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Hi, here you will be analysing and viewing more about debt traps. As we know debt traps are one of the biggest issue that Canadians face today. here you will see what is debt trap, how can we avoid it and details about the main debt trap which is credit card trap.

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In this video we can see the details and facts about the Canadian debt traps.  The economists and bankers clearly say that it is dangerous to continue in this numbers. It is said that 2 trillion id debt that Canadians owe, and it is up by 4 percentage. It I also said that for every dollar Canadian earn that owe 1.69 dollar

We chose this video because this provided great values and facts about the Canadian debt. It is good to have great and supporting facts on each topic. So this video provides great data and facts about debt traps.

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Canadians are swimming in more than $2 trillion of debt | Debt Nation

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This video says the facts and details and real-life examples who has been affected by the debt traps due to the effect of coronavirus. There are so many people who are not getting CERB and they are not having any income. So, these people are facing great crisis and are in the path of debt traps due the lack of income to pay bills and thereby the credit card bills are becoming more and more. This is being faced by millions of Canadians

This video has great importance because of the relevance in this current situation of pandemic. (Covid- 19)

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Coronavirus:  Canada's looming debt crisis

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This video greatly explains about the main debt trap that is the credit debt trap created by the financial institutions around an individual. this video provides great information to the immigrants who are mainly unaware about most of the facts regarding the debt trap the financial institutions tend to make through the credit card offerings.

We choose this video because it provides great information about the debt tarp created by the institutions by providing more and more credits to the individual and thereby, making them as their slave surrounded by the credit card debts.

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Credit Card Debt Trap Explained| How Do Banks Put You Under Debt| Be Aware Its A Lifetime trap

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In this video they speak about the Canadas personal debt crisis, this video says about the fact about the household debt and financial crisis the Canadians face. The personal financial crisis of Canadian is lot more. there is a 2 trillion debt for households and that means each Canadian household owes 53000 dollars. This is a very big number. Also, this video details about how to break the debts by effective handling if credit cards.

This video provides important information with regard to avoid debt traps and to overcome the financial crisis of individuals and households.

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This site provides details about what a debt trap is and how to avoid those debt traps. Debt traps are when we cannot pay what we owe to someone. In this site they explain deb rap with examples and in very precise manner. The site also clearly mentions different points for avoiding the debt traps and is very helpful for people to avoid the traps. It also contains information regarding why to avoid debt traps.

We choose this website because this site has good information and content regarding debt traps, examples, why and how to avoid the debt traps.

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Avoiding "Debt Traps"

Nobody wants to be in debt.

Sometimes, it's necessary to borrow money for a big purchase.

You know you'll end up in debt, but you've prepared for this and can make regular repayments.

The problem is when you fall into a massive pit of debt that suddenly becomes harder and harder to get out of.

No matter what you try, you can't seem to pay off your debts, and the money you owe grows larger and larger.

In essence, you've fallen into a debt trap, and you can't get out.

It's possible to get out of a debt trap, but the easiest solution is to avoid them entirely.

As debt-relief experts, we have plenty of experience pinpointing the common debt traps in modern society.

When you become aware of them, you will know what to avoid, keeping your finances safe.

What is a debt trap?

A debt trap is a term that refers to any scenario where someone ends up in a significant amount of debt and can't repay it.

Typically, debt traps will initially seem like safe ventures.

You feel like you're being offered a great opportunity to borrow some credit.

However, they may hold hidden fees or have really strict terms that quickly turn the situation sour.

You're unable to keep up with repayments, meaning more fees are added on, and your debt grows.

Why should debt traps be avoided?

The biggest problem with debt traps is that they force you into more debt.

If you take out a loan and can't make repayments, you start owing more money.

It's impossible to keep up with these payments, so you take out another loan to help you out.

Now, you have multiple debts, making the situation more.

You end up trapped in a debt spiral that's very hard to get out of.

In fact, many people that fall into these traps will end up filing for bankruptcy as they reach a point where they physically can't pay their debts.

Needless to say, you want to avoid this situation.

What are some examples?

