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1. What did you learn about your topic that surprised you the most?

Something that really surprised us was the the extent to which payday loans and Buy Now, Pay Later (BNPL) plans can trap someone into the vicious cycle of debt. Even though the interest rates of payday loans (up to 400% annually) and the often-hidden fees in BNPL plans are high, many Canadians fall into these traps, especially in an emergency situation or when they are not financially literate. Times are hard and its so easy to fall in to this overwhelming world of debt.

2. Provide a real-life example of how this topic is relevant or interesting to you.

When I was younger, around 18, I got a credit card. Thankfully, the amount was only 1000 dollars; however, I was terrible with money and had a creditor after me. I did pay off the balance and have never again been reckless with my money. I now keep my credit card at a max amount of 2000 dollars as it is manageable to pay off, and even when the bank asks if I want to increase my limit I always refuse. I also only have one credit card and not multiple.

3. If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

One thing that I would pass on is the importance of avoiding payday loans and being cautious with BNPL plans. Not a lot of people read the fine print, and they need to know how the interest works and what happens if you miss a payment. It's important to know the full cost before you commit. It may not seem like a big decision, but it can affect everything you do in the future.

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The infographic titled "The Growing Debt Burden for Canadians: 2024 Edition" by the Fraser Institute illustrates the rising levels of federal and provincial net debt in Canada from 2007/08 to 2023/24. The visual image shows the fast accumulation of debt and its implications for the Canadian economy. ​

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We selected this infographic because it shows the magnitude and growth of Canada's public debt over recent years. The clear visual presentation helps people to understand the importance of preventing potential debt traps for future generations.

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This infographic, "The Debt Cycle in Action," really illustrates how continuous the borrowing and lending cycle can escalate into a lot of debt. It shows the cycle of borrowing more than one person can repay along with demonstrating the progression from initial borrowing to increased debt burdens, highlighting the importance of breaking free from such cycles.

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We liked this image because it really shows in a clear simple way the principle of debt traps, making it easy to understand the patterns that can lead to financial instability.​

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This page is great and it explains how Buy Now, Pay Later (BNPL) plans work, defining the agreements that are involved between the Canadian consumer, retailers, and the financial service providers. It really explains the terms and conditions, including payment amounts, frequencies, interest rates, and the potential fees that may be incurred. The site helps to advise the Canadian consumer how to thoroughly understand these aspects before committing to such plans.​

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We picked this website because BNPL plans are becoming more popular, but many Canadian consumers are not fully grasping the financial consequences. Its important to know the breakdown of the payment structures and the importance of being aware of hidden fees and interest rates, which can take the consumer to unexpected debt accumulation.

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How buy now, pay later plans work and how much they cost in fees and interest.

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We picked this site due to the report which analyzes trends in consumer debt among Canadians, showing how banks and financial institutions are adding to rising debt levels through the promotion of credit products. This report shows the growth of secured and unsecured debts, the increasing amount of debt-to-income ratio, and the implications for financial stability. The report also shows the role of financial institutions in adding to consumer borrowing.

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We chose this website for the in-depth analysis of the underlying causes contributing to consumer debt in Canada. An important detail is the examination of how financial institutions' lending practices and credit promotions have had a great influence on borrowing behaviors, providing a greater circumstances to individual debt issues.

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Consumer Trends Report - Chapter 7: Consumer Debt

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Consumer Trends Report - Chapter 7: Consumer Debt

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We picked this website because it shows the importance of the potential pitfalls in the debt advisory industry. Something important to think about is consulting LITs, ensuring that individuals receive regulated and reliable advice, which will help to avoid scams and unnecessary expenses.

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November 9, 2022 - Ottawa, Ontario

As part of Financial Literacy Month 2022, the Office of the Superintendent of Bankruptcy (OSB) and the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) are working together to help Canadians find advice and solutions they can trust to help with their debt. The OSB and CAIRP websites provide important tools and information to help consumers deal with financial difficulties. But what about finding the right professional? When seeking help to deal with debt, here are some things to consider:

Beware of unregulated, unlicensed debt advisors that claim to be authorized to assist you with insolvency options. Some charge hundreds or even thousands of dollars for services they are not licensed to provide, or for unnecessary services offered before, during or after a consumer proposal or bankruptcy filing.

If it sounds too good to be true, it probably is. Watch out for high-pressure sales tactics or unrealistic promises to quickly solve your debt problems or to fix your credit score. Signs may include high fees, high interest rates, delayed payments and advisors encouraging you to make further advances on your credit card or take out a high-interest loan to pay their fees.

