February 2, 2022

What should you do when a life event leads to debt?

Three Licensed Insolvency Trustees tell us about the real-life experiences of individuals facing debt due to life events, including divorce, death, and becoming new parents, and how they helped them find solutions.

Facebook LinkedIn Whatsapp

What should you do when a life event leads to debt?

Debt and a major life event often go hand in hand. Something significant happens that you weren’t expecting or weren’t financially prepared for, and you can find yourself relying on credit to get by. In this episode of the BDO Financial Wellness Podcast, we’re joined by BDO Licensed Insolvency Trustees (LITs) Nancy Snedden, Jennifer McCracken, Jayson Stoppel and Jeff Lewis. Each of our LITs share a story of how they helped a client who was struggling to find a path forward after a life-changing event. They also share strategies for planning ahead for the unpredictable. You may not be able to prepare for every possible situation, but there are ways to minimize the impact on your finances. To learn more, read the full transcript below. - thumbnail

Debt and a major life event often go hand in hand. Something significant happens that you weren’t expecting or weren’t financially prepared for, and you can find yourself relying on credit to get by. 

In this episode of the BDO Financial Wellness Podcast, we’re joined by BDO Licensed Insolvency Trustees (LITs) Nancy Snedden, Jennifer McCracken, Jayson Stoppel and Jeff Lewis. Each of our LITs share a story of how they helped a client who was struggling to find a path forward after a life-changing event. 

They also share strategies for planning ahead for the unpredictable. You may not be able to prepare for every possible situation, but there are ways to minimize the impact on your finances. To learn more, read the full transcript below.

Financial Wellness Podcast Transcript 


Hi and welcome to the BDO Financial Wellness Podcast. I’m Tera Beljo. You know, one of the most common misconceptions about people who struggle with debt is that they did it to themselves. Too much online shopping, couldn’t control their spending, bad money managers. But the truth is, most debt problems that our debt professionals see every day start with an unexpected or significant life event. A relationship breakdown, a long-term illness or a job loss. Everyone has their own debt story.  

In this episode, we’re sharing a few of those stories. Four of our LITs from across Canada, who help people overcome their debt every day, are sharing stories of real people who found themselves facing unmanageable debt because of a life event. For each person, there was a debt solution that helped them move forward and start fresh. 

New parents and debt: How financial literacy can help with a fresh start 

Nancy Snedden, Licensed Insolvency Trustee and head of the BDO Debt Solutions practice, is a huge proponent of financial literacy. She shares the story of helping a couple whose debt became unmanageable during back-to-back maternity leaves. Like so many people, they weren’t taught financial literacy skills at a young age. Here, Nancy offers advice and resources on how to boost your own financial literacy skills.  

Nancy Snedden:

I see so many clients every day, and I've seen so many clients over my career, and although they each have their own individual story and a life event in a lot of cases that's happened to them, there's some that stick with me. And I think a common thread through 80, 90% of the people that come in is a thing that they wish they knew or a thing that they wish they had been taught about as a child growing up. And I think some of them also worry that they don't know to be able to teach their own kids. And as we know, there's not a lot of financial literacy skills taught in the school system. 

So, a story that really stands out for me was a young couple, they had just had their second child. She was preparing to go back to work. And really, it was the two sort of back-to-back mat leaves that got them feeling a little financially stretched. And that's not uncommon for people when they have a reduced income and they're still trying to pay the bills and they get a little bit behind, and they talked to me a lot about, "When we were growing up, our parents never talked to us about money. Our parents never showed us how to budget or what credit was, and how to use credit in the right way and for the right things." And although it wasn't the cause necessarily of what got them into financial difficulty, I think that they felt strongly that if they had have been taught some of those skills, then maybe they would've thought or planned a little better or a little differently. 

