One in three Atlantic Canadians still experiencing COVID-related disruption to their employment (down 16pts since June)

Indebted Atlantic Canadians urged to seek professional debt advice before borrowing more to make ends meet

HALIFAX, NS – September 16, 2020 – A new poll by Ipsos carried out on behalf of MNP LTD has found one in three (36%) Atlantic Canadians are still experiencing disruption to either their own work situation or that of someone else in their household in the form of lay-offs, reduced pay, or fewer working hours – a 16-point decrease since June. Over the past few months, various financial relief measures from the government, banks, and businesses have helped cushion the financial blow of the pandemic for many Atlantic Canadian households. However, the pandemic is still impacting household income for many as these measures evolve or come to an end.

Halifax streetview at sunset

“The results show significantly fewer Atlantic Canadians are still experiencing COVID-related disruptions to their household income, although 36 percent continue to have some sort of disruption. This group will be vulnerable, as short-term financial relief runs out and creditors start to collect deferred payments . For those who had debt problems before the pandemic, those problems will be compounded,” says Joe Wilkie, a local Licensed Insolvency Trustee with MNP LTD.

Twelve percent of Atlantic Canadians say they are currently working reduced hours or receiving reduced pay (-6 from June), with another three percent saying that someone in their household is experiencing the same situation (-6 from June).

“Although we have yet to see solid evidence showing Atlantic Canadians have piled on large amounts of debt since the beginning of the pandemic, we believe some will end up relying on credit to get by as government relief and deferral measures end, ,” explains Wilkie. “The concern is they will be borrowing against future income they don’t have. That sets off a cycle which is nearly impossible to break free of.”

About one in 10 (6%) say they’ve had to postpone payments on bills, credit cards, and taxes. This translates to about 122,000 Atlantic Canadians.

“If you are stuck deep in debt and are now missing payments, seek out debt advice from a professional before you start borrowing more, ,” says Wilkie. He and his team offer free consultations via videoconferencing (Skype, Messenger, Zoom, FaceTime) and by phone to anyone experiencing debt-related financial challenges. 

Wilkie says historic low-interest rates may be giving some a false sense of security that will result in increased borrowing. In addition, those who are most vulnerable may turn to high-interest credit as eviction moratoriums have ended,.

Nationally, 45 percent of Canadians who are currently receiving COVID-19-related government financial support say they will take on more debt in some form or another when that ends, an increase of 10 points since June. Two in 10 say they will use their line of credit (18%, +6) or borrow from friends and family (19%, +3). One in 10 (11%, +4) say they will take out a bank loan. Two in 10 (21%, +4) Canadians will use their credit cards to make ends meet when relief measures end. About one in 10 (8%, +4) say they will use a payday loan service.

“There are going to be significant setbacks for fixed-income and lower-income renter households who take on high-interest loans to try to keep up with their debt repayment obligations. Those setbacks could last for years,” says Wilkie. “There will also be hard financial choices for homeowners in the province if they are already feeling overleveraged.”

Two in 10 (21%) Canadian homeowners say they will be forced to defer their mortgage payments, and 16 percent say they would have to sell their home to make ends meet once COVID-19-related support ends.

“One thing is clear amid all the uncertainty caused by the pandemic: while people have been able to delay dealing with their underlying debt issues, those issues are not simply going away,” explains Wilkie.

He points to the fact insolvencies are down significantly compared to last year as a result of pandemic-related financial support. The latest stats from the Office of Superintendent of Bankruptcy show insolvencies in Nova Scotia were down 53.3 percent in July compared to the same month last year and 18 percent for the 12-month period ending July 31, 2020.

Insolvencies are expected to increase significantly once COVID-related benefits end. According to the survey, about one in 10 (11%, +5) Canadians currently receiving benefits indicate they will declare Bankruptcy if the financial support ends. Around the same number (10%, +3) say they will file a Consumer Proposal to address their debt.

“Many people don’t realize there is a range of debt-relief solutions to consider. While a Consumer Proposal or Bankruptcy might be the right choice for their situation, they also might just need help to develop a customized plan to manage their debt. A Licensed Insolvency Trustee can offer the necessary guidance regarding all debt-relief options and help individuals choose the option that is best for them,” says Wilkie.

Government-regulated Licensed Insolvency Trustees provide advice to Canadians struggling financially and, where appropriate, can even help them avoid bankruptcy by facilitating an agreement with their creditors. They can also guarantee legal protection from creditors through the Consumer Proposal or Bankruptcy process.

“Dealing with debt isn’t something you should have to tackle on your own. There is professional support available to help indebted Atlantic Canadians get a fresh financial start,” he says.

Those in need of debt advice can visit MNPdebt.ca to book an appointment or to start a live chat.

Other survey highlights include:

  • Nationwide, about one in 10 (7%) say that they’ve had to postpone payments on bills, credit cards, and taxes, translating to about two million Canadians. This proportion reaches 11 percent among those who rent their home. Among those who own their home, 5 percent say they’ve had to defer their mortgage payments.
  • Other plans for when COVID-19-related government financial support ends:
    • Nearly half (45%, -1) of Canadians say they will likely have to cut back on consumer spending and expenses.
    • Three in 10 (31%, +1) say they will use their savings to pay their bills.
    • Fifteen percent (15%, +2) say they will sell assets like their car, investments or rental property.

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

About the Survey

These are some of the findings of an Ipsos poll conducted between September 1-3, 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 national data is available by request.