How debt relief works: A low income case study

How debt relief works: A low income case study

There’s one thing that most of the individuals we help have in common: they never thought an insolvency filing would be something they’d ever need or consider. So when their debt initially became overwhelming they typically knew nothing about debt relief. This often means they struggled with their debt for many years before coming to see us to discuss their options. One of the hardest things about being a Licensed Insolvency Trustee is hearing such stories and knowing that people could have gotten help earlier.

A lot of people have the misconception that individuals who make an insolvency filing lack a moral desire to pay their debts and happily use an insolvency filing to “game the system” and leave their creditors in the lurch. In most cases, nothing could be farther from the truth. So we’re publishing a series of blog posts highlighting some of the people we’ve helped and their situations*. It’s possible you’ll see yourself, a client, or someone you care about in their stories. If not, perhaps you’ll at least have a better understanding of the reasons that people decide to make an insolvency filing.

*Names and other details have been changed to protect the confidentiality of the individuals whose stories we tell


Janet reached out to us after a social worker she’d been working with recommended she speak with a Licensed Insolvency Trustee. At first, Janet resisted. She knew she couldn’t pay the debt she owed, but she couldn’t believe that after over 50 years of scraping to get by it had come to this.

Janet had always lived on a low income, priding herself on always finding a way to pay her bills throughout many years as a single mother. She was a master at finding deals and doing things herself to save money. And she often took on odd jobs or traded labour with friends in order to make ends meet.

In the past decade, though, Janet had experienced a few small setbacks that caused disruption to her income and unexpected expenses. She had never been able to put away much of an emergency fund, and her friends and family were also dealing with low income, so they couldn't help. So Janet used a credit card to bridge the gap during what she thought was a temporary setback. Over a couple of years, the credit card balance grew to a level that might be considered modest by some, but Janet soon realized that she was not going to be able to re-pay it, and she cut up the card.

Janet tried her best for a while to chip away at the balance, but it only grew, as her sporadic payments weren’t enough to offset the interest that was being charged. She had also explained her situation to the credit card company, however they continued to call and send mail asking her to pay. Eventually, the credit card company sold her debt to a collection company, who sold it to another. Whenever she could, Janet would scrape together a small payment, but it was never enough to convince collectors to stop calling, and they often threatened to take her to court. Even though Janet knew it was unlikely they would do so for such a small amount of debt, the threats caused her a huge amount of stress. She lost sleep, worrying that when she died her creditor would pursue her children for the debt, even though legally her children would not be liable for the debt.

When we met with Janet, it was clear that she had no available assets, and not enough income to cover her expenses and pay her creditor, so there was nothing the collection agencies could really do to collect the debt other than cause her stress in the hope she would find the money somehow. Janet knew this meant she would likely continue to face collection calls if she didn’t get a stay of proceedings to stop them (which can generally only be achieved by making an insolvency filing).  

We explained the options to Janet, who eventually decided to make a bankruptcy filing to get relief, finally, from the collection calls. We also provided Janet with information on community resources that might help her better cover her expenses going forward. Janet wept with relief when she realized she would no longer have to live under the stress of her unpaid debt. And for the first time in years she expressed hope that she could make ends meet going forward without having to lean on her family.

Don't Delay Getting Help

Too many people delay coming to see a Licensed Insolvency Trustee, spending months, years or even decades struggling with their debt, because they don’t think people like them make an insolvency filing. The truth is, most people who take this step are regular people who’ve gone through a difficult time and, as much as they want to pay their debt, they need a re-set.

Charla Smith & Company is a Calgary-based Licensed Insolvency Trustee, serving the southern Alberta region. We regularly help individuals navigate their options for getting out from under their debt. If you would like a free, no-commitment consultation to review your options, contact us.

Disclaimer: This publication provides general information and should be seen as broad guidance only. The information contained herein cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon this information without obtaining specific professional advice relating to your particular circumstances. Charla Smith & Company Ltd. does not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

Frequently Asked Questions

There are several factors which must be considered to determine which options are feasible for you and to select the best one, including:

  • What assets do you own?
  • Who do you owe money to and how much?
  • What sort of income are you bringing in and how predictable is it?
  • What is your family situation?
  • Your personal goals and priorities

Check out our Consumer Proposal and Bankruptcy pages for information about each of these options and their pros and cons. For more indepth information about these and other options, we've provided a plethora of information on our blog

For a fulsome review of your situation and advice about which option is best for your specific circumstances, contact a Licensed Insolvency Trustee for a free no-committment assessment.

Sometimes it helps to know how much your creditors would get in a bankruptcy, as this can help you figure out what a fair settlement with your creditors looks like. The amount your creditors could expect to receive if you made a bankruptcy filing is very much dependent on your situation.

A Licensed Insolvency Trustee will review your assets, debts, income, and family situation, while considering the applicable provincial laws about exempt assets, in order to determine what impact bankruptcy would have on your creditors. Be careful taking advice from anyone else about bankruptcy – only a Licensed Insolvency Trustee can provide bankruptcy filing services, so they have the training and experience to provide information you can rely on. 

For more details on the features and benefits of Bankruptcy, visit this page or contact us.

Nothing. We offer free consultations to anyone looking to review their options for dealing with their debt. If we decide together that one of the services we provide is the right option for you, there will be payments you need to make in connection with that, but that will occur only after you have made a decision and signed the formal documents.

  • Typically, LITs focus on either consumer solutions or corporate solutions.
  • Consumer solutions include Consumer Proposals and bankruptcy.
  • Corporate solutions include Division I Proposals, bankruptcy, receivership, and plans under the CCAA (Companies Creditors Arrangement Act).

Charla Smith has experience delivering all of these options, so if you would like information on any of them, please contact us to find out more.

No, a Licensed Insolvency Trustee is an impartial facilitator who communicates with all parties to make sure the process is transparent, and that everyone is following the required rules so that the process is orderly and predictable.


With our experience and our caring approach, we will help you find the best option for debt relief based on your unique situation - from advice on talking to your creditors to a consumer proposal or bankruptcy, and everything in between. We are here to lift the burden caused by overwhelming debt. 

Contact us today at 1-403-899-3890‌ for a FREE, no-commitment meeting, and let us guide you to regaining your financial footing.

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