Canadians Wary And Embarrassed About Seeking Debt Relief

• One third say the stigma of bankruptcy prevents them from seeking help
• Half say they would be too embarrassed to seek help
• Three in ten say they don’t know how to get out of debt or where to turn for help
• More than half say they have difficulty trusting companies to help get them out of debt

OTTAWA, ON – July 29, 2019 – Canadians who find themselves in serious financial trouble could be digging themselves into a deeper hole by not seeking help when they need it. A new survey conducted by Ipsos on behalf of MNP LTD, shows almost half of Canadians (46%) say they would be embarrassed to get help if their financial situation was bad enough to consider bankruptcy. One-third (31%) of survey respondents say the stigma surrounding bankruptcy prevents them from seeking help.

“Unmanageable consumer debt or financial hardship is extremely lonely and isolating because the guilt prevents people from talking about it. Unfortunately, our survey shows those who are most in need of help are the least inclined to ask for it,” says Grant Bazian, president of MNP LTD, the country’s largest insolvency firm.

More than 60 percent (61%) of Canadians who rate their personal debt situation as bad and more than half (54%) who are financially insolvent say they would be embarrassed to ask for help if their financial situation was serious enough to consider bankruptcy.

The latest official figures from the Office of the Superintendent of Bankruptcy (OSB) show the number of Canadians who filed for Bankruptcy or a Consumer Proposal in the second quarter of 2019 was up six per cent compared to the same quarter of last year.

“The number of people filing has increased, but this doesn’t reflect the magnitude of the consumer debt challenges in the country because so many people delay getting help until they are in an absolutely dire situation. By the time they speak with a professional, many may be forgoing basic necessities to avoid filing a Consumer Proposal or Bankruptcy,” says Bazian.

The survey also revealed that many just don’t know what to do to get out of debt. Three in ten (30%) said they don’t know how to get out of debt or where to turn for help. That number jumps to almost half (47%) among those who are most likely to need help when it comes to Bankruptcy and debt relief — particularly those people who are insolvent at month end.

What’s more, there is a lack of trust among Canadians when it comes to debt relief professionals. Half of Canadians (52%) say they have a hard time trusting professional companies to help them get out of debt. This sentiment is higher among 18-34 year-olds (58%) — an age group that is also the least likely to seek Bankruptcy help.

“The trust issue may stem partially from a lack of financial literacy and awareness about debt relief options in Canada,” says Bazian.  “Many people — particularly young people — don’t know there is a regulated system in place to help severely indebted individuals regain financial stability. Licensed Insolvency Trustees are the only professionals authorized to offer relief options such as Consumer Proposals and Bankruptcies,” says Bazian, adding that Canadians should be wary of any companies that aggressively market quick-fix debt forgiveness.

“Our survey consistently tells us half of Canadians are on the brink of insolvency; so if you are struggling, it’s important to know that you’re not alone. There is absolutely no need to be embarrassed to seek help,” says Bazian. 

An overwhelming majority of Canadians (86%) believe there is no shame in seeking financial help with one’s debt. There is also a fair amount of sympathy towards those who have to declare Bankruptcy. Fewer than 4 in 10 (37%) agree with the statement that those who declare bankruptcy are looking for the easy way out of their financial problems.

MNP Consumer Debt Index – Update

The latest wave of the MNP Debt Index shows Canadians’ overall attitudes towards their personal financial situation have improved slightly since March. The number of Canadians $200 or less away from financial insolvency at month end decreased 4 points to 44 percent. Those in Alberta (44%, -4), Saskatchewan / Manitoba (40%, -6), Ontario (44%, -4), Quebec (43%, -8) and Atlantic Provinces (46%, -9) saw the biggest declines, whereas B.C. (44%, +5) has seen a sharp increase.

Not only do Canadians see their current situation as being better than it was in the past, they are also starting to envision a better future for themselves. More than one-third (36%) think their debt situation will be better a year from now, with net optimism up 4 points from March to stand at 26%. Looking five years into the future, almost half (47%) believe their future debt situation will be better than it is today, with net optimism up 5 points to 38 percent. 

Still, nearly half of Canadians (45%, +1) don’t feel they will be able to cover their family and living expenses without going into further debt and roughly half (49%, +2) are still concerned about the impact of rising interest rates on their financial situation. Four in ten indicate they regret the amount of debt they’ve taken on in their life (42%, +1) and are concerned about their level of debt (39%, +2).

After an all-time high in June 2018, the MNP Consumer Debt Index has been on a gradual decline. The latest data, representing the ninth wave, shows the decline has at least been temporarily halted, as the index holds steady at 97. 

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 get a free checkup for your debt health using the MNP Debt Scale.

MNP LTD is the creator of the MNP Consumer Debt Index, an industry-leading national barometer of financial pressure among Canadians.

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 www.MNPdebt.ca/CDI to learn more.

The latest data, representing the ninth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between June 14 and June 17, 2019. For this survey, a sample of 2,111 Canadians aged 18 years and over was interviewed. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.4 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.