Number Of Atlantic Canadians On The Brink Of Financial Insolvency Jumps 10 Points Since December

More than half are $200 or less away from financial insolvency at month end, up 10 points since December. More than half say they could be in financial trouble if interest rates increase, up 6 points. Four in ten say an interest rate increase could move them towards bankruptcy, up 8 points. Half say they won’t be able to cover all living and family expenses in the next 12 months without taking on more debt, up 4 points.

HALIFAX, NS – Atlantic Canadians are feeling worse about their consumer debt and personal finances than was the case just a few months ago, according to the latest MNP Consumer Debt Index, a quarterly survey conducted by Ipsos on behalf of MNP LTD. Compared to other provinces, Atlantic Canadians are the most likely (55%) to say they are hovering close to financial insolvency at the end of the month, just $200 or less away from not being able to pay their bills, an increase of 10 points since December. They are also the most likely (31%) to say they have no wiggle room at month-end, as they already don’t make enough to cover their bills and debt payments.

“Having such little room in the household budget puts people in a situation where they can easily get trapped in an endless cycle of debt,” says Joe Wilkie, a Licensed Insolvency Trustee with MNP LTD, the country’s largest insolvency firm. “This isn’t simply a matter of people living beyond their means. The reality is that too many households simply cannot make ends meet, however hard they try.”

Since September 2018, Atlantic Canadians’ perception of their debt situation has been on a gradual decline. More than half of Atlantic Canadians are worried about their ability to repay debts (59%; +2pts) or believe they could be in financial trouble (54%; +6pts) if interest rates increase. Four in ten (41%) say a rate increase could move them towards bankruptcy, an 8-point jump since December.

“Atlantic Canadians are maxed out, with no real plan for paying back what they have borrowed. When debt becomes a financial survival tool, it makes people particularly vulnerable to exploitative and high-cost lending. They have to spend more to service their debts — particularly as interest rates rise — so they have less money to make ends meet. And so begins the vicious cycle of debt,” says Wilkie.

As the Bank of Canada has held interest rates steady recently, concerns over interest rates have softened somewhat since December. Still, half (+/- 48%) say they are concerned about the impact of rising interest rates on their financial situation.

While there may be red flags about where the economy and interest rates are heading, that has not stopped Atlantic Canadians from continuing to borrow. More Atlantic Canadians report taking on consumer debt compared to this time last year; three quarters (69%) say they have, up five points. What’s more, it seems many may continue to borrow, with half (48%; +4pts) indicating that they won’t be able to cover all living and family expenses in the next 12 months without taking on more debt. Four in ten (37%; -3pts) are concerned about their current level of debt and regret the amount of debt they have taken on in their life (41%; -5pts).

“Credit has become an inextricable component of household budgets in the province. A whole industry has grown up around making that happen, from payday lenders to credit card companies, to buy-now-pay-later retail offers,” says Wilkie. Despite the debt anxiety that many are feeling, Atlantic Canadians are somewhat optimistic about their financial future, as a year from now, nearly four in ten (38%; +2pts) expect their debt situation to improve. Compared to other provinces, Atlantic Canadians are the most optimistic about their debt situation five years from now, with over half (52%; +5pts) believing it will improve.

“The optimism is warranted because there is help available. There is a system in place to give those who are severely in debt the help they need to regain financial stability — even for those who have no income or assets. Asking for help from a licensed professional is the first step,” says Wilkie.

Licensed Insolvency Trustees are the only federally regulated debt professionals empowered to provide a full range of debt relief options including consumer proposals, bankruptcies, informal debt settlements, and debt consolidation.

About MNP

Debt 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 Canadian 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.

About the MNP

Consumer Debt Index TheMNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, follow a budget, 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 Index data was compiled by Ipsos on behalf of MNP LTD between March 13 and March 24, 2019. For this survey, a sample of 2,070 was interviewed online. 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 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.