It’s clear that Canadians are not only just swimming in debt, but they’re currently drowning in it – and insolvency, then a consumer proposal or bankruptcy is their only solution. According to Office of the Superintendent of Bankruptcy Canada (OSB) insolvencies totalled 35,155 in the final three months of 2019, the most in any one quarter since 2010. This figure has increased by 10.2 percent in comparison to 31,900 from the same period one year earlier. This figure is also 5,000 short of the record-breaking number of insolvencies 40,589 – reached in the third quarter of 2009.  

According to Government of Canada Insolvency Statistics, consumer proposals have now overtaken bankruptcy. Since 2015, the number of people opting to enter a consumer proposal has steadily risen while in 2018 it surpassed bankruptcy, with 55% of Canadians choosing this route. We recently discussed a consumer proposal journey from debt to relief and talked about the real and hidden costs of a consumer proposal – but how can you ensure you’re not making any detrimental mistakes while in one?

Let’s learn about the four worst mistakes you can make while in a consumer proposal!

Financing a new car

When in a consumer proposal, one of the worst mistakes you can make is getting a new car with a payment you wouldn’t be able to pay off in three years. This will put you under more financial strain for something that isn’t a basic living expense. For example, your car payment and insurance would cost you $800 a month, and gas may cost you $60 a month. This results in a costly $860 a month on travel alone.   

Instead of financing a new car, why not change your mode of transfer to public transit? In Canada, our transport is energy efficient, timely and cost-effective and buses and trains depart every 5-15 minutes which means you’re never running late. The main positive to public transport is saving, with monthly travel generally costing about $120. So let’s swap the $860 for $120 and you get a savings of a whopping $740. These are funds you can put towards saving, paying larger sums off your consumer proposal or for a strategic rainy-day fund. 

Living paycheck to paycheck

From a recent survey conducted by Loans Canada, 72% of credit-constrained Canadians do not save for emergencies. Following this, we feel one of the worst mistakes you can make is not having a rainy-day fund or emergency fund of at least $500. It’s important to prepare for the worst (or the best!) and if you easily save $50 from your bi-monthly wages, set up a secondary account and organize for the amount to come out the day you’re paid, you could save $1200 in 12 months. This is a simple rainy-day fund, and you will thank yourself for it.  

Using Payday-loans

Unfortunately, this is quite a common mistake made by consumers, deriving from living paycheck to paycheck or not having a rainy-day fund. If your budget is very tight and you end up living outside your means, an emergency comes up or you’re living a lifestyle beyond your net income, this is where people approach a Payday loan company. Payday loans are high interest and usually, come with hefty fees for just taken out the loan (before you even start paying back the loan amount). This high-cost loan generally causes more debt, with 4 in 10 insolvencies driven by Payday loans, according to Hoyes, Michalos & Associates Inc. So you ask, how do you avoid a Payday loan? Follow our first two tips by saving your money and planning your finances, and you will be able to eliminate this as an option.


Increase in rent expenses

This one is an important one to avoid – when you’re renting, make sure your monthly payment is no more than 30% of your net income. If it’s over this amount, your budget will become unmanageable. This will result in more debt, or even worse, without somewhere to live. 

When in a consumer proposal, it’s important to avoid these four common mistakes and ensure your financial health is your priority. It’s a difficult time in anyone’s life when their funds aren’t in order, and at Marble we want to make sure your financial wellness is a priority. If you’re interested in exiting your consumer proposal, visit our website here 


About Marble Financial Inc. (CSE: MRBL; OTCQB: MRBLF) We are a group of forward-thinking financial technology experts that fully understand the benefits and drawbacks of credit in Canada. Marble helps Canadians increase their credit to gain access to prime lending, through our industry-leading proprietary technology solutions Fast- Track, Score-Up, and Credit-Meds. Our proven strategy guides our customers back to a meaningful credit score, 50% quicker than traditional methods. Since 2016, Marble is proud to have empowered thousands of Canadians to a positive financial future. We continue to establish ourselves as leaders in financial wellness.