Understanding Canada's Debt Crisis - Wes Cowan

In this episode of Real Talk With Gary, host Gary Hibbert is joined by Wes Cowan, Senior Vice President and Licensed Insolvency Trustee at M&P, to discuss the growing debt crisis in Canada, particularly in Ontario where insolvency rates are rising to 2-2.5% in 2025. Cowan explains how prolonged inflation, stagnant income growth, and elevated interest rates—though now moderating—have created mounting financial pressure on households. Many Canadians are resorting to high-interest borrowing, including credit cards and payday loans, often using their homes as collateral through second mortgages or refinancing, which can lead to rapid debt spirals. The conversation covers key debt relief options: consumer proposals (a legally binding settlement with creditors over up to five years) and bankruptcy (a last resort where assets may be liquidated). Cowan emphasizes that while bankruptcy can stay on credit reports for up to seven years, a consumer proposal remains for three years post-completion, with the potential to shorten the impact if paid early. He also clarifies the difference between foreclosure (common in the U.S.) and power of sale (standard in Ontario), noting that power of sale can leave borrowers liable for shortfalls if property values decline. The episode concludes with a discussion on psychological factors, including growing pessimism due to geopolitical tensions and economic uncertainty, which are influencing people’s decisions to seek help. The episode serves as a wake-up call for Canadians to address debt proactively before it becomes unmanageable.