Your Debt Solutions Experts
BDO Guelph

512 Woolwich Street
Guelph, Ontario
N1H 3X7

(519) 824-9899

Why It’s Important to Work Together on Debt Reduction

Having a partner to rely on for emotional support can have a positive effect on your debt reduction efforts. A recent survey from CIBC revealed that two-thirds of Canadians enter a marriage or common-law relationship carrying personal debt. So, for those in the early stages of a life together, debt should be an important part of your financial discussions. Consider working as a team to develop solutions for your individual debt management issues. If you’ve combined your finances, the discussion may focus on joint solutions for reducing your overall debt as a couple. Even if you’re still in the dating stages, it’s a good idea to have open and honest conversations about your debt.

For couples in their twenties, thirties and even forties, the issue of student debt might be at the forefront of discussions, as the Government of Canada recently announced it is having to write off nearly $180 million of unrecoverable student loans this year. If you or your partner have a government loan, there are repayment assistance options that can help alleviate debt stress for a period of time. This assistance comes in the form of interest-free periods of repayment, or a temporary reprieve of payments altogether. Government student loans tend to carry lower interest rates than personal loans and lines-of-credit, and the interest you pay can be included in your tax returns at the end of the year.

If you have government student loans that you’re struggling to repay, it’s important to know that these loans usually can’t be included in professional debt relief options like a consumer proposal or bankruptcy. Exceptions to that rule would be if you have been out of school for seven years or alternatively can show that this debt is causing significant hardship on your personal finances.

If you are carrying other forms of student debt such as a personal loan or line-of-credit from a traditional banking institution you and your partner do have debt relief options available to help. If your non-government student debt is posing a challenge when it comes to repayment, seeking help can prove to be very beneficial. This debt will be treated independently from your partner, but both of you should understand what is happening with each other’s finances if you are talking regularly about your debt reduction efforts.

A Licensed Insolvency Trustee (LIT) in Guelph can listen to the challenges you are having with debt and assist you in your goal to have no more debt. The LIT may suggest consolidating non-government student debt and other debts into a single one to simplify your debt management. If the debt problems are more significant the LIT may recommend filing a consumer proposal or bankruptcy to address non-government student debt problems. There is no shame in seeking help. Keeping the lines of communication open with your partner can provide emotional support in your debt management efforts.

If you move ahead with filing a consumer proposal or bankruptcy to reduce your debt independently your partner’s credit will not be affected by this decision. The LIT will be able to explain the entire process and work with you to ensure you are successful in completing all the requirements of the debt solution which will include mandatory credit counselling.

It’s important to talk with your partner regularly about challenges you may be facing with your finances — especially in the early stages of your relationship. Together you can make informed decisions on how to approach debt reduction. By focusing on addressing these financial issues as a team you’ll not only strengthen your financial foundation, you may provide opportunities for the both of you to save for major life events like a children, a home or retirement.

For more tips on reducing student debt join the conversation on Twitter using #LetsTalkDebt.

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