519-646-2222Real Debt Relief – Caveat Emptor.
It is extremely challenging for Canadians to find real debt relief, not because we don’t want to but simply because real debt relief requires a systemic change and there is simply no political will to make the changes required.
Canada’s debt problems began back in the 1970s and are probably predicated on deregulation of the financial industry. Deregulation accelerated during the “Little Bang” in 1987 notionally removing barriers between banking, insurance, and securities, allowing diversification, entry for foreign firms, and increased competition.
However, deregulation had the opposite effect encouraging the growth of banking cartels and monopolies. Canada’s banking industry has become a global leader in malfeasant behaviour.
Some of the more noteworthy instances include HSBC being investigated the RCMP and swiftly purchased by RBC in what has the optics of being a coverup to halt further investigations which may have implicated other banks. Sam Cooper’s book “Willful Blindness” is very suggestive of this being the intended outcome.
The TD money laundering case in the USA has been well reported, with TD Bank agreeing to pay about $4 billion (CDN) in a non-prosecution agreement to protect executives from the possibility of serious penalties that might have included jail.
But even that didn’t stop them, according to a Department of Justice Official, a former TD Bank employee processed bank cheques in a money laundering network totaling some $128 million (CDN).
The problem, at bottom, is that no one is watching the watchers, deregulation gave the banksters far too much power and the virtually unchecked ability to whatever they want to maximize profits on all levels of business.
The average consumer is often oblivious to the questionable behaviour of the banks, although the CBC has reported quite extensively on how we are all being manipulated in acquiring more debt than we can afford to repay.
Real debt relief cannot be found by filing either a bankruptcy or a proposal, these tools only provide temporary relief, they cannot do more. Insolvency processes are designed only to help with the issues that are present at the time the insolvency is filed. But those issues are not fixed in time – even though the legislation assumes they are.
Once the bankruptcy or proposal is completed the same banksters are ready to pounce on the initially cleansed consumer to fill their pockets with more debt instruments. From credit cards to personal loans, overdraft protection, HELOCS and so on – these debt instruments provide not only the bread and butter for banksters but also put gravy on their plates.
Sadly, Canada’s economy is so bad that few consumers can earn enough money to survive without access to debt. Since the 1980s multi layered mortgages became a great source of profit for the banksters allowing them to mitigate their lending risks by stuffing their pockets with the only tangible assets that middle class Canadians are ever likely to own.
After saturating the market with credit cards, the banksters started to make unsecured lines of credit available creating the impression that consumers had more access to lower interest debt instruments. But the real purpose was to allow self-consolidation, by transferring higher interest credit card balances to lower interest lines of credit.
By allowing the washing of the credit cards through a self-structured consolidation, under the guise of interest relief, consumers were encouraged to extend themselves further on their credit cards. Running up charges with the illusion they still had money to spend.
As the consumer market became more saturated with debt the banksters risked more defaults so other strategies needed to be implemented. Undoubtedly “some bankster got a big fat bonus” for coming up with the idea of “reducing minimum monthly payments so low that it would literally take centuries to repay the debt”.
As if the idea of “perpetual debt” wasn’t enough they decided that “increasing credit limits” would also help prevent defaults. Other strategies included “no interest balance transfers”. This allowed for another version of debt washing; by moving a balance from one card to another with no interest charges for six months the consumer arguably had the opportunity to pay off their more rapidly.
However, the actual strategy was to wipe the debt from the existing credit cards in order that they may be reused. Banksters formerly offered only one credit card – for instance during the 1990s if you had said Scotia Bank I would have said “VISA” and if you said Bank of Montreal I would have said “MasterCard” – however today Scotia Bank now offers its clients “VISA”, “MasterCard” and “AMEX”.
The bank would say this is because they want their clients to have “options” but that is simply not the case, it has more to do with “monopolistic strategies”. By allowing you multiple credit card offerings you are less likely to take your business to other institutions and the bank profits from each card as you use one to make payments on another all the while “avoiding default”.
Scotia Bank was one of the first banks to bring multi layered debt to expanded mortgage offerings and block the borrower from leveraging their home equity through competitors. Their innovative programme is called a STEP mortgage. STEP is an acronym for “Scotia Total Equity Plan”.
How it works is basically a crafty sales technique (now employed by most banks under other names). You are offered a very competitive rate for your mortgage but in exchange you must pledge the entirety of available equity in the property as security to the bank.
So, if your home is worth $750,000 and the mortgage is only $250,000 the bank will register a mortgage for $600,000 (80% of the property value). This will a low them to offer access to other credit “products” (the vernacular is very important – it must sound comforting).
For example, you may be granted a line of credit for $300,000 and credit cards totalling another $50,000 to in aggregate total the $600,000 registered. In fairness to the bank, they probably did mention at the tie of signing the mortgage documents what they were doing. Usually, they don’t get into the weeds of how it works they just say, “by over-registering they can lend you more money without incurring legal fees”.
Few insolvent individuals understand they pledged their homes as security for more than just the mortgage, or even the line of credit. In some cases, the banksters may not have had all the proper paperwork executed prior to enforcing their security, but the unsophisticated borrower, and even counsel, maybe blissfully unaware of their position.
Our financial system is not just corrupted with greed; it is extremely complex and layered with obscure terminology and fine print. Just take a look at the residential standard mortgage terms. It is doubtful that when you signed your mortgage your lawyer explained the whole document to you – in fact some lawyers may struggle to fully understand the pros and cons of such a challenging document.
How then does a consumer swimming in this vortex of debt finally break free and find real debt relief? The answer is surprisingly simple, but unlikely to ever happen – we need to regulate and break up the banks. Force them to return to banking, alone, selling off all their other business, not to other monopolies but to smaller competitive entities.
The same issue rings true throughout Canada’s entire financial system, we also need to rein in insurance companies, the real estate industry, mortgage brokers and agents, investment advisers, and others.
Some bankrupts are required to attend a court hearing in order to obtain a discharge – during which they are required to explain to the judge how their insolvency occurred, what steps they took to deal with their financial situation and provide other information about their situation.
The lenders should also be required to attend discharge hearings and explain to the judge the basis upon which they made so much debt available, frequently knowing that the bankrupt lacked the capacity make restitution at the time of lending. But that would require accountability.
Nonetheless, real debt relief is only possible for people who are positioned to earn enough, after-tax, money to support a reasonable lifestyle. Unfortunately, the Canadian economy has been in decline for decades mostly driven by deb, and incomes have not kept pace.
Incomes have steadily fallen, not just nominal incomes but also inflation adjusted incomes have declined tremendously. In 1996 the infamous Sunshine List was developed in Ontario. The list still reports people earning a nominal income that exceeds $100,000 – but that 1996 $100,000 is only worth $54,000 today. After properly adjusting for inflation the list should require only people earning about $190,000 be listed.
Poverty has increased exponentially in Canada – with a median pre-tax income of only $42,000, homelessness has increased, foodbank usage has increased, joblessness has increased and the only thing that saves Canadian from being in worse shape than during the Great Depression is DEBT!
In 1929, homelessness was not a distinct, ongoing social problem, as housing was largely considered a basic need that government and society were obligated to provide. In 2026, homelessness is deeply entrenched, it is a systemic issue caused by chronic affordability crises, and a lack of viable supportive services, rather than a one-time economic event.
According to Statistica, Russia reports about 11,000 homeless people compared with hundreds of thousands in Canada. Even the Canadian government is starting to recognize that rather than seek a viable solution for the problems it has created, that stem largely from an underregulated financial system, a whole industry has been built around maintaining homelessness.
So, real debt relief – don’t hold your breath!