Canadians face difficulties seeking assistance with debt

Half of Canadians have difficulties trusting companies that assist with managing debt or are embarrassed to seek financial advice.

""

CALGARY, AB – May 30, 2022 – Soaring energy bills, skyrocketing food prices and rising interest rates coupled with pandemic-related losses and the end of government support programs have left many Canadians struggling financially. As households begin to feel the financial toll, many are at a loss when it comes to finding help. One in three (32%) say they don’t know how to get out of debt or where to turn for relief, according to a recent poll conducted by Ipsos on behalf of MNP LTD. Half (50%) say they have difficulty trusting professional companies to help them get out of debt.

“It is critical that vulnerable individuals who can no longer manage their debts know who they can trust for professional debt advice,” says Grant Bazian, president of MNP LTD., the country’s largest insolvency firm. “Licensed Insolvency Trustees are the only federally-regulated debt professionals who are legally and ethically required to explain all of the debt-relief options available and provide unbiased advice based on an individual’s circumstances.”

A lack of financial literacy could put indebted Canadians at more risk and intensify the need for debt relief. With interest rates likely to continue upward this year, one in four (24%) say they don’t have a solid understanding of how increases impact their financial situation. Younger Canadians aged 18-34 are the most likely to say they don’t have a solid grasp on how their finances are impacted by rate hikes.

Bazian says many individuals hesitate to seek out financial assistance and suffer needlessly due to the stigma of debt. Nearly half of Canadians (47%) say they would be embarrassed to seek help if their financial situation was bad enough to consider Bankruptcy. Those aged 18-34 are the most likely to say they don’t know where to turn (52%) and are more likely to say they would be embarrassed to seek help (56%).

While nearly half of Canadians (46%) know that Licensed Insolvency Trustees are the only debt professionals who can provide debt-relief options like Consumer Proposals and Bankruptcies, nearly four in 10 (37%) believe there is no difference between credit counsellors, debt consultants, and Licensed Insolvency Trustees.

Licensed Insolvency Trustees are the only professionals authorized to administer Consumer Proposals and Bankruptcies. Consequently, those are the only debt solutions that can offer legal protection from creditor actions, and stop or prevent collection calls and wage garnishments.

“All debt advice is not created equal. Canadians should be cautious of unlicensed insolvency service providers who may make bold claims guaranteeing to make you debt-free — only Licensed Insolvency Trustees can utilize the federal Bankruptcy & Insolvency Act to discharge individuals from debt,” explains Bazian.

Those able to overcome their anxieties and reach out for help may face other hurdles in their search for debt help. One in four (26%) Canadians say they have paid for ineffective financial advice. A potential indication of being burned in the past, those aged 18-34 are the most likely (34%) to say they have paid for financial advice that was ineffective.

“It is important to be cautious of unregulated debt settlement companies and debt-free schemes that make misleading statements promising to slash your debt, ask for a large up-front fee or encourage you to take out loans to pay off debt,” warns Bazian. “Each debt situation is different, which is why a good place to start is with a free, confidential assessment of your financial situation by a Licensed Insolvency Trustee who will outline in detail all of the options available.”

Debt relief options can include striking a deal with creditors through an informal debt settlement, consolidating all debts into one monthly payment, making a debt repayment plan through a Consumer Proposal, or declaring Bankruptcy.

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 240 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. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3 Minute Debt Break Podcast.

About the Survey

The data was compiled by Ipsos on behalf of MNP LTD between March 9 and March 15, 2022. For this survey, a sample of 2,000 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 some of the provincial data is available by request.