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I chose debt traps because of how my parents used to talk about it all the time, to keep me informed of how I should use my  money, and not fall in the patterns as other. I believe that this topic will be very informative for other's that is going down this path.

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This website talks on what “Dept Traps” are and what the four things you will need to avoid, and that is “Payday loans, Paying Only the Minimum on Your Credit Card, Car Title Loans, and Student Loans – Without a Plan to Pay Them Back. “Debt traps is a trap because it’s so hard to get out of.” A debt trap is when someone is stuck in debt but cannot pay back so the person is in a re-borrowing state. Pay day loans is easily accessible but extremely expensive.  If you don’t repay your loan in two weeks the cost goes up. Paying the minimum can mean trying to pay your debt of for years. “Car title loans is a short-term loan where you put your vehicle up as collateral to secure the loan.” But like the others if you cannot pay the debt back you will have a much harder time getting rid of the payments down the road. Student loans isn’t entirely bad but borrowing large amounts of money can make it hard to pay.

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What Are Debt Traps? Avoiding Financial Pitfalls

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Know the concept of debt traps and learn strategies to avoid falling into these financial pitfalls. Empower yourself with knowledge to make smarter decisions.

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This website talks about ten different things that dept trap can involve and has tips to avoid getting into traps. It is shown as blue arrows to show the tips. It also has videos to help with the understanding of the topic of avoiding debt traps. The ten numbers we talk about are “Credit Cards, Overdraft Protection/Bounce Protection, Mortgage Refinancing, Payday Loans, Car Title Loans, Pawnshop Loans, Home Equity Loans, Rent-to-own, Credit Repair, Income Tax Refund Loans.” At the end of the website, they have a recap with what happened in this article but talks mostly on how the problems can get worse.

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There are lots of products and services on the market that may promise temporary relief from your debt-and some of them can. But most of them are just debt traps that can make your financial woes even worse. Here are the 10 Debt Traps and tips on how to avoid them.

Debt Trap #1: Credit Cards

Credit cards are a double-edged sword. In other words, they can be very helpful when you need cash, but if you don't manage your accounts wisely, credit cards can make your financial situation a lot worse. Here's how:

Fees can be exorbitant:

Late payment fees-If your payment is even one day late, you may be subject to a late fee of $39 or more.

Over-the-limit fees-If you go over your credit limit by even one dollar, you may be subject to a fee of $35 or more.

Cash advance fees-Most companies charge from 2%-4% of the amount advanced, with no maximum amount.

Balance transfer fees-Some creditors charge as much as 5% when you transfer the balance from another card. That's a $150 fee on a $3,000 transfer. So if your intention is to lower your interest rate, you may not achieve your goal when you consider the fee involved.

Annual fees: Some cards have annual fees as much as $400. That's a lot to pay for the convenience of using a credit card, especially when there are plentiful no annual fee cards available.

Sudden changes to your credit agreement can be very costly:

Rate increases for late payments-On some accounts, a late payment of even one day triggers an increase in the interest rate of the account. Some accounts that begin at 9% can instantly rise to as much as 29.99%!

Default rate increases-Some creditors will raise your rate if you have been delinquent on any other credit accounts! They regularly monitor your credit report, and if you've been late on any accounts, they'll penalize you.

"Rewards" programs. Any reward program that you have to pay for isn't really a reward program. If it's free-take it! If not-stay away!

Credit card registration services. These services compile all of your credit and debit card account information and arrange for the cancellation and replacement of any lost or stolen cards. Yes, it's convenient. But it comes with a price tag of anywhere from $49 to $99 a year, and you can do what they do all by yourself in about 20 minutes-for free!

TIPS: Read all credit card agreements thoroughly; and make all payments on time, or even a few days early. Useful resources are the Pay Off Credit Card, Credit Card Optimizer and Personal Finance calculators. If you find you are just treading water on your credit cards, try credit consolidation.

Debt Trap #2: Overdraft Protection/Bounce Protection

Overdraft protection and "bounce protection" provides for the payment of your checks-up to a specific amount-if you don't have enough funds in the bank at the time. You can also tap into it using an ATM if you're strapped for cash. But it's far from free:

The overdraft fee for a bounced check or over-limit withdrawal can be over $35 per incident, regardless of the amount.

