One quarter of Albertans technically insolvent, cannot pay their bills each month

MNP Consumer Debt Index confirms debt concerns in Alberta amid employment uncertainty

CALGARY, AB – October 13, 2020 – As the province enters its seventh month of economic disruption, the pandemic is spotlighting issues for those dealing with job loss, debt, eviction, and food insecurity. The latest MNP Consumer Debt Index points to debt trouble in Alberta, particularly as payment deferrals and government emergency aid programs change or wind down.

A quarter (25%) of Albertans now say they are insolvent, unable to cover their monthly bills and debt repayments, a five-point jump since the last wave in June. About four in 10 (37%, -2) say they are $200 or less away from insolvency at month-end.  

“Our results reveal the divergent experiences of Albertans during COVID. Those who have lost employment or wages continue to struggle with financial uncertainty and not knowing whether their job will still be around after the pandemic,” says Sandra Landry, a Licensed Insolvency Trustee with Alberta-based MNP LTD.  

There are other signs more trouble could be on the horizon as bills quickly become due. Almost half of Albertans (46%, unchanged) say they are worried about their current level of debt, the second highest proportion since 2017 (peaking at 48 percent in March 2020) and among the highest in the country. Almost half (46%, -1) are still worried they or someone in their household could lose their job. And half of Albertans (51%) say they regret the amount of debt they’ve take on in life, up six points from the last wave.

“Given the challenges this year has presented, and the underlying consumer debt issues in the province which pre-exist the pandemic, many are in a position now where they need help to deal with their debt. These individuals need to know that  help is available,” says Landry. “Bankruptcy will certainly be the best option for some, but it is the last course of action after exhausting all other available avenues. The earlier people can get help, the more options there are.”

Landry says depending on the extent of the debt and the individual’s income, dealing with debt problems may involve some combination of the following:  

1. Budgeting — Creating a monthly financial plan to help track income and expenses and potentially free up more cash to pay down debts.
2. Refinancing — Re-negotiating the term and interest rate on existing credit accounts to reduce the monthly cost of debts and make them easier to repay.
3. Liquidating — Selling high-value assets such as vehicles, recreational properties, sporting goods, and jewelry to provide the financing needed to pay down debt.
4. Consolidating — Combining all debts into a single monthly payment with a lower average interest rate to reduce the number of payments and their total cost.
5. Credit counselling — Working with a debt professional to negotiate a non-legally binding payment arrangement with creditors.
6. Consumer Proposal — Working with a Licensed Insolvency Trustee to negotiate a legally binding debt settlement with creditors that will reduce the amount owing, and which can take up to five years to repay.
7. Bankruptcy —A legal process that provides immediate protection to individuals experiencing financial trouble and can extinguish debts through a combination of asset liquidation and (potentially) monthly payments.
   
   Bankruptcy may be the right option for those who have (1) had wages garnished, (2) are unable to make credit card and loan payments on time, (3) are receiving past due Notices or calls from debt collectors, or (4) who owe more money than the value of things they own.

“Everyone’s debt situation is different, so a consultation is critical to make sure you receive accurate, unbiased advice,” says Landry.

Licensed Insolvency Trustees are the only federally regulated debt professionals who can provide expertise about all debt relief options and ensure those struggling financially have access to the complete range of debt relief options available.   

MNP LTD offers free consultations via videoconferencing and by phone. Visit MNPdebt.ca to book an appointment or to start a live chat.

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 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. Now in its fourteenth wave, the Index currently stands at 94 points, the second-lowest reading ever, on the heels of having hit record-low in March of this year. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the fourteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between September 1-3, 2020. 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 some of the national data is available by request.