Ontarians Increasingly Pessimistic About Their Consumer Debt

More than half of Ontarians say they are within $200 of insolvency, up 10 points since September.

Toronto, ON, January 20, 2020 — The number of Ontarians who say they are $200 or less away from being insolvent at month end has jumped 10 points since September to 53 percent, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos. This represents the largest proportion compared to other provinces, as well as the largest increase. Ontario was also the only province to see an increase in the number of residents (32%, +6%) who say they are already insolvent, meaning they cannot meet all their monthly financial obligations.

Toronto skyline at sunset with reflection of skyscrapers in the water

“Even more Ontarians are finding themselves unable to pay their debt obligations,” says David Gowling, a Licensed Insolvency Trustee with MNP LTD. “Many have come to the realization that there is no clear path to repaying what they have borrowed no matter the time horizon or interest rate.”

More Ontarians see grey skies on the horizon heading into the new year and beyond as fewer expect their debt situation to improve. Ontarians’ net confidence in their financial futures a year down the road dropped eight points since September. When comparing their current debt situation to five years in the future, net confidence dropped 12 points.

“What is even more concerning is our findings may point to a shift among some Ontarians from debt apathy to debt hopelessness,” says Gowling. “Feelings of hopelessness exacerbate the situation because they can make people feel like giving up on ever paying down their debt — or worse, ignoring the debt as it piles up higher.”

There is not only increasing pessimism among Ontarians about their financial futures. Ontarians also feel worse off now compared to the past. In fact, net optimism for both one- and five-year timeframes have reached all-time lows. Nearly a quarter (23%, +4%) of Ontarians now say their debt situation is poorer than it was five years ago.

“Anyone who is using credit to finance their lifestyle — particularly if their plan hinges on home prices rising — should sit down with a licensed professional,” Gowling says. “They can review your finances with you and set out a budget and plan for managing unexpected expenses.”

The index showed Ontarians are uneasy when it comes to being prepared for the unexpected. For example, only about 3 in 10 (33%) are confident in their ability to cope with a life-changing event such as a serious illness (-4%), unexpected auto repair or purchase (-3%) without increasing their debt load.

“Breaking free of the debt cycle isn’t just about paying off your creditors. It’s also important to change your mindset and behaviours, because that is what will help you avoid getting back into the same financial trouble in the future,” says Gowling.

While it seems more Ontarians are starting to seek professional help with their debt, one of the biggest behavioural changes still required among those who are severely indebted is shucking the tendency to isolate rather than reach out for guidance. 

“Too often clients arrive in our offices only after they have been struggling alone with their debt for years or sometimes even decades,” he explains. “Don’t wait to get help, especially if your debt is causing stress or impacting your relationships.”

MNP Ltd. offers Free Confidential Consultations and their team of Licensed Insolvency Trustees are empowered to help those struggling financially to make the most informed choices to deal with their debt. Licensed Insolvency Trustees are the only federally regulated professionals who can provide regulated insolvency options, such as a Consumer Proposals and Bankruptcies.

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. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the eleventh wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between December 4 and December 9, 2019. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +2.5 percentage points, 19 times out of 20, of what the results would have been 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.