MNP Consumer Debt Sentiment Survey Ontario Update

“With so many going deeply into debt to own homes in the province, it is concerning how many are not confident in their understanding of the impact of interest rates. That says to me that many aren’t considering future costs of the debt they are taking on especially when interest rates rise – and they will,” says David Gowling, Licensed Insolvency Trustee at MNP LTD, a division of MNP LLP.

The survey showed that more than half of Ontarians are now $200 or less per month away from not being able to meet all of their bills or debt obligations each month. This includes one in three who say they already don’t make enough money to cover them. The proportion of Ontarians who are now living within $200 a month of being unable to pay their bills is down 3 points since September 2016, but still up 7 points compared to February 2016.

“Debts tend to pile up quickly when you have no wiggle room. One month, you’re using your credit card to help pay a bill, and next month an unexpected car or home repair catches you off-guard. The next thing you know, you’re in a debt trap, servicing debts with credit each month. It can be very difficult to get ahead when you have no savings, and you don’t have a solid understanding of how interest rates impact payments,” says Gowling.

A majority of Ontarians say that when it comes to their personal debts, they’d go back and do things differently if they could. Fifty-five per cent say they are concerned about how much debt they have. The same amount expressed regret for the amount of debt they’ve taken on in their life. Ontarians are also more regretful than any other province, when it comes to the debt they’ve taken on in the past year alone. Concern and regret were noticeably higher among those who aren’t confident about their understanding of financial concepts like credit scores, the impact of interest rates on debt payments, bankruptcy or insolvency.

Ontarians with a confident understanding of finances were noticeably more likely to have reduced their debt load over the past twelve months, compared to those who aren’t as confident about finances.

Despite the anxiety around debt and the lack of skills to manage it, the majority of Ontarians facing insolvency have not sought out professional help.

“If you are dipping into credit cards or lines of credit on the home to pay for basic expenses or to service other debts, it’s time to get advice right away,” advises Gowling, adding that it is important to seek advice from reputable sources.

Licensed Insolvency Trustees are the only debt professionals licenced by the federal government and legally authorized to provide services under the Bankruptcy and Insolvency Act.

Key poll highlights include:

• Over half (52%) of Canadians are just $200 or less away from financial insolvency at the end of the month (down 4 points from September).
• Three in ten (31%) say they already don’t make enough money to cover their bills (down 2 points since September 2016, but up 3 points compared to February 2016).
• One in ten Canadians (10%) are left with just $100 or less at the end of the month (down 3 points from September).
• Nearly half (48%) agree they’re concerned about how much debt they currently have, down 4 points from September 2016. Those who aren’t confident about their understanding of financial concepts (like credit scores, the impact of interest rates on debt payments, bankruptcy or insolvency) are significantly more likely to be concerned about their current debt (61%).
• Half (49%) agree they regret how much debt they’ve taken on in their life (down 1 point), while nearly four in ten (37%) regret the debt they’ve taken on in the past year alone. Those with a less confident grasp of financial matters are particularly likely to regret the debts they’ve accrued over the past year (46%) compared to those who have a stronger understanding (35%).
• A majority of Canadians (58%) agree that when it comes to their personal debts, they’d go back and do things differently if they could. Canadians who aren’t particularly confident about their financial knowledge (67%) are more likely to want to go back and do things differently.
• The vast majority of Canadians are not very confident in their financial planning abilities. For example:
  
  • 55% are less than ‘very confident’ in their ability to pay down debt.
  • 60% are less than very confident in their ability to set and follow a budget.
  • 61% are less than very confident in their understanding of the impact of interest rates on debt payments.
  • 66% are less than very confident about their ability to create a rainy-day or emergency fund.
  • 70% are less than very confident about their understanding of credit scores, and what their own score is.
  • 71% are less than very confident about their understanding of the concepts of bankruptcy and insolvency.

About MNP LTD

MNP LTD, a division of MNP LLP, is one of the largest personal insolvency practices in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working collaboratively with individuals to help them recover from times of financial distress and regain control of their finances. With more than 200 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit www.MNPdebt.ca to learn more.

About the MNP Consumer Debt Sentiment Survey

Now in its third wave of tracking, the MNP Consumer Debt Sentiment Survey is a semi-annual poll designed to track Canadians’ feelings about their debt and their perception of their ability to meet their monthly payment obligations.

The survey was conducted by Ipsos on behalf of MNP Debt between March 27 and March 30, 2017. For this survey, a sample of 1,500 Canadians from Ipsos' online panel was interviewed online. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/ - 2.9 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.