Manitoba and Saskatchewan are more pessimistic about personal finances than anywhere in Canada
Households concerned about debt and have less money left at month-end compared to the rest of the country
WINNIPEG, MB – July 20, 2020 – Manitoba and Saskatchewan households were feeling more optimistic last quarter, but concern about debt is now growing in the provinces — even despite the raft of pandemic-related support programs. The latest MNP Consumer Debt Index, conducted quarterly by Ipsos, found almost half (49%) are concerned about their current level of debt, a five-point jump compared to March. Over half (55%) also say they regret the amount of debt they have taken on in life (+8). Far fewer expect the situation to improve a year from now (26%, -15). And many expect it to get worse (15%, +7).
“As the economy re-opens, we expect to see creditors seeking out ways to catch people up on their payments. That might include increasing monthly payments or extending loan terms, which will only make the situation worse for those who already can’t pay their bills,” says Gord Neudorf, a Regina-based Licensed Insolvency Trustee with MNP LTD.
The poll found the number of Manitoba and Saskatchewan residents who are $200 or less away from financial insolvency at month-end increased two points since early March (51%), the most compared to the other provinces. This proportion includes 30 percent who report already being insolvent and unable to cover their bills and debt payments, an increase of eight points this wave and the largest increase in the country.
“With many people so close to being unable to pay their monthly bills, it wouldn’t take much to push households back into a dangerous place financially. Even a few hundred dollars per month — less than an unexpected car repair or loss in overtime pay — could be all it takes to push a family into financial trouble,” says Neudorf.
Manitoba and Saskatchewan residents feel slightly more confident about being able to cover their living expenses for the next 12 months without going further into debt (61%, +2). But compared to pre-pandemic levels, they were the least likely to rate that their current debt situation as excellent (33%, -3). They were also the least likely (22%, -3) to perceive their debt situation as better now than it was a year ago or five years ago (25%, -10).“That many people in Manitoba and Saskatchewan are far less optimistic about their personal debt situations right now is concerning considering most of the country is feeling a sense of optimism due to the pandemic relief measures,” says Neudorf. “Those who were having a hard time making ends meet before the pandemic are seeing those financial problems amplified.”
Compared to the rest of the country, Manitoba and Saskatchewan residents report having far less wiggle room in their household budgets each month. On average, after paying bills and debt obligations, they report having $98 less at month-end than they did in early March. The rest of Canada experienced an increase.
“Across Canada, many households reduced discretionary spending during COVID-19 due to restaurants, theatres, malls, and other business closures. However, that doesn’t appear to be the case for Manitoba and Saskatchewan. The marginal increases in groceries, utilities, and online shopping coupled with a loss in wages have decreased wiggle room in household budgets,” explains Neudorf.
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 in Saskatchewan declined 34 percent compared to the same month last year.
Given the already shaky ground Manitoba and Saskatchewan residents were standing on before the COVID-19 crisis — not to mention the magnitude of the virus, its economic impacts, and the government response — Neudorf says it won’t be at all surprising to see nationwide insolvencies jump.
“I would expect to see a rapid increase in the number of people struggling once government aid and other financial supports run out. Creditors will want those deferred payments paid in full and leave many unable to cover their debt obligations,” says Neudorf.
“It is tough to predict just how many people in the province will need debt help as a result of the pandemic, but it would be fair to say the scope will be unlike anything we’ve seen before.”
When asked how they think their debt situation will be five years from now; four in ten Manitoba and Saskatchewan residents say they expect it to improve (39%), a decrease of 17 points from pre-pandemic levels and by far the largest decrease among the provinces. As with the one-year timespan, one in ten believe their debt situation will worsen (12%, +8).
For those who are struggling with debt, Neudorf 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 best 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.
