higher interest. Then you could either redistribute it across different credit cards or just go … whatever amount you were paying for that other one, just distributed directly to the high interest one, just move it over. Now, “Okay, that amount is now going to this particular account to get it paid.” So when you think about it, it’s plowing down that debt as quickly as you can, right? That’s the goal.

Making minimum payments is a short-term strategy for tackling your debt problems


That makes total sense. So I guess, getting into a little bit deeper, so to what is your advice for people who are only able, or willing, to make the minimum monthly payments on their credit cards or line of credits or even their loans?

Jennifer McCracken:

Well, I mean, the thing is people have to just evaluate what are the pros and cons, right? So think about if you do nothing, if you say, “I’m just going to continue with the minimum payments, that should be a short term solution, right? Because you do know that you’re not actually paying off the principal when you make the minimum payment, or it’s a very minimal amount going towards the principal, and you’re paying more for those goods and those items that you purchased on that account. So that $1,500 drum set is now going to cost you how much over it? Because it takes you 15 years to pay for it. How much have you actually paid?

So the other thing would be to be cautious about using it (the credit card) anymore. If you’re not able to make more than the minimum payment, you shouldn’t actually be putting any purchases on that card. So it would be very important to not continue using it, to really remove it from your wallet. You really need to be on a plan to get that balance paid and not increase the debt load on it at all.

Then the other thing I encourage people to think about is that because the interest rate generally is quite high on credit cards, is that it may be more advantageous to go into a financial institution, see if you can get a loan, have a term set for it, reduce the interest rate. If you can find an option to basically transfer the balance for a lower interest rate so that you actually, in the long run, you’re going to be able to pay that debt off sooner because the interest rate is lower. That’s the other thing to think about.

I mean, I know getting loans and going into a financial institution is a very scary time and it’s a lot easier for people to say, “Well, it’s COVID-19 and I think banks are all very cautious right now. I’m not even going to suss out my options.” Just ask the questions, look online, phone into the bank and say, “Can you reduce the interest…or what can I do?”

Like try to work with your lenders. Just paying the minimum and not having a plan in place or a contingency, it would not be my recommendation. You’re going to want to build a plan around it to either transfer the balance or work towards tackling the debt. Say in the next six months, really move away from the minimum and work towards making larger than the minimum monthly payment, rejig your budget, do whatever you need to.

How does a payday loan work?


That’s some great advice. So at one time or another, most of us have been hit with a big unexpected expense, a leaky roof, a car repair. For us, two years ago, our heater went. A dental bill, you can crack a tooth. For people who don’t have an emergency savings and don’t have access to a credit card or a loan from a traditional lender, a payday loan would seem like a good idea for a temporary solution. What should people be aware of before they take that step?

Jennifer McCracken:

Well, I would say it’s really …I have to be honest with you, Tera, it’s probably a pretty rare occurrence that I would be recommending a payday loan just because there are so many fees associated with it. So someone can go in and go, “Oh the interest is only such and such on this.” What you’re not reading is like the rolling fees, the initiation fees, there’s all these other fees built into that agreement. So it’s not just… The only question you’re asking is not, “What’s the interest rate?” You’ve got to be asking other questions. There are a lot of fees associated with it.

The other thing I would say to somebody who’s considering it is that, in my practice, I find that an individual that has a payday loan lender, they’ll typically have, not just one, they have two or three or four. What happens is it causes a massive cash flow crunch for people so that they’ll get the money associated with the payday loan. But making the minimum payments and paying that loan back, in terms of like how they’ve planned to, once you factor in the fees and the interest rate, it becomes very difficult to do it.

So what happens is they end up getting another payday loan, and it’s in part to make the payments on this payday loan and to make all these other payments. So it actually becomes a bit of a vicious cycle for people. So where an individual could avoid a payday lender at all costs, in my view, this is not slagging payday loan companies, but the realities of what I see for people is, it becomes a bit of a cycle that’s difficult to break out of and that the fees associated with it are just so high, that it is really the most expensive credit that you would be looking at borrowing.