Most programs demand that all fees, and the overdraft amount, be repaid within 30 days. But some demand repayment in 16 or even five days; and if you don't pay on time, they can send the account into collection!

Some banks even charge a daily fee of as much as $ 10 until you have repaid the overdraft amount.

TIP: If you'd like to sign up for an overdraft protection program, make sure you are aware of the terms you are agreeing to. Know what your fees are, when they are triggered, and whether or not your overdraft protection amount is included in your daily balance. Understand that "Overdraft Protection" is an optional feature of a bank account and that you can opt out of it.

Debt Trap #3: Mortgage Refinancing

When rates are low, it's tempting to refinance your home. After all, your monthly payments will go down, and you'll get some extra cash, right?

Not necessarily.

Only people with the best credit qualify for the lowest rates.

Even if you qualify for a low rate, there are still costs and other considerations, such as: Do you want to sign up for another 30 years of mortgage payments?

Also, ask for a detailed breakdown of origination fees and other closing costs associated with a re-finance. These costs can run between $1500-$5000, on average, for a single family home, adding to what you owe.

Finally, stop thinking of your house as an ATM machine. The purpose of a 30-year mortgage is to have it paid off when you retire, to reduce your expenses when your income decreases. Borrowing from your home will keep you house poor.

Debt Trap #4: Payday Loans

These loans are basically very expensive credit. You write a personal check to a lender for, say, $120, in order to borrow $100 for two weeks. The lender holds your check until your next payday, at which point the lender deposits your check, or you pay another fee to extend the loan another two weeks. So if you roll the loan over three times, that's 3 x $20, and you've paid $60 to borrow $100! That's an annual percentage rate of 521%!

Payday Loans are likely the worst debt trap of them all. Most of them roll into a second loan, and then a third. It's better to pay late or default on other, lower-interest debt than to take out a payday loan.

Debt Trap #5: Car Title Loans

These loans are secured by the title for your car, and the lender decides how much it will loan you for your car, as well as the time period of the loan. Not only can the annual interest on these loans be as much as 264%, but you may also lose your car if you're even one day late on your payment!

TIP: If you must resort to a car title loan, make sure you read your agreement thoroughly and you are certain that you will be able to pay on time.

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Debt Traps: How to Avoid Debt by Being Careful

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There are lots of products and services on the market that may promise temporary relief from your debt-and some of them can. But most of them are just debt traps that can make your financial woes even worse. Here are the 10 Debt Traps and tips on how to avoid them.

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This website has four common debt traps that are payday loans, consumer leases, blackmail securities and credit management. Payday loans has the same point as web #1 so I will talk on the other points instead, but this website talks more on what these four ways can do to your financial situation, and those are bad situations that it talks about.

I picked this website because I needed to show more facts on what debt traps can do, and how dangerous you can get yourself into if you are not prepared. It also gives the definitions so people will know those points.

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From Shakespeare's Shylock to Dickens' Ebenezer Scrooge to HBO's Tony Soprano, characters who lend out money at exorbitant interest rates are unsavoury.

So what should we think of businesses that deliberately target the poorest and most vulnerable for corporate profits?

There has been significant growth in the unregulated small-loan market, aimed at people likely to be in financial stress. Concern about the problem led to an Australian Senate select committee inquiry into financial products targeted at people at risk of financial hardship.

Read more: What 1,100 Australians told us about the experience of living with debt they can't repay

It found plenty to report on, with businesses structuring their lending practices to exploit loopholes in consumer credit laws and to avoid regulation. Charging fees instead of interest is one example.

Below is a snapshot of four common lending practices identified in the inquiry's final report. The practices may be legal but they all carry the high potential to make your financial situation worse, and ensnare you in a debt trap from which it is hard to escape.

1. The payday loan

Payday loans are advertised as short-term loans to tide you over until your next payday. They can be up to A$2,000. The payback time is between 16 days and 12 months.

Lenders are not allowed to charge interest but can charge fees, including an establishment fee of up to 20% and a monthly fee of up to 4% of the amount loaned.

