Debt-endency: Addictions, Debt and Insolvency

2019-12-13   minute read

Wesley Cowan

Lifestyle Debt

Serious debt is rarely a stand-alone problem. It’s often the result of other factors which either parallel or contribute to financial distress. While these factors can be temporary (job loss) or easily remedied (poor budgeting skills), addictions are usually more persistent and difficult to overcome.

Addictions come in multiple forms. Substance use disorders are usually the first that come to mind. But  behavioural issues such as compulsive shopping or gambling can also be problematic and lead people to neglect their financial wellbeing.

Person talking on a cellphone looking at spreadsheets on their laptop


Smoking is generally in decline across Canada's society. However, it can be a costly addiction for those who still choose to light up. Given the current cost of an average pack of cigarettes, even moderate smokers can spend upwards of $400 or more per month on tobacco. This leeches funds from family needs and can make it difficult to pay down accumulated debt.

For many smokers, the cost may only represent a lost opportunity to buy other things. For those in financial distress, it means relying on additional credit for basic needs — which further exacerbates their personal financial situation.  


Besides the high cost of alcohol as a drain on earnings, the alcoholic often finds his or her choices have more serious financial consequences. Some ultimately lose their jobs due to lagging performance, absence or disciplinary issues. Financially contributing spouses often decide they can no longer cope with the excessive drinking and leave. Or, impaired driving charges result in significant fines and increased transportation costs — such as public transportation, installing an ignition interlock device, rising monthly insurance premiums, etc.

Cash-strapped alcoholics will often use credit to make up the shortfall between income and expenses. But that credit will eventually run out.


The impact of drugs on Canadians’ health and longevity is a growing concern — especially given the ongoing fentanyl and opioid crisis across the country. In many cases, the addicted are often unwitting victims; having received drugs for legitimate medical treatment, only to become dependent and compelled to seek drugs from illegitimate sources. In other cases, recreational drug use spirals out of control and the addict can no longer control his or her consumption.

The financial consequences of drug addiction are generally parallel alcohol addiction. A sizeable portion of the debtors’ income goes to feed the addiction, often at the expense of daily needs. And when that well runs dry, drug addicts turn to credit — often applying for more debt when existing sources have been exhausted with little thought as to how to repay those loans.

Behavioural Addictions

For those who aren’t addicted, compulsive shopping, gambling and other behavioural problems can be more difficult to understand than drug or alcohol dependencies. There may not be a mood altering chemical involved, but the rush or catharsis these addicts feel involves the same psychological and biochemical reactions in their brains. And the financial impacts are equally similar.

Problem gamblers in particular tend to habitually and rapidly access large amounts of credit when they’re convinced they are on the verge of a big win. However, big losses tend to be more frequent; and when those happen it’s often impossible to repay what they’ve borrowed in any reasonable timeframe.

Life-Changing Debt Solutions

MNP Licensed Insolvency Trustees (LITs) have seen many cases of addiction over the years and we are extremely empathetic to these situations. We understand there are countless reasons people become addicted and nobody sets out with the intent of ending up in an impossible financial situation. Life happens and we believe everyone deserves the opportunity to recover and start over.  

Help is available if you’re struggling with — or have recently recovered from — a substance use or compulsive behavioural challenge and want to rebuild your financial position. During a Free Confidential Consultation, an LIT will review your finances, seek to learn your challenges and goals and identify opportunities that will work best for your unique situation. You may qualify for a Life-Changing Debt Solution, such as Bankruptcy or a Consumer Proposal, which can help erase your debt, rebuild your finances and build the knowledge and skills you need to better manage money moving forward.

Our team can also provide referrals to qualified counseling and addictions treatment professionals who can help you make a more holistic and sustainable change in your life. Ideally, these, combined with your financial fresh start, will allow you to emerge with a set of skills and strategies that will put you on a path to both personal and financial success for the rest of their life.

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