So it has to be a pretty extreme circumstance. Like you say, it’s the busted tooth, or the furnace, or whatnot. And you really do need a plan to get that paid back quickly. If you can do it, then fine it worked for you. But you would have to go in knowing you’re going to run the risk that you’re not going to be able to meet the payments associated with the loan, and you could be creating a cycle where you now need other payday loans just to get by.

Consider a secured credit card instead of a payday loan


Some of those different types of rates that … I mean, I had not heard of some of those that you mentioned. So like what would you suggest, if that is their only option, they go to research what some of those fees are? To know what the meanings are in the fine print?

Jennifer McCracken:

There are tons of resources. So our website at BDO, we have a lot of resources associated with that. Again, the Financial Consumer Agency of Canada. But even if you just get a copy of the contract or ask whatever company it is that you’re dealing with, ask point blank, “What are all the fees within this contract?” And you could even write it down, go home, Google it, look it up. There’s a lot of information now available on the website or on the internet rather, and various websites that you can be an informed consumer, and you may find there could be one lender that has an initiation fee and another lender that doesn’t have an initiation fee.

I mean, I encourage people to look for things like secured credit cards because you have some secured credit cards that have a $10 annual fee and then others that have none. I mean, you can really do your research and say, “Okay, this product from this lender, these are the fees,” and shop it out. Don’t just go to the first place you go to. Look around and really ask the questions and then do your research. Don’t sign a contract the day that you enter and get the loan. Ask the questions, you do your research, go home, read up on it, educate yourself.

I don’t know off the top of my head, “This lender has this rate or this fee,” but anybody who’s in the market looking for a payday loan, you would be able to find all that out from every lender. Go home and do your research, sleep on it, and then make an informed decision.

How can couples manage their finances?


So let’s talk about disagreements over money and financial problems being cited as one of the leading cause of relationship breakdowns or divorce. So knowing that households across the country are experiencing record levels of debt, and also we’re all locked in together.

Jennifer McCracken:

That’s right.


What advice would you give to couples who are struggling to agree on how to manage their finances?

Jennifer McCracken:

Well, I can say that, in my practice, it is a significant issue in the lives of Canadians, right? Whether you’re married, whether you’re common law, whether you’re not even living together, you’re boyfriend, girlfriend, or what have you. Finances really can draw a wedge in a relationship.

1. Plan a financial date

So the one thing I encourage folks to do is, schedule a financial date, whether it’s a coffee, whether it’s a date-date, but like maybe not just sipping on fancy wine in a restaurant talking about your finances.

But you could treat it as like…try to build some fun around it and make it a special time where you guys can sit down and connect. I always encourage joint bank accounts. I know some people go, “Well I really don’t want that. I want some sense of privacy around my money.” You may have a plan around what you’re contributing to the joint expenses, then just have a joint account that you’re using for your combined expenses.

2. Be honest about debt problems

But really, it’s being transparent, being open and honest with each other, being open about if you have debt, what’s the minimum payment, really sitting down and saying, “What are our expenses in the month? What is the income?”  It is important that couples understand that where one couple has a higher earning income, you should allocate your expenses relatively. I know some people say, “Well, we’re covering each 50 per cent of the expenses, but her income is X percent higher than mine.” Well, that’s the discussion to have as a couple. So, “Okay, well, what’s fair. Like what amount are you going to cover? What expenses are you going to cover?” And really have a plan around your budget.

3. Create a budget and review it monthly

Then you have to look at it. You need to actually be looking at the budget and reviewing it. So that’s why I encourage you to sit down and have that monthly date and say, “How are we doing?” This is also where you set goals in your relationship. So you’re going to say, “Okay, honey…”  – I mean, I know we’re not traveling a lot due to COVID-19, but when the world sort of settles down — “…where do we want to go? And how much is the vacation and how much am I going to save every paycheque? And how much are you going to save?”