There are a few common examples of debt traps you can easily walk into in modern society.

You need to be aware of them as it's much easier to avoid a trap if you know where it lies!

Here are the most common traps in Canada:

Credit Cards

When used correctly, credit cards can be a clever way of building your credit.

If you pay your bill in full every month, it shows you're capable of borrowing money and paying it all back on time.

However, credit cards are also the biggest debt trap of them all. Many people get lured in by minimum payments.

On the surface, minimum payments seem like an excellent thing.

Credit card providers give you a chance to make a smaller payment on your monthly bills.

This will be a percentage of the bill, and it means they don't hit you with any late fees or extra charges.

For many people, it's a no-brainer to pay the minimum as you spend less money each month.

However, failure to pay your entire bill will trigger the interest rate on your card.

This adds to what you owe, and you still have the rest of the bill to pay.

Let's say your bill is $2000 for one month.

The minimum you can pay is, say, 5% of your bill.

As such, you pay $400, keep your credit card company happy, and move on.

You still have the additional $1600 to pay, which gets added to your next bill, plus interest.

Overall, you end up owing way more money than if you paid in full.

This is why credit card debt is so common - people fall into the trap of paying the minimum amount each month.

To avoid this, use your card responsibly and pay your bill in full.

Payday Loans

Payday loans are also a huge debt trap waiting to swallow you whole.

Again, this plays on the idea of good intentions that go wrong.

A payday loan is a very short-term loan designed to give you cash in minutes.

The premise is that you get some money to use until payday.

When you get paid, you pay the loan off, and everyone is happy.

A typical loan length will be around two weeks.

Unfortunately, most people struggle to make payday loan repayments on time.

This is where the debt trap kicks in.

Missed payments lead to outrageously high fees and charges.

You'll likely have a late payment fee tacked onto an extortionate interest rate.

To give you an idea of how costly this is, payday loans in Canada can end up costing the equivalent to an interest rate of 500-600%.

In effect, you're in a situation where you simply can't meet the loan terms and end up falling deeper into debt thanks to the interest fees and extra charges.

Avoid this by not going for payday loans as they aren't set up to benefit the borrower.

Car Title Loans

A car title loan is where you use your car to secure a loan.

It is collateral, meaning your vehicle can be seized if you default on the loan terms.

This is considered a short-term secured loan, and many people use them if they need money quickly.

Again, the major issue is that interest rates are so high.

They can almost be as high as payday loans, but the problem is arguably bigger.

You need your car, so you will do all you can to maintain payments.

This quickly leads to more loans being taken out from different lenders.

In fact, you may get a payday loan to cover your car title loan, sending you into a massive debt trap.

The best advice for avoiding financial traps is to only borrow money if you can afford it.

Take interest rates and additional charges into account at all times.

Borrowing money can be helpful, but only if you're in a strong enough financial position to pay it back on time.

Get out of your debt traps today!

Are you currently in a debt trap?

Don't worry, we can help you get out of it with our debt-relief services.

Call us today, and we can book you in for an initial consultation.

Alternatively, feel free to fill in one of our evaluation forms.

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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What Are "Debt Traps" And How Can You Avoid Them

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Debt traps can be very damaging and may lead to bankruptcy. Learn how to avoid them and maintain financial stability.

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this site clearly explains the one the main path that leads to debt trap among Canadians which is the credit card debt trap. This site says that facts relayed to why the Canadians gets attracted to the credit cards and why they are depending the credit card institutions to pay their bills and expenses. This site also mentions hoe these credit card institutions lead these individuals to the credit card debt trap.

We choose this site because this site contains information related to the credit card traps and then lead to debt traps in very precise manner with real life examples.

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This column is part of a series we're calling Debt Nation looking at the state of consumer debt in Canada.
Even after a decade of rock-bottom borrowing costs as low as two per cent, agencies that help Canadians overwhelmed by debt say their clients are still loading up on some of the most expensive debt in the market by borrowing on their credit cards.

Now as interest rates rise and sources of borrowing shrink, financial literacy experts worry that many more consumers will fall into the same trap of using that high-cost debt to cover day-to-day expenses.

