Illness is one of the top five leading causes of bankruptcy in Canada.
The reality is that our healthcare system doesn’t cover everything, and a major illness can occur unexpectedly and limit your capacity to work and earn a wage, thereby leading to a host of financial issues. Here’s how illness can push people towards insolvency and what you can do to protect yourself.
A LONG RECOVERY
One kind of instance in which a medical issue can lead to insolvency is when someone has no other choice but to take time off work to recover and therefore resorts to using credit to cover their living expenses. Depending on how long their convalescence or recovery takes, they may not be able to pay for both their living expenses and the newly acquired debt once they return to work.
IMPOSSIBILITY OF RETURNING TO WORK
In some cases, a person finds themselves simply unable to return to work, meaning that they end up having to live off of disability, which may not be a sufficient amount to cover their expenses as well as existing debts they’d acquired prior to getting sick. This is especially likely if their illness is chronic and requires accommodations, home care or expensive medication. This change in income can make it impossible for someone to remain solvent.
LACK OF PLANNING
In cases like these, the issue is that people often fail to plan ahead. In addition, someone who was in a precarious but tenable situation because of considerable debt may find themselves unable to keep up if something undermines their ability to earn money.
HOW TO PROTECT YOURSELF
Illness happens and there’s nothing you can do to prevent it except try to maintain as healthy a lifestyle as possible. There are, however, things you can do to minimize the impact that a sudden serious illness could have on your financial situation.
Aim to have an emergency fund with enough money set aside to survive without relying on credit for at least three and ideally six months. We’ve put together how you can plan an emergency fund in six simple steps.
Try to get your financial situation to a point where you’re not living paycheque to paycheque and only making the minimum payments required. Look into debt counselling if doing this seems difficult or if you’d like additional guidance and advice.
CALL US FOR DEBT HELP IN OTTAWA AND ACROSS EASTERN ONTARIO
Weathering something as devastating as a serious illness is easier when you’re not in a precarious financial situation. D. & A. MacLeod Company Ltd. can help you achieve financial independence before it’s too late. If you’ve recently suffered a loss in income, a major debt or simply need financial help, contact us today for a free consultation.