Over half (53%) of Albertans still experiencing COVID-related disruption to their employment

Indebted Albertans urged to seek professional debt advice before borrowing to make ends meet

CALGARY, AB – September 16, 2020 – A new poll by Ipsos carried out on behalf of MNP LTD has found more than half (53%) of Albertans 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 decrease of two points 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 Albertan households. However, as these measures evolve or come to an end, the pandemic is still impacting household income for many.

“A majority of Albertans are still experiencing COVID-related disruptions to their household income. Many will find their pre-pandemic debt problems compounded as creditors begin looking to collect deferred payments and short-term financial relief comes to an end,” says Donna Carson, a Calgary-based Licensed Insolvency Trustee with MNP LTD.

One in five (22%) Albertans say they are currently working reduced hours or receiving reduced pay (+4 from June), while 17 percent say someone in their household is experiencing the same situation (-1 from June).

“While we have yet to see evidence proving Albertans have taken on significantly more debt since March, it seems like some will be forced to rely on credit when government relief and deferral measures run out,” explains Carson. “The problem here is they will be borrowing against future paychecks. That leaves a hole in the next paycheck, and so begins a cycle that is very difficult to get out of.”

One in 10 (10%) Albertans say they’ve had to postpone payments on bills, credit cards, and taxes. This translates to about 443,000 people.

“If you are deeply indebted and now missing payments, seek professional debt advice before considering borrowing more to make ends meet,” says Carson. She and her team offer free consultations via videoconferencing and by phone to anyone experiencing debt-related financial challenges. 

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

Nationally, 45 percent of Canadians who are currently receiving COVID-19-related financial support from the government say they will take on more debt in one 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.

“Fixed-income and lower-income renter households are going to have really significant setbacks for many, many years if they take on high-interest loans to make ends meet,” says Carson. “But homeowners in the province face particularly stark decisions if they are already 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.

“While the pandemic has caused a great deal of uncertainty, one thing is clear: Albertans underlying debt issues have not gone away, but the pandemic has delayed their need to deal with those issues,” explains Carson.

She 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 Alberta insolvencies were down 37.5 percent in July compared to the same month last year and 4.7 percent for the 12-month period ending July 31, 2020.

Once COVID-related benefits end, insolvencies are expected to increase significantly. 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.

“In some cases, a Consumer Proposal or Bankruptcy may be the right choice, but there are other options. Some people simply need help developing a customized plan to manage their debt. A Licensed Insolvency Trustee can offer guidance regarding a range of debt-relief solutions to help individuals choose the best option for their needs,” says Carson.

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.

“Debt isn’t something people should have to face alone. Professional support is available to put indebted Albertans on the right track,” she 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.