Recent research by for-profit insolvency advisers BDO Canada Limited, conducted by the polling firm Ipsos, puts some colour on the Canadian credit card debt burden.

Read more stories in our Debt Nation series:
Contrary to BDO's advice, Canadians did not use record low interest rates as an opportunity to pay down debt.

"We used the low interest rate environment to acquire more debt to acquire things we wanted," president Doug Jones said. That included real estate. But as house prices rose, people borrowed against that real estate to buy other stuff such as cars, renovations and holidays. And now that interest rates have begun to rise, existing debt will become an increasing burden.

Making ends meet

While credit card interest rates are high, usually in the 20 per cent range, those rates are agreed between banks and consumers in periodic contracts, and so tend not to fluctuate with short-term swings in rates. But for consumers who are already spending everything they earn, rising rates on other sources of borrowing such as mortgages, cars and lines of credit make the easy availability of credit cards a dangerous temptation.

"As the cost of borrowing goes up, your ability to make ends meet is going to become lessened," Jones said. The BDO survey shows signs this is already happening for many Canadians, he said.

"People were saying, 'Well, we're going to have to make some sacrifices here in order to make our budget work,' and one of the sacrifices they made was, 27 per cent of them said: 'I'm not going to pay off my credit cards.'"

According to one of Canada's largest non-profit credit counselling agencies, by the time people become so overwhelmed by debt that they reach out for help, they typically owe between 55 and 60 per cent of their non-mortgage debt on credit cards.

"The average person who comes into credit counselling has generally, on average, six or seven creditors," said Patricia White, national president of Credit Counselling Canada, the parent organization of 18 not-for-profit agencies across the country. "And very likely there are three or four cards in there."

An everybody problem

White says there are more expensive borrowing traps than credit cards, including payday lenders. And Jones says he encountered one young couple with a bad credit rating who had a car loan with a rate of 42 per cent.

But the credit card trap is by no means just a poor person's problem, White says, partly because so many of us use cards to get loyalty points. Paying with credit cards has been normalized for people of all ages. The problem, she says, is running up debt is easy; paying off debt is hard.

"I think it's an every-kind-of-person problem," she said.

And according to Dan Kelly, president of the Canadian Federation of Independent Business, that extends to entrepreneurs who commonly run up debts on their credit cards with the expectation, or hope, that they can get through a difficult period.

Kelly said he did it himself when he was starting out as a consultant. And he says he can hardly criticize business people who do everything they can, including mortgaging homes and going into personal debt, to keep their business afloat.

Many successful businesses go through such phases, he says. Banks are often reluctant to lend money during hard times, but taking on credit card debt requires no one's permission.

"It certainly can be a lifesaver in certain emergencies" he said. "You're setting up a coffee shop and your espresso machine breaks and you need to buy a new one and you need to do that today. You don't have the money to do it. So you can put it on a credit card.

"But you do that too many times and you can drown in the debt, and obviously the interest that is charged can be overwhelming."

Rainy day fund

And that slide from tiding yourself over during a bad time to overwhelming debt can happen so easily, especially if people lose a job or face a serious illness. With interest rates so low and banks anxious to lend for so long, many Canadians came to think it is normal to always be in the hole. But as interest rates rise, being in debt becomes more and more expensive, especially if you resort to credit cards.

Instead, Terry Goodtrack, president of the Indigenous business support group AFOA Canada, says everybody should have a rainy day fund.

But advice like that is only really useful in advance - before it starts pouring. It's less helpful for those who are already struggling to pay off debt.

Goodtrack, who is helping to advise the federal government on a plan to increase financial literacy that goes into top gear in November, which the government has designated Financial Literacy Month, worries that people have become too comfortable with credit and credit cards.

"The problem with that is that easy access gets some people into trouble in the long term," Goodtrack said. "If you can't pay off your credit card in a month, you're living beyond your means."

Keeping back a reserve for hard times, running a carefully balanced budget and always paying off your credit card is sound advice, but for many Canadians struggling to make ends meet, it is easier said than done.