Where to find financial literacy help 

And it's so, like I said, so important for people to reach out and get help, not only when they get into financial difficulty, but if there's skills or things that they think could be beneficial, knowledge that could be beneficial for them to move forward with their finances, even without any sort of formal restructuring. So, things like credit counselling agencies have free budgeting classes, for example, and they will sit with you and budget with you every month for an extended period of time until you're comfortable with those skills. I always tell my clients as well, like the FCAC's website has a lot of great information that you can read and learn, and there's ways that you can then pass those skills onto your own kids. CPA Canada, the same. We've got a lot of stuff on our website

But if I talk about this couple, she cried. And I remember thinking to myself, I wish that there was a common place that people could go to, a group maybe that they could talk to and express their feelings, but people are so uncomfortable talking about their own finances with others. So, they don't want people to know they're in financial difficulty. And I said to her, "You're not alone. I see clients every single day, and there's common themes and common problems that I talk about with clients every day, similarly to the conversation that we are having, that you need to just really sit down and look at your budget, and not plan a budget, but track your expenses for a number of months. And based on that, then you're forming your own budget." 

And she said, "It sounds so easy, but no one's ever shown me that. So how am I to know how to go about that?" And so, we sat and we went through the application and I gave them a solution with a consumer proposal. The sense of relief was really overwhelming. And she said, "Nancy, it sounds so easy when you tell me this. It sounds so easy when you lay out this plan. How could I find myself in this situation when it's so easy to look at your monthly budget and try to make a plan?" And that breaks my heart. And people say, "Your job must be so depressing because you're listening to sad stories all day long." But it's the most rewarding career that I could have had for myself because I'm helping people. And I showed her that, although it sounds easy, it's because I'm a professional. I do this for a living. 

And so, you’re a teacher and you're teaching kids about science. So, I know nothing about science, but if you were to sit down and teach me about the things that you do every day, it would sound really easy to me as well. But it doesn't mean that it's going to be second nature or something that I'm going to learn. So, I think when it comes to financial literacy, people often second guess themselves, or they feel like the concepts are something that they should just know. It's not something that they should have to ask for help on so they're often afraid to ask for help. And time and time again, clients will say to me, "This is such an easy process. I wish I had contacted you sooner. I've been struggling for so long. I didn't know which way to turn."  

And there's a lot of shame and embarrassment about getting yourself in a situation because you feel like something that you should have been able to control or you should have been able to help yourself get out of. And it's just not the case. It's no different than any other life concept. Like if your car breaks down, you don't know how to fix it, you take it to a professional. So, there's lots to things you can do to help develop your financial literacy skills if you feel like that's something that you're struggling with. There's also a lot of professionals that can help you through that. It's not something that you should feel ashamed of and it's not something that should necessarily just be second nature to you because it's adding and subtracting your income and expenses.

Debt after divorce: How a consumer proposal can help you rebuild your credit 


A marital separation can have a big impact on a person’s financial well-being, especially if you find yourself newly single with young children and little to no financial support. Credit can quickly become a way to cover the costs of your basic needs. Jennifer McCracken is a Licensed Insolvency Trustee based in BDO’s Vancouver office. She shares the story of a woman who, after raising three children on her own, found herself struggling to deal with the debt that had accumulated over many years. Everyone’s debt situation is different. Here’s how Jennifer helped her find her a solution that she was comfortable with and that gave her a fresh start.
Jennifer McCracken:

I had a really wonderful experience recently, helping a lady get into a plan, to discharge her debt in a consumer proposal. She had a pretty extraordinary life story, relating specifically to her marital separation, so she was in a difficult marriage. She had to leave with her kids, she had three children. She was also quite young, so she was in a situation where she was finishing her education and she wasn't really fully established in her career. So, she went to school, she's now working in her field of study. But along the way, because she had no financial support and she was raising her three kids on her own, she obviously had to access credit and use credit just for basic needs, basic necessities. She's a very smart woman, so she was also able to get access to social housing and other resources in her community, to really support her and her three kids. 

So, she had this long journey where she got into debt, and at that time, sort of had, she relayed it to me, she said the debt was an afterthought, there was never... She was not going to take steps to deal with her debt, when she had the three kids at home and she's in the middle of her trying... getting her designation and trying to get to work. When I got to meet her, one of the kids had already gone out of the house. She's still actually in social housing situation, but she has now established herself in her career. And really, the debt kind of came to the forefront, because she had all these other life events, that she really had worked through. And the debt was becoming just completely unmanageable. Just the amount of minimum payments based on her income, she was on this debt cycle. 

