Ottawa·THE BIG OWE

How one woman paid off $50K of credit card debt

Charline Cormier spent nearly eight years struggling to pay off $50,000 in credit card debt before seeking professional help. She finally became debt-free in April 2017.

With the help of a credit counsellor, Charline Cormier gave up her cards and paid off her 5-digit debt

Federal public servant Charline Cormier spent eight years trying to pay off $50,000 in credit card debt before seeking professional help. (Ashley Burke/CBC News)

Charline Cormier remembers the day she realized she was trapped by debt.

A chart at the bottom of her credit card statement caught her eye. It showed how long it would take her to pay off her debt if she continued to make minimum payments.

"That number was 20 years. And I thought, 'I can't handle this anymore,'" said Cormier, a 50-year-old public servant.

I'd never get out of debt because the interest was accumulating faster than I could pay it off.- Charline Cormier

"I was still making minimum payments, but I'd never get out of debt because the interest was accumulating faster than I could pay it off."

Cormier had already spent nearly eight years trying to pay off her credit cards, but compound interest had pushed her total debt to more than $50,000.

Cormier is now debt-free, but said it was a struggle to learn to think differently about credit.

Interest rates on the rise

It's a struggle many more Canadians could soon be facing.  

After seven years of record-low interest rates, the Bank of Canada has raised its benchmark rate twice in the past three months; by one quarter of one per cent in July, and again by the same amount in September.  

At the same time, a recent survey found 35 per cent of employed Canadians said they felt "overwhelmed" by their level of personal debt.  

The survey by the Canadian Payroll Association polled 4,766 Canadian workers between June 27 and Aug. 5, and found nearly half were living paycheque to paycheque due to soaring spending and deepening debt.

Ottawa credit counsellor Pamela George said for most of her clients, credit is a way of life, and even when they're mired in debt they struggle to give up their credit cards.

"This brings on a lot of anxiety, a lot of tears. I have had clients shaking," George said. "That's how emotionally attached they are to their credit cards."

Credit counsellor Pamela George shows the credit cards her clients have been forced to cut up. (Ashley Burke/CBC News)

Minimum monthly payments

Cormier figures she was about 23 when she got her first credit card.  

"I got a credit card, and that sort of became the balance.... 'OK, there's a little bit missing, I'll use the credit card.' And it was always manageable."

Then Cormier moved to Toronto, where she began having trouble paying off the balance each month. She soon fell behind to the tune of $10,000.   

The tipping point came in 2004 when a family member racked up an additional $25,000 on her credit card.

Cormier said because she made a good salary with the federal government, she felt she could manage the debt.

For the next few years, she continued to make minimum payments.

But her debt quickly ballooned thanks to compound interest. Her $35,000 debt grew by hundreds of dollars each month.

"It was very stressful. It led to depression, some shame, because I couldn't talk to friends about it," Cormier said.



'I had nothing as collateral'

Cormier approached her bank for some advice, but was told she wouldn't qualify for a loan.

"I had nothing as collateral. I don't have a line of credit because it's not against a home, and I'd never been able to afford a home because I was trying to pay off the debt," she said.

Cormier was paying almost $1,000 per month to service her credit card debt. She spent hours poring over spreadsheets, trying to figure out a way to increase her payments.

She stopped buying new clothes and household items, and even put off buying eyeglasses and a new hearing aid because she couldn't afford them.

"I had nothing extra at the end of the month," Cormier said.

Sought credit counselling

It was a TV ad for a credit counsellor that made Cormier seek help, and in November 2012 an insolvency trustee helped her negotiate a consumer proposal, the last option before declaring personal bankruptcy.

Under this legal agreement, Cormier had to give up her credit cards and make a fixed payment of about $700 per month. In return, her creditors stopped charging her interest.

By April 2017 Cormier had managed to pay off her entire credit card debt, just in time for her 50th birthday.

"I took a snapshot of the [final] cheque I wrote and sent it to a whole slew of friends," Cormier recalled.

Cormier said the experience of giving up her cards and paying off her debt completely changed her thinking on credit.  

"Now I budget on, 'Here's the things that I want to do.'  Next year when I take that vacation, I can pay for it, cash, and not have to depend on the credit card."
The picture Cormier sent to friends to mark her final payment on her credit card debt. (Charline Cormier)

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