As the Canada Mortgage and Housing Corporation revealed last week, high property prices mean the majority of new homebuyers have already maxed out their budgets. As rising borrowing costs eat further into disposable income, avoiding the credit card debt trap will be harder than ever.

Follow Don on Twitter @don_pittis

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As lending gets tighter, Canadians face threat of credit card trap: Don Pittis | CBC News

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This column is part of a series we're calling Debt Nation looking at the state of consumer debt in Canada. Even after a decade of rock-bottom borrowing costs as low as two per cent, agencies that help Canadians overwhelmed by debt say their clients are still loading up on some of the most expensive debt in the market by borrowing on their credit cards.

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This site sates about the fact that most o the Canadians fear about debt traps and insolvency. The surveys conducted and the results that came out through the surveys points out that more than 30% of the Canadians fear about bankruptcy. This site also mentions about the details on how the banks and financial institutions traps the individuals and then lead them to the traps by increasing the interest rates.

We choose this site because of the fact that they provided with related to the number of people who fear bout these debt traps and the facts related to rising interest rates.

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The day of reckoning for over indebted Canadians might not be coming this week, but a new survey indicates a rising proportion of Canadians fear the fallout from higher interest rates.

Thirty-three per cent of respondents to a survey conducted on behalf of MNP said they could be pushed toward bankruptcy due to rising rates - that's up five percentage points over the last six months.

The Bank of Canada has raised interest rates three times since last summer, taking its benchmark policy rate to 1.25 per cent.

While investors see only a minimal chance (18 per cent) of rates going up another quarter percentage point this week, the survey results paint a worrying picture of how consumers will bear the burden as the cost of borrowing rises.

More than half of respondents to the MNP survey (51 per cent) said they fear higher rates will affect their ability to repay debts, 43 per cent of respondents admit to feeling the effects of already-higher rates and 29 per cent said they have no financial breathing room after paying monthly bills.

"Nearly half of outstanding mortgages have interest rate renewals within a year so monthly mortgage payments are set to rise for a huge proportion of people. But a staggering percentage of Canadians say they already don't have any wiggle room at all," said MNP President Grant Bazian in a press release.

"Households currently showing signs of financial difficulty and living on credit are about to fall into a debt trap if interest rates continue to rise or if they face an unexpected expense."

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1/3 of Canadians fear bankruptcy amid 'debt trap' warning: Survey - BNN Bloomberg

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The day of reckoning for over indebted Canadians might not be coming this week, but a new survey indicates a rising proportion of Canadians fear the fallout from higher interest rates. Thirty-three per cent of respondents to a survey conducted on behalf of MNP said they could be pushed toward bankruptcy due to rising rates - that's up five percentage points over the last six months.

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This website provides a clear real life example of a lady who bought house by lending loams and ho she was trapped by the credit card institutions by helping her to pay the interest of the loan and thereby leading her to the ultimate trap of debt .

We choose this site because it is good to provide the topic with a real life example and how one will slowly get trapped into debts by owing more money to credit card institutions and banks to pay off their interest and bills.

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In 1998, Ann bought a one-bedroom condo in the Kitsilano area of Vancouver. Gainfully employed at a printing company, she found the monthly mortgage payments were within her budget (Ann and others quoted in this story asked that Maclean's not use their full names). The building was on the older side, and eventually she got the itch to update the decor. She intended to replace only her bathroom sink; she ended up renovating the entire bathroom. "I remember thinking, 'Well, now that I've started...' " The kitchen came next, then the living room and finally the bedroom. Ann thought the renos, funded partly on credit and spaced out over a few months, would boost her condo's value. She also wanted to keep up with her neighbours. "Everyone was doing something," she says.

Finances became tight afterwards, and she only paid the minimum on her credit card each month. Every year, her condo fees rose while her salary at the printing company (where she still works) stagnated. She began relying on credit for everyday expenses, and later took out a second card.

