British Columbians concerned about personal finances

Compared to March, far fewer feel confident they can cover living expenses for the year without going further into debt

VANCOUVER, BC – July 20, 2020 – The financial picture for many British Columbian households looked bleak last quarter. And even with the current raft of pandemic-related support programs, many are struggling. The latest MNP Consumer Debt Index, conducted quarterly by Ipsos, found British Columbians feel less confident about being able to cover their living expenses for the next 12 months without going further into debt (56%, -5), the lowest proportion of any province.

“While our results show the rest of Canada becoming more optimistic or even hopeful about their personal finances, British Columbians are not having the same experience,” says Lana Gilbertson, a Vancouver-based Licensed Insolvency Trustee with MNP LTD. “That could stem from the lack of wiggle room in household budgets prior to the pandemic. Those who were finding it difficult to get by before are really struggling now.”

The number of British Columbians who say they are $200 or less away from financial insolvency at month-end increased three points since early March (43%). This includes 22 percent who are already insolvent and unable to cover their bills and debt payments, a decrease of three points this wave.

“It wouldn’t take much to push many B.C. households into dangerous territory. Just $200. That’s a small car repair or a loss in overtime pay,” says Gilbertson. “We also expect to see a range of efforts from creditors to help people catch up as the economy begins to re-open. This could include increased monthly payments or extended loan terms. For those who are already overstretched, the net result will see them falling further behind and deeper in debt.”

Gilbertson says one financial upside of the pandemic is widespread store closures left fewer opportunities for spending and that many realized savings on gas and commuting costs while working from home.

The poll found British Columbians have more wiggle room in their household budgets each month compared to March. On average, after paying their bills and debt obligations, they report having $128 more at month-end than in early March.

“With altered consumer spending during COVID-19 due to the closure of restaurants, theatres, malls, and other bastions of discretionary spending, some reported savings — even with a marginal increase in groceries, utilities, and online shopping,” explains Gilbertson.

The poll found some optimism in the province as slightly fewer regret the amount of debt they have taken on in life (44%, -2). But four in 10 (44%, +1) are still concerned about their current level of debt.

So far, support from the government, mortgage deferrals, and the flexibility of creditors have all contributed to a significant decline in insolvency filings since the pandemic began. In May alone, consumer filings declined 37 percent in British Columbia compared to the same month last year.

Given the already shaky ground British Columbians were standing on before the COVID-19 crisis — not to mention the magnitude of the virus, its economic impacts, and the government response — Gilbertson says it won’t be at all surprising to see insolvencies jump.

“Even in the best-case scenario, we will likely see the number of insolvency filings quickly return to the pre-COVID baseline as federal subsidies and stimulus dollars run out, deferred payments become due, and consumer spending returns to pre-pandemic levels,” says Gilbertson.

For those who are struggling with debt, Gilbertson notes Bankruptcy is not the first nor is it always the best option. Licensed Insolvency Trustees are the only federally regulated debt professionals empowered to provide a full range of debt relief options including Consumer Proposals, informal debt settlements and bankruptcies. They take a customized approach and provide an unbiased opinion to help severely indebted individuals understand their rights and determine the right path forward.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 230 offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. 

In light of the social distancing measures currently in place, MNP LTD is currently offering free consultations via videoconferencing (Skype, Messenger, Zoom, FaceTime, etc.) and by phone. Their team of Licensed Insolvency Trustees are empowered to help those struggling financially to make the most informed choices to deal with their debt during this time. Visit MNPdebt.ca to book an appointment or to start a live chat.

About the Survey

These are some of the findings of an Ipsos poll conducted between June 1-2, 2020, on behalf of MNP LTD. For this survey, a sample of 2,001 Canadians aged 18 years and over was interviewed. 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 ±2.5 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.

A summary of the provincial data is available by request.