Three in ten (30%) Quebecers still experiencing COVID-related disruption to their employment

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

MONTREAL, QC – September 16, 2020 – A new poll by Ipsos carried out on behalf of MNP LTD has found three in 10 (30%) Quebecers 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. While this is a 12 point decrease since June, the pandemic is still impacting household income for many —particularly as various financial relief measures from the government, banks, and businesses evolve or come to an end.

“Significantly fewer Quebecers are experiencing COVID-related disruptions to their household income, but 30 percent are still dealing with disruption. That group is vulnerable. Those who had debt problems pre-pandemic may see those problems exacerbated as short-term financial relief comes to an end and creditors start going after deferred payments,” says Frederic Lachance, a Montreal-based Licensed Insolvency Trustee with MNP LTD.

Eight percent of Quebecers say they are currently working reduced hours or receiving reduced pay (-6 from June), while another six percent say someone in their household is experiencing the same situation (unchanged from June).

“While there aren’t yet numbers to confirm Quebecers have saddled themselves with significantly more debt since March, we believe some will be forced to lean more heavily on credit when deferral measures and government relief run out,” explains Lachance. “What happens is people start borrowing against future paychecks, creating a hole in the next paycheck. The cycle continues from paycheck to paycheck, and it becomes increasingly difficult to get out of.”

About five percent say they’ve had to postpone payments on bills, credit cards, and taxes. This translates to about 428,000 Quebecers.

“Individuals who are deeply indebted and now missing payments may be tempted to borrow more to make ends meet. Instead, they should seek professional debt advice,” says Lachance. He and his team offer free consultations via videoconferencing and by phone to anyone experiencing debt-related financial challenges. 

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

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.

“Taking on high-interest loans to make ends meet will likely cause significant consequences for years down the line, especially for fixed-income and lower-income renter households,” says Lachance. “Homeowners in the province who were already overleveraged will also face particularly tough financial decisions.”

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.

“On many fronts, the pandemic has caused uncertainty for Quebecers. But one thing is clear: while the pandemic has delayed the need for some people to deal with their underlying debt issues, that does not mean the debt issues are gone,” explains Lachance.

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 Quebec were down 50.3 percent in July compared to the same month last year and 17.3 percent for the twelve-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.

“There are a range of debt-relief options which a Licensed Insolvency Trustee can offer guidance. They can help individuals choose the best solution for their needs, whether that be a Consumer Proposal, Bankruptcy, or in some instances, simply help developing a customized plan to manage their debt,” says Lachance.

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.

“Indebted Quebecers shouldn’t have to face their debt problems alone. There is professional support available to help them get back on their feet,” 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, five 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.