We all call it robbing Peter to pay Paul, but that's really what it is. And you just get further and further into debt. And so, she was under an extraordinary amount of pressure and stress, when I got to meet her. Because she's a survivor and a very strong woman, she was very reluctant even to reach out. So, this is why we say, BDO (first call) Debt Solutions, that is the most difficult thing to do is to make that call.  

I was able to walk her through what her options are, bankruptcy and proposal. She had a very strong view to avoid a bankruptcy, she absolutely could have done one. It was a completely a legitimate option, and she personally did not want to go there. And, I respect all my clients’ views on their personal situation. It's not up to me to dictate to them, what is best for their life. 

So, we eliminated the bankruptcy pretty quickly, and walked through a proposal process. She even though had reluctance to do a proposal, even though she could see the pros of the situation, that she could discharge her debt, she was going to have a manageable monthly payment. If her financial situation improved, she could pay off the negotiated proposal amount, sooner than what she expected. We were going to give her financial counselling sessions. We were going to take the pressure off, so that the creditors could stop phoning.  

A consumer proposal can be the first step to better credit

The biggest hurdle for her, because of course she found all those things, obviously very positive, was actually her credit report and her credit score. She felt that she needed to stay on the cycle of debt, and somehow through some miracle, get this debt paid, to preserve her credit so she can get into her own place. Her goal is to be, to rent her own place, and not be sort of in this other housing situation. 

And I did walk her through that, we provide that advice in our counselling sessions, in fact. Doing a proposal can improve your credit score over time, because you're changing the debt to income ratios, and you are on a plan to actually get the debt removed from your credit report, quicker than if you just continued paying it. So, I could give her legitimate examples of how our clients have been able to reestablish credit, even during a consumer proposal process, and certainly how their credit score improves afterwards. And that was enough for her to see, and deal with the debt. 

And that was really the last piece in her life because she had so many challenges before then, that all stemmed from the marital separation. And obviously it was so lovely to have an opportunity to help her. And we're in the process now, so of course, I'll be elated when she finishes, and it's just been a really great journey to walk her through it. And I, of course admire her and her strength. And, yeah, it was just a great opportunity to help her get through that last little bit, that she needed to deal with.

Debt and loss: What to do when a loved one leaves debt behind 


What happens when you’re the executor of a deceased relative’s estate and you find out they have serious debt issues?  It’s not something many of us face even once in a lifetime. The role of a Licensed Insolvency Trustee is to explain all available options for dealing with an estate’s debts — while also being mindful of the wishes of the loved one who passed away. Jayson Stoppel, a BDO Licensed Insolvency Trustee in Thunder Bay, shares two stories of people who found themselves in this situation. Here’s how Jayson helped them find a debt solution that brought them peace of mind.   

Jayson Stoppel:

We get an opportunity to work with individuals and families from time to time. And often the starting point when we're dealing with an individual that's passed away that has debt, or unknown debt obligations that are just coming to light, we need somebody to talk to. And so, I've had the opportunity as a Licensed Insolvency Trustee, over a number of years, to work with executors and deceased individual's estates.  

One of the things that we do when we see an individual that's passed away and they've got more debt than they have assets, is we try to talk to the executor about their rights and responsibilities and making sure that they understand that the stress and pressure of trying to deal with collections and creditors can be taken care of by putting the estate into a bankruptcy. When we're dealing with a deceased individual's estate, it's actually quite a relatively straightforward process whereby we can make a motion or an application to court. And the courts will then allow the executor, the debtor individual's representative, to assign the estate into bankruptcy. Once the estate is in bankruptcy, then our responsibility is to take control of that estate. 

An LIT can offer peace of mind and solutions for an estate’s debt 

So, we can give that executor peace of mind and a little bit of ease and comfort that all of the questions and concerns and a lot of the things that have been sort of bothering them, we're now taking that over. It's now our responsibility as the trustee to take care of the last wishes and the estate assets, and to deal with the creditors.  

