How one Canadian made the journey from debt to recovery

“I had taken out some payday loans, cash money loans, things like that, and I could pay them, I could keep them paid, but it was basically living paycheque to paycheque.” 

This is how Ryan (a pseudonym) described the early days of his financial struggles, a situation that, at first, felt manageable. 

“Then eventually the car broke down, and I didn’t have the resources to go and take out another loan, because I tapped my loans everywhere else. So, it was at that point where I realized, oh, I have borrowed too much money, and I can’t pay it all back.” 

Ryan was working part-time, earning hourly wages, while juggling multiple loan payments that added up to more than he could sustain. 

He recalled times where he would end up with four, five or even six loans that all needed to be paid at around the same time.  

“It just got to the point where I had to start choosing between food or a roof over my head, gas in the tank, or the bills.” 

Ryan wasn’t ignoring his responsibilities. He was doing everything he could to stay on top of them. 

“I always made my payments. I never missed a payday loan, cash, money, payment, nothing. Never missed it.” But just staying afloat wasn’t the same as getting ahead. And eventually, even that didn’t feel possible anymore for him.  

Recognizing key signs of financial distress 

Ryan’s experience isn’t unusual. 

According to Bromwich+Smith’s Chief Insolvency Officer and Licensed Insolvency Trustee, Jeff Lewis, financial strain tends to follow recognizable patterns.  

“One [sign] would be you’re using credit to pay your everyday bills,” he explained. “Credit should be something that you use, and you pay off every month. But if you’re using credit to buy food and essentials and gas and paying your utility bills, and you can’t afford to pay it off every month, obviously your expenses are more than your income.” 

Unfortunately, financial distress often escalates from there, said Lewis. “You’ll perhaps do something called ‘debt cycling’, where you borrow money from one source to pay another. So, you’re not actually paying down your debt, you’re just shifting debt around.” 

And while that cycle can work for a while, eventually it tends to lead to a breaking point (as it did with Ryan). “A lot of people do this until they eventually run out of rope; they run out of room to borrow more money,” Lewis said. Also highlighting that the impact of this kind of debt struggle goes far beyond finances. For many people, this pressure starts affecting sleep, personal relationships, and even their ability to work. 

“You can’t enjoy life, it’s about survival for you at this point,” he described, noting that it’s often around this time that people realize they may need a regulated insolvency solution like a consumer proposal or bankruptcy, to help them deal with debt and improve their financial future. 

How to start a debt recovery process  

When Ryan hit his breaking point financially, he started reaching out for help. First, his mother recommended he consult an insolvency specialist to explore whether a regulated solution might be the right fit for him

After some online searching, Ryan learned about consumer proposals, which are a formal, federally regulated debt solution that must be administered by a Licensed Insolvency Trustee. 

A consumer proposal allows you to repay a portion of your unsecured debt over a maximum of 5 years through a single monthly payment, with no interest, while keeping your assets. Your creditors must agree to the terms, and once they do, they are legally bound by them.  

Bankruptcy is the other regulated option available, but it is a more structured legal process that may involve surrendering certain assets depending on your situation. 

Realizing a consumer proposal might be his best solution, Ryan booked an in-person appointment with a Licensed Insolvency Trustee from Bromwich+Smith.  

It was a quick process from there. Two more appointments and he had an approved plan: “They took all of my debt, about $18,000, and they managed to compress it down to about $12,000,” he said. 

Even more importantly, instead of juggling multiple payments with high interest rates, Ryan now had one manageable monthly amount. 

“They were like, ‘what is a reasonable amount, so you could still pay all of your bills and get groceries and stuff, because you need to be able to live too, but you need to pay your debt,’” he explained.  

He appreciated that the Bromwich+Smith team were up front about the responsibilities required of him throughout his consumer proposal term, which was five years.  

A consumer proposal comes with a strict set of rules. You must make your payments, otherwise you forfeit the proposal. Ryan also had to attend two mandatory financial counselling sessions, which he found very helpful in setting a budget and sticking to it.  

“Believe me, I don’t squander my chances,” he said.  

The path to financial recovery takes support, time and discipline 

As Lewis explained, deep commitment to the debt recovery process is often what drives success in an insolvency situation. “The hardest thing to do is to actually make that call and realize you need help.” 

“There are those that we meet that are truly committed to becoming debt free and building themselves back up. They’re the people that really forge ahead.” 

For Ryan, building new financial habits was key to not only successfully completing his consumer proposal, but investing in a home as well.  

“In the course of the five years of paying this off, I got a lot more strict and frugal with my budget.” He started tracking everything. “Knowing where your money’s going is the easiest way to not get it lost.” 

And over time, those habits changed more than just his ability to keep up with payments. They also shifted how Ryan makes any financial decision, from daily spending to long-term planning. “It really became a matter of needs versus wants.” 

“We went from buying whatever we wanted, to buying whatever we needed and applying the rest of the money where it needed to go.” Results don’t happen overnight, cautions Ryan. But his hard work and discipline have paid off.  

“In five years, I have gone from a 300 credit score to my credit score is almost in the seven hundreds. I got my student loans paid off. I got a house three quarters of the way paid off. I got a truck fully paid off in payments, and I was able to do all of that simultaneously, while in the midst of a proposal.” 

For many people, financial strain builds gradually, and so does recovery. If you’re weighing whether a consumer proposal is the right path, speaking with a Licensed Insolvency Trustee at Bromwich+Smith is the next step. There’s no obligation, and no judgment.