If you don't pay back the money in time, the costs escalate with default fees.

Most payday loans are "small amount credit contracts" (SACC), with three companies - Cash Converters, Money3 and Nimble - dominating the market.

Read more: Four reasons payday lending will still flourish despite Nimble's $1.5m penalty

In 2016, Cash Converters had to refund $10.8 million to customers for failing to make reasonable inquiries into their income and expenses. In 2018, it settled a class action for $16.4 million for having charged customers an effective annual interest rate of more than 400% on one-month loans.

But it is not necessarily the worst offender. The Senate inquiry's report singles out one company, Cigno Loans (previously Teleloans), for allegedly appearing "to have structured its operations specifically to avoid regulation", so it can charge fees that exceed the legal caps.

If you are on a low income and need money for essential goods or services, a better option is the federal No Interest Loans Scheme (NILS), which provides loans of up to $1,500 for 12 to 18 months with no interest charges or fees.

2. The consumer lease

A consumer lease is a contract that lets you rent an item for a period of time, usually between one and four years. You make regular rental payments until the term of the lease finishes.

This can be appealing because the regular payments are very low. But the length of the lease and terms of the contract end up making renting an item a very expensive option.

The Senate inquiry report notes that while consumer leases are subject to responsible lending obligations, unlike small amount credit contracts there is no cap on the maximum cost of a lease, and you will invariably pay more than the cost of buying and owning an item outright.

The report refers to a 2015 study by the Australian Securities and Investments Commission. The study involved Centrelink recipients leasing goods. Half paid more than five times the retail price of the goods. In one case leasing a clothes dryer for two years effectively cost 884% in interest.

Read more: Loan shark regulators need a lesson in behavioural economics

Consumer lease companies disproportionately profit from those on low incomes. The Senate inquiry heard about the the number of leases being paid through Centrepay, the direct debit service for Centrelink recipients.

Thorn Group, owner of Radio Rentals, told the inquiry 52% of its consumer-leasing customers paid via Centrepay. About A$600 million was paid through Centrepay for consumer leases in 2108.

ASIC's rent vs buy calculator can help you work out the cost of consumer lease and whether a better option is available.

3. The blackmail security

Lenders sometimes earmark a borrower's asset as a guarantee for the loan. If the debtor defaults, the lender takes the asset in compensation. Normally, the asset should be of higher value than the loan amount, to cover the debt if the the debtor ever defaults.

However, a lender might choose an asset with a lower value, because it is critical to the borrower's livelihood. A car or work tools are two examples. The intention is to ensure the borrower prioritises repaying the loan over other expenses. Should you be unable to pay back the loan for some reason, losing an asset critical to earning an income will push you into greater financial hardship.

Because the practice is regarded as coercive, so-called blackmail securities are prohibited on loans lower than $2,000. The Senate inquiry report notes concern that some lenders appear to circumvent this restriction by lending more than $2,000.

So don't assume generosity or oversight is the reason a lender offers you a bigger loan or to take as security an asset worth less. Think very carefully about the consequences if you can't repay the loan.

4. The credit 'manager'

If you've gotten into debt and ended up with a bad credit rating, credit repair services offer help with fixing your credit history or managing your debts.

These services may be legitimate businesses or non-profit community services. But there has been an alarming growth in unregulated debt negotiation and debt management services, charging exorbitant and hidden fees for minimal services. The fees and contract structures may be deliberately complex to obscure the costs.

Read more: Debt agreements and how to avoid unnecessary debt traps

According to the Senate inquiry report: "On the evidence provided to the committee in submissions and public hearings, these services rarely improve a consumer's financial position. The charges for the debt management services increase their debt, and often consumers are referred to inappropriate remedies which may be expensive and cause lasting damage. The committee heard many case studies to this effect."

ASIC recommends seeking help from free services first. You can find one through its MoneySmart website here.

Social obligation

Most people would agree we want a society that protects the most vulnerable. That includes having laws and regulations to protect the financially vulnerable.

