May 2021 Debt Index Update (MNP 3 Minute Debt Break Podcast)

As pandemic-related government aid and loan deferral programs begin to wind down, the latest MNP Consumer Debt Index finds the number of Canadians hovering close to financial insolvency has reached a five-year high.

Conducted quarterly by Ipsos on behalf of MNP Limited, the Consumer Debt Index tracks Canadians’ attitudes about their debt and ability to meet their monthly payment obligations.

The latest debt index states that more than half of Canadians say they are $200 or less from not being able to meet all of their bills and debt obligations each month, a whopping 10-point jump from December. This includes three in 10 who report they are already insolvent with no money left at month-end to cover all their payments.

Pandemic-related financial relief measures provided some breathing room over the last year, but now there is a reversal being noticed. The number of Canadians with virtually no wiggle room in their household budgets has reached a five-year high. The anxiety Canadians are feeling about making ends meet — or already being unable to do so — indicates there may be an avalanche of households falling behind on payments or defaulting on loans, mortgages, car payments, or credit cards.

Some Canadians may be seeing their bills coming due, even if they are not back to full-time employment. And even though some are spending less and saving more as a result of pandemic measures, others are being pushed further into the red taking on more debt to stay afloat after job, wage, or small business losses.

A quarter of Canadians say they have taken on more debt because of the pandemic. This includes using credit cards, using a line of credit, taking out a bank loan, or deferring mortgage payments.

The survey, however, found very few Canadians plan to get professional advice or contact a Licensed Insolvency Trustee like MNP Debt to discuss debt relief options over the next year. Instead, it seems many plan to do exactly what is cautioned against: taking on even more credit to pay their expenses. More than a quarter say they plan to take on more debt to pay bills over the next year, including using high-interest options like credit cards or payday loan service.

If you are a deeply indebted individual, you should seek professional debt advice right away. Bankruptcy is not the only option, nor is it always the best option for dealing with debt. But every debt is different and that’s why speaking to MNP Debt can provide you unbiased advice about your situation and the options available. Visit MNPdebt.ca to book an appointment or to start a live chat.

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