“There are a lot of people that are going to find that they just can’t make it through.” 

Leigh Taylor is a Licensed Insolvency Trustee at LCTaylor, a company that has been helping individuals and small businesses solve debt problems for the past three decades. LCTaylor deals exclusively in areas of insolvency, which includes individuals, businesses, and farms experiencing financial difficulties.  

Inflation & The Individual  

Offering a realistic outlook on what appears to be a rather unsure future for many, Taylor verbalizes what has been a concern for many: 

“You add any kind of personal traumatic event while you’re going through these tough economic times, whether it’s a marriage breakup or illness or death in the family or, you know, all the myriad of things that can go wrong, that’s going to be enough to sink people.” 

Rising inflation has become top of mind internationally, and many are looking for ways to supplement their income, stretch every penny, and avoid having to declare bankruptcy.   

“It creates all sorts of problems for just about everybody, truth be known,” Taylor admits. “The cost of food, goods, heating, gas for the car, the whole bit. All those prices start to go up. The difficulty with that is that income doesn’t necessarily go up at the same rate, or certainly not at the same time. Your grocery bill will go up tomorrow when they change the prices, but your paycheck might not go up til the end of the year when, and if, your boss feels that they can afford to pay you more. There’s going to be a pinch felt right away.” 

“But the sooner you look into it, the more options are going to be available to you.” 

Taylor stresses that, if you’re having financial difficulties, the time to assess the situation is now.  

“If you wait too long, you may find that the hole that you’ve dug is just a little too deep,” Taylor states. “At that point, the only remaining solution for your debt problem may be Bankruptcy. Bankruptcy is a sure-fire solution, and many times it is the best solution. But not always. If you seek help early enough, you may have other options available to solve your problems.” 

In fairness, the ins and outs of insolvency is not a topic many people research until they have to. Taylor describes the usual course of events:  

“They wait. They put things off. They get deeper in debt. And their creditors get less patient with them. They start facing judgements, fines, and penalties. You know Revenue Canada is not a patient collector, and if you put it off too long, you’ll find that options such as proposals to your creditors, reorganization, and simple budgeting… aren’t going to solve the problem. It’s gone too far for that- you’ve cut down your options.” 

“A lot of banks were giving breaks to people. The government was handing out money like crazy to get people through the pandemic. But most people didn’t realize that the money they were receiving was taxable. You take government money that you have to pay taxes on, and eventually… you have to pay those taxes.”  Today, collection agents and Revenue Canada are getting back to work, making up for lost time, and consumers are reeling from unexpected tax bills. 

Taylor continues, “You find a lot of collection agencies, or collection departments, or even Revenue Canada have not been that busy trying to collect on accounts because of the pandemic that we’re going through. Although, at the time, it seemed like they were giving a break to their clients because they weren’t pressuring them, what they were basically doing is allowing them to get further and further in the hole.  

Inflation and Small Businesses 

Taylor acknowledges the many hardships companies have dealt with over the last few years. 

“Small businesses took a big hit with Covid. They lost a great deal of business, and therefore, revenue. Many had to lay off staff, others limped along, retaining their staff and losing money the whole time. Now as we recover from the pandemic, it is tough to get labour and, because of inflation, the people they can hire need to be paid more.” 

“Most businesses carry inventory. Carrying an inventory means that, normally, you have a bank line of credit, one that accumulates interest. Rising interest rates will eat into your cash flow even more. And it’s not always that easy to then turn around and, particularly if you’ve quoted on jobs, to suddenly increase rates. Customers are going to drop off in direct proportion to how your prices go up. It’s hurting everybody.” 

This hits small businesses especially hard, as they are generally undercapitalized. This means that they don’t have a lot of leeway- they’re borrowing from the bank in order to operate, and don’t have a substantial margin within which to operate. If they get behind on tax and employment remittances, it is very difficult for a business to recover.  

For farming operations, prices and costs tend to rise quickly at the first sign up inflationary pressure, especially since traditionally, farmers are known to track international markets and trends. That means that everything they use to produce the food we rely on has gone up in price. In the past, farmers have often “eaten” cost increases because it takes some time before they see an increase in the price of their product, and often that increase does not nearly match the increase they have seen in their costs.  

What Can Be Done?  

When considering options, Taylor strongly suggests avoiding using credit cards to stay afloat, and instead encourages budgeting and adjusting your standard of living. This will help you avoid having to pay more interest in the long run, and teach practical money management. The trustees at LCTaylor specialize in just this kind of conversation.  

“There are several answers to different kinds of financial problems, because everyone is unique.” Taylor goes on to describe their initial assessments. “What we do is we sit down with people, and we analyze their situation. We don’t charge for that- we just want to talk to people and help them identify what the problems are.” 

“We try to give them enough information as to what the alternatives are, so that they can make an informed decision about the best way to get back on their feet financially.” 

Based in Winnipeg but working with people across the province, LCTaylor has a team of four Licensed Insolvency Trustees, licensed with the federal government, having completed years of training and education in the field. The rest of the LCTaylor team is composed of other specialists in financial counselling and insolvency administration.  

For free confidential consultation to learn more about your options, visit http://www.lctaylor.com, or give their Winnipeg office a call at 204-925-6400.