Optimism about debt and personal finances jumps in Quebec

• Compared to pre-pandemic levels, significantly more Quebecers rate that their current debt situation as excellent (49%, +9) – more than any other province
• Far fewer are concerned about their current level of debt (38%, -9pts)
• Significantly fewer say they are $200 or less away from financial insolvency (41%, -11pts)
• More feel more confident about being able to cover living expenses this year without going further into debt (63%, +2pts)

MONTREAL, QC – July 20, 2020 – While the financial picture for many Quebec households looked bleak last quarter, many have stayed afloat thanks to the current raft of pandemic-related support programs. The latest MNP Consumer Debt Index, conducted quarterly by Ipsos, found Quebecers feel more confident than ever about being able to cover their living expenses for the next 12 months without going further into debt (63%, +2), and are the most confident compared across the provinces.

Compared to pre-pandemic levels, significantly more Quebecers rate their current debt situation as excellent (49%, +9) – more than any other province. They are the most likely to perceive their debt situation to be better now than it was both a year ago (34%, +3) and five years ago (40%, +4) The newfound optimism is also visible in measures showing fewer regret the amount of debt they have taken on in life (38%, -5) or are concerned about their current level of debt (38%, -9).

“The optimism in the province is likely a result of the pandemic relief measures. But it could also be that many found it easier to spend less over the last few months since they were required to stay home,” says Frederic Lachance, a Montreal-based Licensed Insolvency Trustee with MNP LTD.

With widespread store closures leaving fewer opportunities for spending and many saving on gas and community costs as a result of working from home, Quebecers say they have more wiggle room in their household budgets each month. On average, after paying bills and debt obligations, they report having $218 more at month-end than they did in early March.

“COVID-19 dramatically altered consumer spending with mall and restaurant closures. Even with an increase in groceries, utilities and online shopping, many have reported significant savings. In some cases, this may have made people feel more capable of keeping up with previously unsustainable debt payments,” explains Lachance.

The number of Quebecers who say they are $200 or less away from financial insolvency at month-end decreased a staggering 11 points since early March (41%). This proportion includes 18 percent who report already being insolvent and not being able to cover their bills and debt payments — a decrease of seven points this wave.

“For more than 40 percent in the province, just a few hundred dollars per month — less than one unexpected car repair or a loss in overtime pay — may be enough to tip the scales toward an insolvency scenario,” says Lachance. “We will begin to see a range of efforts from creditors to catch people up from deferrals. Whether that takes the form of increased monthly payments or extended loan terms, many will be further behind and deeper in debt coming out of the pandemic.”

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 Quebec declined a staggering 65 percent compared to the same month last year.

Given the already shaky ground Quebecers were standing on before the COVID-19 crisis — not to mention the magnitude of the virus, its economic impacts, and the government response — Lachance says it won’t be at all surprising to see nationwide insolvencies jump.

“We see these numbers returning to normal as soon as federal subsidies and stimulus dollars dry up and creditors begin clawing back deferred payments,” says Lachance.

Some households are bracing themselves for a crash landing when the current relief measures end and leave them to face an uncertain post-pandemic economy. One in 10 (9%, +2) Quebecers expect their debt situation to worsen a year from now.

For those who are struggling with debt, Lachance 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.