Then this is where you’re building out really fun life events. And whether you’re planning your wedding or you have a baby on the way. All of these things, you’re going to plan that out. So every relationship has its patterns. If set a pattern in your relationship to be talking about your finances and sitting down regularly and being open and honest about it. It’s like, think about roots of a tree. It’s going to be very sound financial footing for your relationship. So those are some kind of easy things that I typically recommend to couples at my practice.

4. Discuss how you’ll manage your combined household income


Personally, it wasn’t until I started working here that my husband and I started doing that. We didn’t talk about finances, really, at all. Now what used to be a very tense, scary conversation, we have them now kind of in passing. Like, “Hey, I’m thinking we should save up to do the bathroom.” I’m like, “Yeah, okay. I think I can manage this.” Or we were talking about, we’re getting a new vehicle soon. It’s like, “Well, what can you afford? And what can I afford?” Because, like you said, our pays are not equal. So why should we be equally contributing? It’s not fair because one person ends up with less money for themselves afterwards.

Jennifer McCracken:

And then there’s resentment in the relationship. That’s why I say that … I’m not in people’s houses like those TV shows where the financial expert walks through the house and critiques everything. That’s not what we do at BDO. But I mean, I can say that it is obvious when one spouse goes, “Well, wait a second. I worked just as hard as you and I do this and this around the house, why should it be 50-50?” That’s exactly the kind of stuff you want to kind of hash out with your partner and say, “Okay, what’s fair?”

This is why relationships struggle with it (money) because if you have that issue and can’t work around it, this is what now causes that wedge. And then there are other issues that kind of come into play, right? So it is really important…you want to be fair.

At the end of the day, you’re a household, you have a combined household income, you have certain expenses. As a couple, as a family, you have financial goals. So there should be no reason why one partner is going to say, “My income’s higher, I’m not prepared to pay more for the expenses.” That would be an issue. So that’s why you want to have those conversations out in the open and say, “Okay, let’s find a solution that’s fair and that’s easy to integrate into our life.”

How does a consumer proposal or bankruptcy affect debt obligations in a relationship?


Exactly. So how does a consumer proposal or a bankruptcy affect debt obligations in a relationship? For example, what happens if an ex-spouse owes child support or alimony and files for bankruptcy? Will a consumer proposal or bankruptcy filed by one spouse affect another?

Jennifer McCracken:

Well, a couple of good questions there. So I’ll just tackle the questions concerning alimony, spousal, and child support. So those are not dischargeable debt. So the legislation in Canada exempts certain debt from being discharged, just for obvious reasons. So an individual can participate and potentially receive money through the process, but it’s not a debt. A credit card debt, yes, that’s a dischargeable claim. But anything relating to spousal support and child support would be a debt that survives the process and nobody can really walk away from those obligations in a consumer proposal or bankruptcy proceeding.

What I see more commonly in my practice when there’s been a divorce or separation, and a lot of family law lawyers will do agreements up where they’ll say, “Tera, you’re going to pay the such and such card and your husband, he’s going to pay this such and such card.” But meanwhile, you both could have a legal obligation to pay both. But for some reason, when these agreements are drawn up, “You’re going to take responsibility for this account and he’ll take responsibility for that account.”

What happens is, legally, the credit card company or the bank can pursue both of you because you’re both legally obligated to pay that because it’s a joint account, you’re both co-borrowers. What happens is when one spouse does a bankruptcy or consumer proposal proceeding, you’ve got a little knock on the door. That debt that he had said he was going to pay, he’s not paying it anymore. And if it’s joint in your name, now you’re covering off the one that you kind of agreed to in your settlement and this other new account.