Read more: There are serious problems with the concept of 'financial literacy'

The growth of financial services that target those most at risk of financial hardship suggests government and industry should take seriously the Senate inquiry's recommendations.

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Four common debt traps: payday loans, consumer leases, blackmail securities and credit 'management'

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From Shakespeare's Shylock to Dickens' Ebenezer Scrooge to HBO's Tony Soprano, characters who lend out money at exorbitant interest rates are unsavoury. So what should we think of businesses that deliberately target the poorest and most vulnerable for corporate profits? There has been significant growth in the unregulated small-loan market, aimed at people likely to be in financial stress.

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This article talks about how Canada homes becoming debt traps. This talks about how people struggled to keep their houses with the number of debts they accumulated over the years to make it harder for them to retire. Their mortgage is hard to fix when the price goes up. At the start they had their story’s but later they talked about banks and what hand they had in the situation.

I picked this website because I needed some examples of real-life situations that been documented with another way of debt trap. This article also shows the process of these victims of the situation and what they went through.

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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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This interview from New York Times is about a lady named Diane McLeod from CROYDON, PA, and her sad situation from being in debt. In 2003 $25, 000 in credit card debt but what she is caring in total of debt now is $286,000. She had a problem with money mostly on financial miss steps, unfortunate circumstances, and a company lending her more credit more then she can repay. The main problem that got her in debt is her chronic shopping and lending company taking advantage of her in that state.

I picked this video because I thought that this video explained a lot on what debt trap can do to you financially and how long It will stay with you.

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This pic accurately describes how dept traps get you when you do not take it seriously it will come back to be more serious for you in the future. That is why I picked this picture because it is ready to trap someone in debt.

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The picture with the man dragging the money behind his back is also another way to express how bad being caught in a debt trap is and how hard it is to get rid of it plus start anew.

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This New York Times video is about Amy and Robert Ahleman who were late with their mortgage payment. Now they are on the verge of losing their dream home. They picked a home they didn’t have enough pay to afford it so they picked out 2 mortgage to buy the house but they didn’t have enough pay to support themselves after buying it, putting themselves into debt by having miss payments on paying off their mortgage, penalties and fee’s that piled up.

I picked this video of this family because it talks about a different type of debt trap that got these folks stuck but it was mostly to blame on their money planning.

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This video from CNBC-TV18 talks about how to avoid Debt Traps with 6 ways to improve your financial system that you would do on an everyday basis. The first one is be prudent the second is be judicious, the third is be free, the fourth is be wise, with the fifth one coming in it’s be disciplined, and last but not lease it’s be safe. These six points have important explanations on how these points come into place so you can understand well.

I picked this video to be informative of what you could do to avoid Debt Traps because I already have videos of what debt traps can do but I needed a video on how to educate others to not fall in the same positions.

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This video from FundooMoney talks on what you can do to avoid Debt Traps in detail. First it talks about what a Debt Trap is and gives an example of how it could happen to you. You would need to create a plan and work appropriate to the situations so you can get out of your situations. The five steps are Pay off high-cost debt at the earliest, consolidate medium cost debt, Look for low cost alternative, Try extending the tenure, and Liquidate investments if the need be. It goes in properly telling you more on each point.

I picket this video because it’s very informative on more points you can use to help avoid Debt Traps, and if you didn’t understand you can read the video underneath so it could help.

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

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

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I learned that watching your money is lot more important than what I once thought it was. What I thought was simple minded thinking, but it became more finding out that if you’re not careful or smart with your money you can get into debt trap and be stuck in a never-ending cycle until you hit rock bottom unless you start to work on your own financial situation with proper steps.

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

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

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I am interested in this topic because of how my parents always talked about it and saying how dangerous it is to make the wrong steps with your money and how you can be in a bad situation if you don’t have a plan. I did my research reading and watching how people got stuck in debt traps and they cannot get away from it. It’s disheartening.

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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?

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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?

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If I can pass this off to anyone including family and friends, I would say the most import things to avoid Debt Traps is the six steps from Video 3. “The first one is to be prudent the second is to be judicious, the third is to be free, the fourth is to be wise, with the fifth one coming in it’s to be disciplined, and last but not lease it’s to be safe.”