One anecdote from a file that I had done a number of years ago, a debtor had passed away. An individual had passed away. He was a sole proprietor. He acted in a professional capacity during his career. So, he had a GST account, HST account, he also had some tax filings from a business perspective, from a sole proprietorship that he ran. When his daughter took over his estate, she soon realized that her father's income tax filings were significantly in arrears. 

And she also realized that her father's remittances to the government, on a number of his tax filings were significantly in arrears. She was completely at a loss as to how to handle this, because her role as an executor was to carry out the last wishes of her deceased father. She was in a position where she couldn't honor the wishes of her deceased father and distribute property to family members and friends, because she had this outstanding Canada Revenue Agency obligation.  

By using the Bankruptcy and Insolvency Act, we were able to sort of put ourselves in between her, in her role as the executor and the creditors, being this case, Canada Revenue Agency. We assisted in the realization of the assets and we were able to get the income tax filings up to date. And at the end, we were able to close out the estate of the deceased individual to the benefit of Canada Revenue Agency, but also to the peace of mind and the benefit of the executor, the daughter in this case, because it was quite a stressful time. 

We also had another situation where we had a deceased individual that was killed tragically in a car accident. His wife, when she took a look at the sort of paperwork and documentation for both the family business and with respect to the deceased individual's last wishes. Well, unfortunately in that situation, well, we never really know when life's events are going to take a tragic turn. And unfortunately for this individual, he passed away without any direction with respect to his last wishes and no last will or testament. And he also passed away with his books and records for his business and the assets of his business in quite a state of incompleteness or disarray. 

So, in that situation, we once again, were able to make an application to court and the courts allowed us to act in the capacity as a trustee of bankruptcy. So, we stepped in between the deceased individual's spouse, who was really...quite obviously, the tragic loss of a spouse was very, very difficult to deal with, to have to deal with all of the paperwork and all of the business issues and all of the Canada Revenue Agency issues on top of that, was an extremely stressful experience. 

So, we were able to sort of step in and become that individual that was the middleman between the creditors and the deceased individual's assets and books and records. So that's a couple of situations where we've stepped in and we've been able to assist deceased individual's relatives by taking care of their estate through a bankruptcy. 

Why it’s important to talk to your loved ones about financial problems   

Oftentimes, and quite frankly, we don't talk about money. As individuals, we talk about our favorite sporting teams. We talk about the pain in our knee. We talk about the pain in our back. We'll talk about the strangest things with strangers and with family members and friends, but oftentimes when we're facing financial difficulties, especially if we've got health issues near the end of our lives, we don't want to share the burden of financial issues with our family members and our friends. It's just something that we don't talk about. 

So quite frankly, and unfortunately, in a lot of cases, when you're the executor, or you're the family member or friend that's looking after the last wishes of the deceased individual, that's when a lot of this financial difficulty comes to light. That's when you find out that your uncle or your aunt, or your mother, or your father, or your sister, or your brother, had credit card debt that they had no ability to deal with. And so, you can then take on that stress and pressure of those unknown financial liabilities by saying, "Well, how do I take care of my deceased brother's estate with all of this credit card debt? And he didn't even tell me he was having these problems." 

So, you've got the emotion behind having money troubles and debt. You've got sort of things that get disclosed after the fact. Oftentimes it's just easier to look at it through the lens of an insolvency and say, "I'm going to put this estate into bankruptcy, and I'm going to allow the Licensed Insolvency Trustee to deal with the Visa card or the MasterCard, or the auto financing loan and the shortfall thereon, after the car has been sold. So that's just a number of things that sort of pop-up day to day to day, when we're looking at our role as a Licensed Insolvency Trustee.

Debt and unemployment: How to find a solution that’s tailored to your needs  


Dealing with a job loss is never easy, especially in a tough economy. Jeff Lewis is a BDO Licensed Insolvency Trustee in Ontario’s Niagara region. He’s helped many people in his community deal with the debt they accumulated after losing their jobs in the area’s largest employment sector: the hospitality industry. Here, Jeff shares debt advice for anyone who’s experienced a job loss. It’s not only about finding the right debt solution, it’s also about making sure the solution fits your unique situation.  