So it’s one of those things that I do strongly recommend for individuals that are potentially dealing with a marital separation and sorting out their finances is that you do need to know, “What accounts am I joint with my spouse on? What accounts do I have a supplemental card?” The supplemental card agreement, it varies based on the lender. You do need to understand, “What debt potentially am I exposed to?”

So think about the scenario where somebody separates. There’s a supplemental card in your name and a year later, the balance has gone way up. If you have not somehow removed yourself from that, the lender doesn’t care that you’re separated. That has nothing to do with it. You’re still on that contract. So you do need to be cautious. You really want some finality around those items because you can be exposing yourself to bigger debt problems when you are a supplemental cardholder or where you’re a co borrower and you haven’t really nailed that stuff down as part of your separation and the sorting out your finances.


So what about, speaking of separation, divorce and debt responsibilities, what if it is not a joint card and you are told you are responsible for it. Are you?

Jennifer McCracken:

The way the family law, at least in BC works, is it’s considered family debt. So there would be a responsibility to make a contribution towards paying at least 50 per cent of it. So there could be an obligation within your family law, I mean, it’s a settlement or whatever, that you would have an obligation to pay an amount, either to the bank or to your ex.

I can tell you that legally, if a husband and wife have a card that’s only in the husband’s name, they then separate, and the wife does not have a supplemental card, is not a co-borrower, legally, she is not responsible to pay the bank. Like if the bank were to actually pursue a claim and get a judgment, they could only get it against the main borrower. But there could be some obligation through the family law process where an individual would actually have to make some sort of financial contribution towards the family debt. So I don’t know if I’ve answered that well, but-


No, no, that was good. I understood.

Jennifer McCracken:

It’s a convoluted answer. I don’t know what to say.

If your spouse files bankruptcy or consumer proposal, will it affect you?


It’s a convoluted situation, and it’s why I asked because there’s so much around it. Like, for example, if I and my husband, I am having that issues that he cannot help me with, and I file for a consumer proposal or a bankruptcy, a lot of couples think that it also affects the other spouse.

Jennifer McCracken:

And it doesn’t. You’re right. That’s a really great example to give. So that example you give where he’s not responsible in any way, there’s also a question of, “Are they going to report to my credit bureau? Because I’m his wife?” And it doesn’t get on his credit bureau file, it has nothing to do with them. They’re two separate people and they’re reported separately. So there is no impact.

So for a lot of individuals, they actually feel a sense of relief that they don’t have these joint combined finances because when one spouse wants to do a filing and the other spouse doesn’t need to, it is a lot easier and cleaner when they say, “This is the debt, it’s solely in my name, and this will have no impact on my husband at all. I’m going to resolve the debt, deal with it, and it’s not going to affect him in any way.”


And the other spouse not helping doesn’t necessarily mean that they don’t want to. Sometimes bills still need to be paid.

Jennifer McCracken:

Oh, for sure, absolutely. I don’t see a lot where there’s one spouse just sort of sitting in the corner, sort of like pointing their finger at them. Like generally when a couple and a family is having debt problems, in most instances there’s been a lot of buildup to it, there’s been a lot of conversations around it and there’s really just a need to find a solution. So it’s not really a blame game situation. I mean, there are times, of course, if somebody’s had addiction issues or there are other things going on that have caused the debt, that could be an issue for the relationship or for the situation.

But generally speaking, most people are on the same page of like, “Look, we just want to get the debt under control and we want to cause as little sort of damage to ourselves and our credit rating as much as possible, when we get out of debt.”

Debt problems can negatively affect emotional wellbeing and mental health


Exactly. So when overwhelming debt happens to a person, regardless of the reason or the cause, it’s often accompanied by stress, anxiety, depression, loneliness, despair, anger, to name one of the many myriad of emotions that they go through. What advice do you have for someone whose financial challenges are affecting their emotional wellbeing or their mental health?

