British Columbians Increasingly Pessimistic About Their Consumer Debt

Net optimism for both one- and five-year timeframes have reached or near all-time lows.

Vancouver, BC, January 20, 2020 —More British Columbians see grey skies on the horizon heading into the new year and beyond as fewer expect their debt situation to improve, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos. Net confidence in their financial futures a year down the road dropped two points since September. When comparing their current debt situation to five years in the future, net confidence dropped four points.

Night view of Vancouver port, downtown lighting up the streets and water

“For some, there has been a shift from debt apathy to debt hopelessness,” says Lana Gilbertson, a Vancouver-based Licensed Insolvency Trustee with MNP LTD. “When people start to feel hopelessness, they many give up entirely on trying to pay down their debt or ignore their debt completely — which is even worse.”

There is not only increasing pessimism among British Columbians about their financial futures, they also feel worse off now compared to the past. In fact, net optimism for both one- and five-year timeframes have declined by four points and seven points respectively since September. One quarter (24%, +7%) of British Columbians now say their debt situation is worse than it was five years ago.

“It can be extremely stressful for those who come to the alarming realization there is no clear path to repay what they have borrowed, regardless of time frame or interest rate,” says Gilbertson.

A quarter (26%, unchanged) of British Columbians say they are already insolvent, meaning that they cannot meet all their monthly financial obligations. This proportion rises to 46 percent (+1%) when also including those who say they are $200 or less away from being insolvent at month end. Half (50%, +5%) aren’t confident they will be able to cover their family and living expenses this year without going into further debt.

“Financing a lifestyle on credit — especially for those using their homes — is a recipe for trouble,” Gilbertson says. “If you are using any form of credit to make ends meet, it’s time to sit down with a licensed professional who can review your financial situation, help you create a budget and ensure you have a plan in place that will allow for any emergency expenses should they arise.”

The index showed British Columbians are uneasy when it comes to being prepared for the unexpected. For example, only about a third (30%) are confident in their ability to cope with a life-changing event such as a serious illness (-4%), unexpected auto repair or purchase (-3%) without increasing their debt load.

“Truly breaking the cycle of debt requires not only paying off your creditors, but also changing your mindset and spending behaviours so you don’t end up back in the same financial trouble again in the future,” says Gilbertson.

While it seems more British Columbians are starting to seek professional help with their debt, one of the biggest behavioural changes still required among those who are severely indebted is shucking the tendency to isolate rather than reach out for guidance. 

“Many are reluctant to get professional help. In fact, we often find out clients have been struggling unnecessarily with their debt for years — sometimes even decades — before they finally reached out,” she explains. “If the creditors are calling or debt is causing you stress, it’s time to get professional advice right away.”

MNP Ltd. offers Free Confidential Consultations and their team of Licensed Insolvency Trustees are empowered to help those struggling financially make the most informed choices to deal with their debt. Licensed Insolvency Trustees are the only federally regulated professionals who can provide regulated insolvency options, such as a Consumer Proposals and Bankruptcies.

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.  

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the eleventh wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between December 4 and December 9, 2019. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +2.5 percentage points, 19 times out of 20, of what the results would have been 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 national data is available by request.