Jeff Lewis:

My practice is primarily down in the Niagara region, and the largest employer there is the casino. Once the pandemic hit, we noticed that everybody was out of work. The casino closed and it's the largest employer. The biggest industry in the area is obviously entertainment, so the hotels basically were closed because the borders were closed. The restaurants obviously closed. We had most of the people in the area that were working those industries. Well, not working. Claiming CERB benefit. What we noticed was that people were coming to us after a while and saying, "I've managed to get through the pandemic and I've survived on my benefits, but I had to rely on credit to get through." A lot of people weren't ever sure they were ever going back to work and it was a big stress for them. 

Towards the end of the government aid period, other people were coming into me and saying, "Jeff, I do need some help with my debt now. What can we do?" By and large, it's a very similar story for everybody. How much debt have you built up during the pandemic? What's your prospects going forward? Typically, we look at their income. Two things. We look at their income as it is when they come and see us. We can only do a proposal for people, which is a method to repay parts of your debt based on what you can currently afford. But we also look at their prospects as well. What are your prospects for getting back on track? For me, one of the most important things is I can deal with your debt for you, but I can't put money in your pocket, right? 

The earlier you get debt help the better 

I'm really keen to help people to understand, let's going to plan together for your future so that you can be financially successful, and we can deal with your debt. Do you expect to go back to work? You looking for alternative employment? Many people did. But the ones that went back to work, we could plan and work out a proposal for them. Most people think a proposal is... Typically it's paid over 60 months, so we'll make an offer to the person's creditors they owe money to, to pay back a percentage of the debt. So, anything from really 20 to 50%, depending on their income and their assets or their situation at the time. 

A consumer proposal can be adapted to your employment situation 

Many times, it doesn't have to be a straight line. People obviously think, "Well, I can't afford it now. Perhaps I'll delay until the future and I'll file in a year's time." Okay? Big mistake. The one question that people always say to me or the one comment they always make is "My God, Jeff, it's been amazing. I wish I'd come to see you a year earlier, but I couldn't afford it." Right? My answer to that was, "Well, you should have done because you should just take some advice." So, what we can do is we can tailor the terms to suit your needs. What that means is, is that it can be, perhaps, a lower payment for the first 12 or 24 months, based on your current income. If you believe your income's going to go up in the future, or you can have prospects of a better job, and we can tailor those payments so that they escalate over time. 

You may increase your payment in year two or year three and again maybe year three or year four and so on so that you are making larger payments towards the back end of the proposal, right? Sometimes it's a lump sum. Sometimes it's a very small payment you can afford now. If you can't afford a linear payment based on the amount you should pay to your creditors, or they will accept, then what I'll say to you is "Well, how about this payment now, which is very affordable for you, right? Much less than the interest that you're paying. Allow you to keep your assets in your house and so on. Whatever you've got. And then at the end, we'll do a lump sum payment for you based on... You may get an inheritance in your future. You may have a policy that's going to mature. Something like that. Or you may decide “I'm going to sell an asset or sell my house in five years, and I'm going to move. That's a great time to settle my debts." 

What it does is it stops the interest. It stops all the rot and the distress and gives you peace of mind. Huge, huge benefits to talking to somebody early. 


I want to thank my guests on this episode for sharing their debt stories, Nancy Snedden, Jennifer McCracken, Jayson Stoppel and Jeff Lewis. If you’re looking for more Financial Wellness Podcast episodes, articles, debt management tools and resources, please visit our website We are here to help you turn the page on debt. Your next chapter is waiting.

Do you have questions about debt?

Check out our related content


February 2, 2022

What should you do when a life event leads to debt?

Three Licensed Insolvency Trustees tell us about the real-life experiences of individuals facing debt due to life events, including divorce, death, and becoming new parents, and how they helped them find solutions.

Facebook LinkedIn Whatsapp