Soon, one of her banks began calling with a solution to help manage her debt. She ignored the inquiries, preferring not to think about her finances, but she started to feel desperate: "I just wanted to do something, and that was the only thing coming my way." The bank offered a loan at a low rate to pay off her high-interest credit card debt, and she ended up taking out a second mortgage for $80,000. The interest rate still wasn't manageable. "It was a huge mistake," she says.

READ MORE: After weathering the Great Recession, can Canada avoid a debt crisis?

Saddled with two mortgages, rising condo fees and a flat income, she continued relying on credit cards. Surprise expenses, such as dental work, added to her debt. Embarrassment kept her from seeking help. Three years ago, she decided to sell her condo. Despite Vancouver's booming market, the sale didn't solve Ann's financial problems. She moved in with a friend and was able to pay off her mortgages, but she couldn't make much of a dent in her credit card debt.

In 2017 year, Ann turned 64. She was carrying $70,000 in debt, and knew she couldn't work another decade to pay it down. That realization prompted her to seek help, and she eventually met with an insolvency trustee. Ann's trustee filed a consumer proposal on her behalf. Less severe than personal bankruptcy, a proposal is an offer to all of an individual's creditors to pay a portion of debt under a strict plan over a maximum of five years. The remainder is discharged. Creditors typically agree to these arrangements since they are guaranteed to recoup at least some of their money. For Ann, filing a proposal came as a relief. "I actually feel like I can breathe again," she says.

Other Canadians are still suffocating. In early 2017, the household debt-to-income ratio hit another record of 167.8 per cent. A long period of abnormally low interest rates has enabled Canadians to carry massive debts, since monthly payments appear manageable. Further, in cities with rising home values, particularly Toronto and Vancouver, homeowners can secure a home equity line of credit (HELOC) to pay other debts or simply fund their lifestyles. In spring of 2016, the Financial Consumer Agency of Canada warned that the increased use of HELOCs "may lead Canadians to use their homes as ATMs, making it easier for them to borrow more than they can afford."

Insolvencies, though, are rare. As of the end of July [2017], there were nearly 123,000 consumer proposals and personal bankruptcies filed by Canadians in 2017, a decline of 1.2 per cent from the same period in 2016. That might be a sign of fiscal prudence, but it's also the result of record low interest rates that ease debt-carrying costs. Scott Terrio, an insolvency estate administrator and president of Debt Savvy in Toronto, calls this phenomenon "extend and pretend." Canadians can extend their debt repayment terms and pretend to live a lifestyle they can't otherwise obtain. He sees it all the time-couples with decent jobs carrying large mortgages, and putting daycare, cars and vacations on credit.

RELATED: Canadians pile up debt faster than anyone in the world

Some reach a trigger moment when they can no longer pretend-a job loss, say, or divorce or illness. But lately Terrio has noticed a change in his business. More clients are coming in because they're simply tapped out. As with Ann in Vancouver, there is no trigger. "It's a gradual realization for some people," Terrio says. "They can't do it anymore." Lana Gilbertson, an insolvency trustee in Vancouver, has seen the same change. "Nowadays, they have jobs, they're making money, they're plugging along, but they're just in over their heads," she says.

The cost of borrowing is set to rise, adding strain to households. The Bank of Canada hiked rates twice in 2017, signalling more could be coming-depending, in part, on whether households can handle it. Economists at TD Bank Group believe two more rate hikes are likely next year. That will cause rates on everything from lines of credit to car loans to mortgages to tick up. At the same time, house prices are not rising as quickly as they once were in many Canadian cities. RBC Economics forecasts home prices in Canada will increase 11.1 per cent in 2017-and just 2.2 per cent in 2018. Canadians won't be able to pull cash out of their homes so easily to get themselves out of trouble. "The insolvency business is cyclical, and we're at least a year overdue for shedding blood in the system," Terrio says. "If ever we were poised to hit that right on the head, it's now."

For some Canadians who struggle with debt, the problem can be traced back to real estate. In a survey TD released in September 2017, 56 per cent of respondents from across Canada were willing to exceed their budget by up to $50,000 to purchase a home. At the same time, 97 per cent of homeowners said they wished they'd factored in other obligations before buying, such as property taxes, maintenance costs and "overall lifestyle expenses."

