Bankruptcy and Addiction

Bankruptcy and addiction often go hand in hand. Sometimes addiction can cause money issues, which ultimately lead to Bankruptcy. In other situations, the stress of extreme debt and the thought of filing for Bankruptcy can fuel addictive behaviors.

Whether you’ve worked through your addiction and are trying to re-establish your finances, or you’re still struggling with addiction and can’t handle your debt, it’s time to speak to a Licensed Insolvency Trustee (LIT). There’s no need to suffer in silence. At Adamson & Associates, we can help you find a solution to your financial situation.

What is Addiction?

When you think of addiction, you might immediately think of substance abuse, such as smoking and alcohol. However, addiction can come in many forms. The Centre for Addiction and Mental Health defines addiction as:

“A treatable, chronic medical disease involving complex interactions among brain circuits, genetics, the environment, and an individual’s life experiences. People with addiction use substances or engage in behaviours that become compulsive and often continue despite harmful consequences.”

While there is still a stigma around addiction and the “addict,” it’s important to remember that addiction can touch anyone. Society often paints a picture of an addict as someone who is weak or immoral, but this isn’t the case.

In Canada, it’s estimated that approximately 21% of the population (nearly 6 million people) will meet the criteria for addiction during their lifetime.

So, if you’re suffering from addiction, know that you’re not alone. Remember, addiction is a disease, and when you’re sick and suffering, you deserve to get help.

How Can Poverty and Debt Affect Addiction

When you’re drowning in debt and tired of trying to make ends meet, you might reach for a drink or another substance to try and numb the pain. Worrying about how you’re going to keep a roof over your family’s head can feel incredibly stressful, and stress is a well-known risk factor for substance abuse and relapse.

Debt can contribute to addiction, and it’s not only people with a lower socio-ecomonic status who are affected. Addiction can pull middle and high-income individuals into debt.

Funding a substance use, gambling, or shopping addiction is expensive, and it can easily destroy your financial situation. You may start to prioritize your addiction over your financial and employment obligations. This can lead to debt and potential job loss.

How Addiction Can Impact Debt

If you’ve gone to treatment for addiction, you might come out with very few financial resources. Research has found that re-establishing your financial footing after addiction is key to recovering from the consequences of addiction. Not having access to money can be a trigger for relapse, especially early on in recovery.

If you’re in a tough financial position and don’t know what to do, reach out to a Licensed Insolvency Trustee for debt help.

You’ve already worked so hard on your recovery, don’t let your finances prevent you from having the future you deserve. You can contact an LIT for a free consultation. At this meeting, your LIT will ask questions about your finances and go through your debt relief options which might include:

Credit Counselling

In credit counselling, you can work with an LIT to learn more about financial management and work on skills such as building a budget or learning how to use credit. A credit counsellor can also help you set up a debt repayment plan which allows you to consolidate certain debts including credit cards and unsecured loans. With a debt repayment plan, you still have to pay back all of your debt. However, your counsellor will usually try to negotiate with your creditors to reduce or eliminate your interest payments.

Consumer Proposal

A Consumer Proposal is an alternative to Bankruptcy that allows you to keep your assets. In a Proposal, you work with your LIT to develop an offer to your creditors to pay a percentage of your debt, increase the time you have to pay, or both. If your Proposal is accepted, you have up to five years to make your payments.

As soon as you file a Proposal, any wage garnishment, lawsuits, and collection calls will stop. This can provide some immediate relief.

Bankruptcy

While the thought of filing for Bankruptcy might make your heart drop, the purpose of Bankruptcy is not to punish. Instead, it’s to offer Canadians who are down on their luck a second chance. While you will have to surrender some of your assets, in exchange, you’ll be discharged from most of your debts.

Bankruptcy and addiction often go together because it’s easy to lose sight of your financial priorities when you’re suffering from addiction.

Fueling your addiction becomes the number one goal, and this can lead to unwise spending, the inability to pay your mortgage or other bills, and insolvency.

How to Find Help

If you are struggling with addiction and need help, there are resources available. The Government of Canada has a list of Canada-wide services and many are free. It also provides links to provincial and territorial health and support services.

For financial help, you can contact an LIT at Adamson & Associates. During your free consultation, an LIT will review your debt and help you decide on a path forward. While it might feel like you’re in a financial spiral, you can get out of it, and you don’t have to do it alone. When you’re ready, call us at 519-310-JOHN (5646) or fill in our online contact form.