Meet with a Licensed Insolvency Trustee (LIT). LITs provide independent, unbiased advice about the options to deal with debt. They are required to assess your financial and personal situation, and to discuss all options available for solving financial difficulties, including insolvency and non-insolvency options.

The OSB has a directory of LITs and LIT firms. LIT services are available across the country, even in remote locations.

An LIT may recommend non-insolvency options such as talking to your creditors, consolidating your debts, establishing and following a budget or a Debt Management Plan (DMP). If needed, they would refer you to a reputable credit counselling agency, for example, to access DMP services.

If your financial situation is more serious, an LIT may recommend an insolvency option such as a consumer proposal or bankruptcy. LITs are the only professionals authorized to administer these government-regulated insolvency options.

Ask for a free consultation. First consultations with an LIT may be free, so those facing debt problems can get advice with no commitment and no upfront fees.

Most importantly, be a well-informed consumer by consulting reliable sources for information, asking questions, and seeking a second opinion. This can help you avoid paying for unnecessary services or fees.

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Need help with your debt? Ask questions and shop around to avoid paying unnecessary fees.

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Is your debt getting out of control? Don't know where to turn for help? You are not alone.

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This official Government of Canada page gives extensive guidance on how to manage debt, including how to create repayment plans, dealing with debt collectors, and how to look for assistance from credit counsellors. This website gives you step-by-step advice to help Canadians understand their financial obligations and look for options like debt consolidation and consumer proposals. The website also emphasizes how important it is to budget and gives tools to help you track your expenses.

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We chose this website for its trustworthy and educational information directly from the federal government. One really great feature is its detailed explanation of the different debt relief options, which can help Canadians to make informed decisions regarding their financial situation.

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Paying down debt, what to do if a collection agency contacts you and getting help with debt.

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This video is really good! It discusses how student loan debt can affect not only young Canadians but all Canadians, by explaining repayment terms, the rising tuition costs, and the long-term financial weight many Canadian graduates face. It also covers government assistance programs and the way student loans are impacting major life decisions, like buying a home or starting a business.

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We picked this video because student loans are an increasing concern in Canada, however, they are overlooked when talking about debt. An important takeaway point is the explanation of repayment assistance programs, which a lot of borrowers are unaware of. This video also highlights how student debt influences financial independence.

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What Students Don’t Know About Student Loans in Canada

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This video goes in depth regarding the dangers of payday loans, showing how their very high interest rates (up to 400% annually) trap Canadian borrowers in cycles of debt. The video talks about day to day life of Canadians struggling to repay payday loans, and talks about whether regulations can effectively protect Canadian consumers from exploitative lending.

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We chose this video because payday loans can be a serious issue, and many Canadians turn to payday loans in emergencies. Being aware of how payday lenders target low-income individuals really made us see the need for a stronger financial education and regulations.

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The 'overwhelming burden' of the payday loan cycle

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This video shows how credit card debt is affecting Canadians, discussing the high-interest rates, how minimum payments work, and their impact on Canadians financial stability. The video talks about how carrying a credit card balance can quickly lead to overwhelming debt due to the compounding of interest and how credit scores are affected when it comes to late payments.

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 We chose this video because credit card debt is one of the most common financial hardships that Canadians face. The explanation on only paying the minimum amount can result in years of repayment was eye-opening. This video also gives you ways to help manage your credit responsibly and avoid these long-term financial stresses.

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What is causing Canadians to take on more credit card debt?

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The video gives you an overview of common debt traps that many Canadians fall victim to. Such as, pay day loans, high-interest loans, and credit card debt. This video talks about how these financial dangers can have long-term financial ramifications and offers ways to avoid them.

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We chose this video as it explains simply how different debt traps work within the Canadian financial system. A good point to remember from this video is how to determine if you are in a debt trap so you can avoid it or fix your financial situation right away.

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How To Avoid The Debt Trap When Borrowing in Canada

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Welcome to our padlet, I hope it is insightful . We will be providing information regarding "The hidden dangers of Debt Traps". We will show the impact of consumer debt on you as an individual and also how it affects the economy.  We will show the different types of debt traps, what their consequences are and how you can avoid debt traps altogether. We hope you find the information helpful regarding how you make everyday financial decisions.

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Welcome to our padlet, I hope it is insightful . We will be providing information regarding "The hidden dangers of Debt Traps". We will show the impact of consumer debt on you as an individual and also how it affects the economy.  We will show the different types of debt traps, what their consequences are and how you can avoid debt traps altogether. We hope you find the information helpful regarding how you make everyday financial decisions.