The problem is not confined to Toronto or Vancouver, where huge price gains have enticed buyers to stretch themselves for fear of getting permanently priced out. In Regina, Joshua and his wife purchased a house in 2014 when expecting their first child. Both 24 years old at the time, they carried about $35,000 in debt between them, mostly tied to student loans. "We rushed into getting a house because we just thought it would be the right thing to do," Joshua says. "It almost felt wrong to be renting and having a kid." (Joshua's mom pressured them to buy, too.) In one weekend, they viewed 16 houses. The very last one felt right. They put down five per cent and moved in.

But the couple was blindsided by maintenance costs. Their furnace needed repairs, and they later had to replace the water heater, which set them back hundreds of dollars. After expenses, the pair has virtually no cash to put toward their debt. Joshua's card is maxed out, and his wife's card is close to the limit. Joshua says they're frugal (splurging means going to Subway) and live paycheque to paycheque. The situation became worse this year. His wife is on maternity leave with their second child and their variable mortgage rate ticked up. "Just the way the rate is fluctuating is killing us," Joshua says, who works in sales at a telecommunications firm. "It can't keep changing like this."

Staring down tens of thousands of dollars in debt, rising mortgage costs and no foreseeable way to substantially boost their incomes, the couple decided to sell their house and rent. They're not expecting a windfall. A while back, their basement flooded and they used the insurance money to repair the foundation. The basement had been finished, but there's no cash to renovate it, so it will be sold in "as is" condition. The market in Regina is also soft, and the average home price is down slightly from 2014. Joshua hopes to at least get his down payment back, and their financial situation should improve when his wife returns to work as a massage therapist. "We'll be able to really hack away at our debt," he says, "but it's going to take years."

While real estate has led to financial distress for some Canadians, it's been a saviour for others. The home equity line of credit has allowed millions of households to borrow against their properties, providing cash for everything from renovations to investing to debt consolidation. HELOCs have been around in Canada since the 1970s, but in the mid-1990s, lenders started marketing them to a wider swath of consumers. Between 2000 and 2010, HELOC balances soared from $35 billion to $186 billion, according to the Financial Consumer Agency of Canada, an average annual growth rate of 20 per cent.

The pace of growth has slowed since then, but balances still hit $211 billion in 2016. Lenders have been all too eager to dole out HELOCs, creating the perception of instant, easy money. An animated commercial for Alpine Credits, a lender in B.C., features a room full of employees rubber-stamping loans-even for a client who wants to install a four-storey waterslide. (The employees celebrate by cheering while one pops open champagne and another tears off his shirt.)

RELATED: Praying for a real estate crash

One common use of HELOCs is to pay off higher-interest debt. In 2016, according to Scotiabank, Canadians used $11.6 billion (or 28 per cent of HELOC withdrawals) for debt consolidation. Doug Hoyes, a founder of licensed insolvency trustee Hoyes, Michalos & Associates, has witnessed the shift. The firm has offices across Ontario and in 2011, roughly one-third of the firm's clients owned a home when they filed for bankruptcy or a consumer proposal. Last August, just six per cent of insolvent consumers were homeowners. "You don't need to file a proposal to pay off your debt," he says. "You just go out and get a second mortgage."

If the pace of home price appreciation slows down-or worse, prices drop-there will be consequences for households that have been piling on debt. The slowdown in the southwestern Ontario real estate market is already creating stress. Hoyes recently saw a couple who purchased a home four years ago and accumulated $70,000 in unsecured debt. They bought furniture, hired landscapers and borrowed to finance a swimming pool. Before the slowdown, the couple might have earned $100,000 by selling their home. Now they might get $70,000, which would barely cover their debts. They're also reluctant to sell and move to a different neighbourhood. And because of the softening in the market, they haven't been able to find a lender willing to issue them a HELOC large enough to cover their unsecured debt. Their solution? Convince one set of parents to take out a second mortgage, and borrow from them. "It's the bank of mom and dad," Hoyes says.

