More and more Hamiltonians are falling deeper and deeper into debt.

The number of Hamiltonians who failed to make a credit payment in the past 90 days increased by 20 per cent between May 2008 and May 2009. That’s slightly higher than the national average of 19 per cent, according to a report yesterday by Equifax Canada.

In its study, Equifax monitored the amount of credit debt accumulated by Canadians — essentially all debt, including credit cards and lines of credit, except mortgages.

It’s this credit crisis that has resulted in a doubling of clients heading to Catholic Family Services of Hamilton-Wentworth. The social service agency has been forced to hire two more staff in the past few weeks to deal with the demand.

Linda Dayler, executive director, said what most alarms staff is that so many clients are in such bad financial shape, mostly owing to lack of income or too much debt or both. The number of clients at the agency declaring personal bankruptcies in the past two months has doubled.

Dayler worries about the future.

“Now we’re looking at laying off 600 more people at National Steel Car ,” she said. “The fact is we have people who are very skilled at what they do and we have great new innovative jobs … but they’re not for these individuals.”

But aside from job loss, it appears  one of our biggest problems is with shopping.

The delinquency rate on credit cards has increased by 38 per cent in the past three months. For retail financing, for big-ticket items such as furniture or electronics, it’s increased by a whopping 58 per cent.

“Consumers appear to be willing to fall behind on those before they miss payments on bank loans and lines of credit,” said Nadim Abdo, a spokesperson at Equifax.

James (who did not want his last name used) has been in this kind of debt pit and he’s one of the fortunate who has climbed out.

Four years ago, the 53-year-old Hamilton professional was sinking fast and furious in about $30,000 of debt: credit cards, car loan, bank loan and, horror of horrors, payday loans.

He hit rock bottom when he was trying to trick the payday loans companies with stopped payments after maxing out his plastic on meals, clothes and a few sticks of furniture.

But soon he was hunted. His credit rating was in tatters. And he had two teenagers to support.
His is a story of life after credit card crisis.

The lifeline was Catholic Family Services, which arranged a debt repayment plan for him.

Eventually he paid back all of his debt out of his $70,000 income but for $1,800 left in a bank loan. That’s done in a few months.

He owns his van. Saves money in a tax-free account for gifts, golf, vacations and, some day, a home. On top of that, he tithes.

“If you give to charity, you get a break on your taxes and, besides, blessings will come back to you.”

Vittoria Desimone-Maida, a credit counsellor with Catholic Family Services, said many people don’t realize it is possible to regain control over financial problems.

She said one of the first things clients in the debt management program must do is cut up all credit cards.

Then they get a plan.

“It’s too, too easy to get credit these days. There’s really no check on it … as a society it’s so hard to live on cash. Eventually clients do work their way back to having a card but not for a long while.”

At the same time, hard times offer a hard but good lesson to learn: get back to the basics and don’t spend money you don’t have because the cost of too much credit is too high.

lmarr@thespec.com
905-526-3992