Bankruptcies on the rise: Q&A with accountant Nancy Snedden

A personal finance and bankruptcy expert says the number of people having financial difficulty is up across Newfoundland and Labrador.

The province has found itself in a difficult fiscal situation, as have some of its population.

Nancy Snedden,an accountant and bankruptcy expert with Deloitte in St. John's,spoke with Anthony GermainforCBC's St. John's Morning Show.

See their conversation below. Note: the entry has been edited for length.

Q. How busy have things been for you?

It's been very busy. We've seen a steady increase I would say since last summer.

Q. So that corresponds with what happened with oil. Any figures on the increase?

I'd say last September we saw an increase of about 11 per cent, that grew to about 17 per cent in December. The latest statistics are out for the 12 months end in January and they're saying an increase of 20 per cent in insolvency.

Q. That sounds like a big jump. Is that a significant increase?

It is a significant increase. We would usually see a less than double digit increase year over year, so to be at 20 per cent and to see it go from 11 per cent last September to now a 20 per cent increase in January for that 12 months, it is a big increase. And interestingly though, bankruptcy's up about 12.5 per cent it's consumer proposals that are really driving that increase, they're up over 70 per cent from last year.

A consumer proposal is where a licence insolvency trustee would negotiate with your creditors on your behalf to get you to repay a percentage of your overall debt, as opposed to looking to repay all your debt, or to file bankruptcy, which would be the other alternative.

Q. What do you advise them when they come to see you? It must be a difficult meeting.

It can be a very difficult meeting. I always say to people when they come see us, the hardest part is making that call, making that decision to come sit down and talk with us. But I can say it's very rare that we see someone, sit down with them, go through their finances, talk through the options that are available to them and that they wouldn't feel a sense of relief when they left.

Lots of times people don't know what their options are or what the impacts of those options are on them. So,yeah,bankruptcy's an option, a proposal's an option. We'd also recommend refinancing or debt retirement program with a credit counsellorif we thought that was the best option, even though it wouldn't be something we'd administer. People get a real sense of relief from the stress they're feeling just to know that the options are available and talking to someone that understands and can put that in perspective for them.

People often say I wish I'd come to see you a year ago or made that call two years ago.

Q. Tell me about the people that come through your doors. Are they out of work, are they people who worked out west, are they younger, are they older?

We're seeing people from all walks of life, all age groups. Some people are unemployed, some people have been out west and are now home looking for work. Others have found work back home here, but it's at a very different income level than what they were used to making.

Others have very stable incomes, but they're realizing cost of living, increased family responsibility, they're finding it harder and harder to meet their debt commitments. And in fact if they make the minimum payment, they see that line on the bottom of their credit card bill that says it would take them 40 years to pay that debt. It's a real eye opener for people."

Q. How does somebody actually know if they're in serious financial trouble? What's the warning sign?

It's different for everyone, it's a very personal thing financial difficulty, but I would say some general warning signs would be if you'reliving paycheque to paycheque, if you're only making or finding it hard to make the minimum payments on your debt, if you're using your credit for everyday living expenses.

If you're losing sleep or the financial stress is causing problems in your relationship, or even if people can really sit down and say, "I don't even know what my monthly living expenses are."That could be a sign.