And while debt consolidation is an effective strategy if consumers don't fall back on bad habits, Terrio says recidivism is a problem. "They go ka-ching out of their house and pay off their credit card debts, but they go and run up their cards again," he says.

Borrowing against her home wasn't enough for Charis Sweet-Speiss to pull herself out of debt. A registered nurse, she divorced and moved from Ottawa to Oliver, B.C., a town south of Kelowna, in 1998. Her then-boyfriend (now husband) wasn't working at the time, and the couple used the divorce settlement to start building a new life; they bought a used car, a place to live and furniture. "Then that money was gone, so I just started using credit cards," she says. "And it was so easy." Their debt started building, and their income wasn't sufficient to pay more than the minimum. New credit cards she'd never asked for arrived in the mail, and Sweet-Speiss started using them. She had 13 on the go at once, and eventually they were all maxed out. "I've always been employed. I make a good salary. But just paying the minimum every month was a lot of money," she says. Every six months, she phoned each credit card company to wheedle them into reducing her interest rate. She caught some breaks, but never enough to make a big difference: "It was a horrible way to live."

Sweet-Speiss says she wasn't frivolous with her spending, but in retrospect, she made questionable decisions. When her daughter would run up a large balance on her own credit card, Sweet-Speiss sent her money-even though it meant sinking deeper into debt herself. Sweet-Speiss borrowed against her home at one point and withdrew money on two separate occasions to consolidate her debt, but was still left with $40,000 on her cards, and it built up again.

After more than a decade of amassing debt, Sweet-Speiss turned to the Credit Counselling Society for help ridding herself of nearly $67,000 spread across 13 cards. Once enrolled, her interest payments stopped and she was put on a plan to pay down principal. She completed the program this in 2017. She still has a mortgage and a line of credit, but is finally free of high-interest credit card debt.

Sweet-Speiss says her mortgage would have been paid off a decade ago had she never borrowed against her house. Indeed, one of the problems with home-equity loans is that they cause debt persistence. HELOCs are marketed with little or no obligation to repay in a timely manner. For years, one of the main advantages of owning a home is the forced saving effect-paying the mortgage, combined with rising property values, builds equity. A HELOC undermines that dynamic, tempting consumers to access cash now rather than build wealth over the long term.

It marks a fundamental shift in the way Canadians think about homeownership. "Whatever happened to getting to the end of a mortgage and owning your home?" says Gilbertson, the trustee in Vancouver. "It's less about truly owning our homes today and more about having another revenue stream to fund our lifestyles."

VIDEO: How to keep from drowning in credit card debt

That Canadians are carrying record amounts of debt is not in dispute. But the magnitude of the problem is contested. "I think the fears are overstated," says Paul Taylor, CEO of Mortgage Professionals Canada. "Canadians are incredibly prudent, and history will show that." As the head of an industry association for mortgage lenders, brokers and insurers, Taylor isn't exactly impartial on the issue. But he points to a report from the Parliamentary Budget Officer released in 2017 showing that, since 2009, the debt service ratio-a measure of income spent to pay debt-has remained steady at around 14 per cent, not much higher than the long-term average. That's a sign that even though we have more debt than 20 years ago, we're not overextending ourselves, Taylor says.

But the same PBO report projects the debt service ratio will rise to an all-time high of 16.3 per cent by the end of 2021. Taylor says the premise is a "little bit flawed" because it presumes Canadians will make no changes to their finances owing to higher interest rates. "I'm certain people will become prudent again to ensure they retain that [historical] expense ratio," he says. Already, brokers have been fielding calls from Canadians about locking in their mortgages to guard against future increases, for example.

Bank of Montreal chief economist Douglas Porter also contends that too much emphasis is placed on the debt-to-income ratio. "We have long been of the view that much of the commentary on this topic has been overwrought," he wrote in a research note this month. The savings rate is close to the 25-year average of five per cent, which doesn't point to a consumer debt apocalypse. Rather, Porter expects spending to "gradually moderate" as borrowing costs rise.

