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When your debts make you dizzy, you need to take action

Rebecca, a young teacher in her thirties, gradually accumulated credit card debt that now totals $10,000. In addition to that, she has a $5,000 loan taken out to furnish her new apartment. This debt has made her feel overwhelmed, and she has decided to take action.

Feeling trapped and aware that her financial obligations would not disappear on their own, she decided to seek advice from a licensed insolvency trustee. Her biggest fear? Having to declare bankruptcy… Fortunately, that wasn’t the only option available to her.

Assessing the Situation

First and foremost, the trustee helped her assess her financial situation, identify the causes of her financial difficulties, and propose solutions to better manage them.

The trustee initially noticed that despite earning an annual salary of $52,000, Rebecca was struggling to make ends meet with a monthly rent of $800. To give her some breathing room, the trustee recommended reducing certain expenses in her budget and lowering her debt-to-income ratio, which currently stands at 39% (the acceptable limit for financial institutions).

To tackle her debts, the trustee suggested applying for a consolidation loan of $9,900 from her bank to pay off her three credit cards in one go. Instead of having to make monthly payments of $300, the repayment of this loan over a period of 60 months would amount to $230. “However, we did not include the $5,000 personal loan in the consolidation loan because its interest rate (around 9%) is lower than that of the consolidation loan (around 13%). It would not have been advantageous for her,” says Pierre Fortin, a licensed insolvency trustee and president of Jean Fortin et Associés. As for the personal loan, it requires monthly payments of $210 and will be fully paid off in 27 months.

Another recommendation was to keep only one credit card and cancel the other two to avoid the temptation of consuming and incurring new debt. “Ideally, you keep the one you have had for the longest time, as an account that has existed for a long time is considered more favorably in your credit score,” recommends Pierre Fortin.

Repayment Plan

With this repayment plan, Rebecca will gradually regain some financial flexibility as her debts are paid off. In addition to the personal loan (27 months) and the consolidation loan (60 months), she also has to repay an auto loan ($300 over 40 months), bringing the total monthly payments to $740. She will have to tighten her belt, especially during the first 27 months, but the situation remains manageable.

Relieved that she didn’t have to declare bankruptcy, Rebecca assures that she will follow the trustee’s advice to the letter. The trustee reminds us that easy access to credit can easily lead us into the spiral of debt.

“We must remain vigilant and remember that every time we spend money that is not ours – credit – it represents a significant cost in interest rates, and it sometimes takes years to get out of it,” says Pierre Fortin.

Visa $1,800 19% $55
MasterCard $4,300 18% $130 
MasterCard $3,800 20% $115

Personal loan for furniture purchase (ends in 27 months)


9% $210
Total $14,900   $510



$12,000 Auto loan – $12,000, $300 repayment over 40 months 
Furniture $10,000 (new value) Not subject to seizure
RRSP $4,500 Not subject to seizure