Jennifer McCracken:

You know, I really…I mean, I feel so blessed to be in the work that I do because I really truly feel that it’s such an opportunity to help people. People should just know that there’s no reason to be ashamed that you have debt, that life is hard, and a lot of times there is a significant life event, like a death or a failed business, or a divorce, or something like this that has really … They’ve already been through so much personally, and the debt is just one other aspect of their life that they needed to supplement their income, times were tough. There was a reason around it.

So it’s easy to say, “Well, don’t feel ashamed.” But the key is to work through those emotions to understand, “Look, I’m not alone. I’m like hundreds and thousands of other people all over the world that have struggled with debt and I’m just doing my best.” The point now is, “I’m going to find a solution.” It’s an opportunity for change. “I’m going to change my life. I’m going to get out of debt.” You’ve learned from your mistakes, you’ve learned from the hardship because a lot of times there is a hardship associated and you just got to find that solution going forward.

And know that a lot of people that work in this realm are very empathetic people. We come in knowing every meeting, every conversation I have with somebody, I’m going to learn something new, or hear something different. Everyone’s life is so unique. So you just have to know that this is just one part of your life and it’s an opportunity for you to get it under control. You will feel those emotions are normal and it’s really common. But once you start getting your life on track, in terms of having a plan to deal with your debt, it’s amazing, those feelings, like they switch off.

I always say to my clients — I mean, I know we’re not meeting face-to-face anymore, but when we were — they physically look different. They physically look like different people. So that’s the stress, the stress, it brings them down. They look tired. They’re really drawn in and they’re really tight. They’re physically different people after they get a solution in place, whether it’s bankruptcy or proposal. So that’s the key to focus on.

“You’re already here. We’re not going to go through everything. Let’s just move forward. We’re going to find the solution. And that’s what’s going to change your life and change those feelings, not looking in the past and feeling guilty and ashamed over at all. That’s not going to get you anywhere. Let’s just look forward.”

How to help someone struggling financially


Exactly. So what advice would you give to someone who has a friend or a family member who’s emotionally struggling and suffering because of debt or financial challenges? What advice could you give them to kind of help get the person they love the help they need?

Jennifer McCracken:

I would say that, first of all, you want to show kindness and empathy and say, “Look, you’re not alone.” If someone shares a situation like that with you, and you’ve had your own personal struggle with it, open up as well, because that person is already feeling alone. So if you have a close friend or family member say, “Look, I’ve been through the same thing, or, “I had a best …” You don’t have to name names, but you can say, “Look, I’ve known … I’ve talked to people about this before. You’re not alone.”

Direct them to resources. Like for the work that I do, I’m a Licensed Insolvency Trustee. There’s free information, free consultations available. I always encourage folks to, if there’s a component of mental health, talk to your family doctor. There’s lots of resources out there to get you back on track.

I think just being supportive and saying, “I’m here for you. We’re going to find a solution for you. We’re going to get out of this and everything’s going to be okay.” That’s the advice you want to give. Talk to a professional, talk to a Licensed Insolvency Trustee, they’re going to help you find that path. You could offer to go with them if they want. “Do you want me to go to the meeting with you? Do you want me to help you get your papers in order?”

Be a resource and if they know you don’t judge and that you’re not making them feel embarrassed, and you’re saying, “Let’s be part of the solution.” That’s going to motivate them to make the change and to get their life back on track.


Well, that is a great way to end our interview today. Thank you so much, Jennifer, for sitting down with me. I really appreciate it. It’s lovely.

Jennifer McCracken:

Thank you for having me.


Have a good one.

Jennifer McCracken:

Yes, you too.


Thank you very much to Jennifer McCracken, BDO Licensed Insolvency Trustee, for taking the time to talk to us today. Also thank you for listening to this episode of the BDO Financial Wellness podcast. For more debt management resources, tools, and advice, visit our website For more podcasts and videos, visit our YouTube channel BDO Debt Solutions Canada, and remember, we are here so that you don’t have to face debt alone.