Still, numerous surveys show Canadians are worryingly close to the edge. A report from MNP Ltd., an insolvency trustee, released in October 2017 found 42 per cent of Canadians said they don't think they can cover basic expenses over the next year without going deeper into debt. An earlier survey this summer found 77 per cent of respondents would have trouble absorbing an additional $130 per month in interest payments. And as organizations such as the IMF and the OECD have constantly warned, high household debt renders the country far more vulnerable to economic shocks.

When a downturn does hit, even a high income won't necessarily provide enough protection. Gene moved from the U.S. to Calgary 12 years ago to take a job with a major oil company, earning more than $300,000 annually. He purchased a home for close to $1 million and supported his wife, two kids and mother-in-law. In 2015, Gene lost his job when the price of oil crashed, and was out of work for nine months. He took out a home equity loan for $30,000 to make ends meet, and eventually found another job at a pipeline company, but for half his previous salary. A six-ﬁgure income would be more than enough for most Canadians, but Gene and his family were accustomed to their lifestyle. The kids were enrolled in extracurricular activities, and housing costs added up to $4,100 every month.

A year later, Gene was laid off again. "It was just devastating for us," he says, adding that he began questioning his self-worth if he was unable to provide for his family. He eventually found another job, but at a still smaller salary. On top of the mortgage and the line of credit, Gene had another $20,000 loan. When he first purchased his house, he didn't quite hit the 20 per cent down payment threshold; his bank offered him a loan to cover the difference. He had a couple thousand in credit card debt and a small, high-interest loan from EasyFinancial he'd taken to cover an unexpected medical expense for a family member. Finally, he faced a $90,000 tax bill, since he opted not to pay after he lost his job. Gene sought help from an insolvency trustee in 2017. "I just wasn't making enough money, and I had to protect the family," he says. Gene submitted a consumer proposal, but one of his creditors rejected the terms. In October, Gene filed for bankruptcy-just over two years after making a salary most Canadians can only dream of.

This sort of precariousness worries some experts, who fear wider implications for the Canadian economy. "We continue to see the household sector as accident-prone, with a complacency toward debt which could prove disruptive to the economy," wrote HSBC Canada's chief economist recently. The result is Canada is at "some risk" of a balance sheet recession-a period of slow growth or decline caused by consumers saving and paying down debt rather than spending. David Madani, an economist with Capital Economics in Toronto, doubts the growth Canada has seen in exports recently will be enough to offset the decline in consumer spending. "Canadian policy-makers have allowed household debt to rise above the disturbingly high levels reached in the U.S. in 2007, raising the risk of a similar potentially disastrous deleveraging down the road," Madani wrote.

Statements like that could be dismissed as fear-mongering, but the reality is Canada hasn't been in this situation before, and the outcome is impossible to predict. Canadians ignored warnings from policymakers about piling on debt for years because low interest rates were too enticing. Now households will have no choice but to dial it back. The only question is how bad the fallout will be.
RELATED: MORE ABOUT DEBT:

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How Canadian homes became debt traps - Macleans.ca

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In 1998, Ann bought a one-bedroom condo in the Kitsilano area of Vancouver. Gainfully employed at a printing company, she found the monthly mortgage payments were within her budget (Ann and others quoted in this story asked that Maclean's not use their full names).

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The first picture shows how more and more debts actually lead to trap. It is an excellent symbolic representation for debt traps that clearly depicts that debts are traps.

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The second picture clearly shows the data of debts owned by Canadians by the different provinces of Canada. We can see that the numbers are high in most of the provinces, especially Ontario.

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

The thing that surprised us the most is the fact that the traps that financial institutions put up on an individual by providing more and more credits and thereby making them as their slaves. This was surprising to us. Also, the fact that most of the Canadians are worried about these were also surprising

Question #2
Provide a real-life example of how this topic is relevant or interesting

for you.

This topic is of great importance as I have seen many immigrants especially our friends who came here as international students and are on work permit who struggles to pay off the credit card bills and ultimately falling to debt traps.

Question #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?

The information that we would like to pass to our family member of friend is that do no fall for the credit cards and should pay of the credit card bills as soon as possible without delaying it as this is the very first and easiest manner to be trapped into debt.