Debt, bankruptcies climbing in Cariboo

Tips: create a forced savings plan, save for emergencies

An increase in the number of bankruptcy filings in the Cariboo region have been seen over the past year, according to personal bankruptcy trustee Dean Prentice who opened MNP Debt offices in 100 Mile House, Quesnel and Williams Lake after he observed a trend of people struggling with personal finances.

“Bankruptcies had actually been going down since 2009, and now we are starting to see an increase in activity.”

While still much lower than they were five years ago, he notes bankruptcies have been rising in the Cariboo since then, as are insolvency “proposals.”

“They still go through a trustee, but rather than going bankrupt, what I do is I negotiate a settlement with the creditors.”

Prentice says some ways people commonly get out of debt include selling their house at higher margins or refinancing their mortgages at a better rate.

However, a decline in local house values leaves many who were counting on significant capital gains before renewing their mortgage now out of luck and money, Prentice explains.

“Interest rates being low, people say it’s cheap to borrow money – which is true, but in my mind, it’s the exact wrong thing to do.”

Periods of low borrowing rates are the best times to lump any available money onto existing debts, so more of the payment chips away at the principle instead of the interest, he says, adding interest rates will also inevitably rise, and suddenly payments can become unaffordable.

He has some basic tips to help reduce debt, including creating a forced saving plan; saving for emergencies, paying off the principle and seeking help.