Lowuh-employees, young Canadians, women and the tenants most at risk debt or insolvency burden
MNP Consumer The debt index falls to the second lowest since its inception (94 pts)
CALGARY, Alta., Oct. 13, 2020 (GLOBE NEWSWIRE) – As the country enters its seventh month of economic disruption, the pandemic recession highlights inequalities between the haves and those facing job losses, debt and evictions; and food insecurity. MNP’s latest consumer debt index highlights what many are predicting to be a ‘K-shaped recovery’, in which those at the top will prosper while working-class Canadians take on debt. more and more.
“In many ways, our index highlights the divergent experiences of Canadians during COVID. While some are fortunate enough to be able to continue working in their current jobs but from home, others continue to struggle with financial uncertainty and are unsure if their jobs will still be around after the pandemic, ”said Grant Bazian , president of MNP SARL, the largest insolvency company in the country.
Now in its fourteenth wave, the MNP Consumer Debt Index is conducted quarterly by Ipsos and tracks the attitudes of Canadians about their debt situation and their ability to meet their monthly payment obligations. The index currently sits at 94 points, the second lowest reading on record, after hitting a record high in March this year. Those who earn less than $ 40,000 a year, renters, women and millennials are most likely to say their current debt situation is worse than it was in the past. These groups are also at higher risk of insolvency, according to the research.
“Unemployment and income inequality intensify the debt challenges that were already present before the pandemic. The loss of income directly resulting from the pandemic is preventing more Canadians from being able to repay their existing debts and thus putting them in serious financial distress, ”said Bazian.
Several indicators making up the MNP Debt Index point to debt problems, particularly as payment deferrals and government emergency assistance programs come to an end. Half (47%) of Canadians now say they are $ 200 or less from insolvency, a four point increase from the last wave. This proportion also includes 26 percent who are already insolvent to begin with, also up four points from the last wave.
Young Canadians, women, renters and low-income people are more likely to find themselves struggling during this K-shaped recovery. For example, those who rent are significantly more likely to be insolvent; nearly six in ten renters (57%) say they are $ 200 or less from insolvency, which already includes thirty-two percent who say they are already insolvent. In contrast, just over a third (36%) of homeowners say the same, with two in ten (18%) already saying they are insolvent.
It is therefore not surprising that three in ten renters (31%) say they regret the amount of debt they have incurred in their lifetime (compared to 22% of owners), and that only 31% say they are able to cover their living expenses for the next twelve months without taking on more debt (vs. 45% of owners).
Generation Z Canadians appear to be the hardest hit by the continued economic downturn in the wake of the pandemic, losing either summer jobs or hard-hit hospitality jobs. Seven in ten (69%, +16) are $ 200 or less from insolvency, including four in ten (39%, +8) who already are. Half of women (49%, +4) also say they are dangerously close to insolvency, with a quarter (25%, +3) saying they are already there. Households earning less than $ 40,000 per year are the most likely (67%, +4) to be $ 200 or less from insolvency, including four in ten (38%, +6) who already are.
“During the pandemic, Canadians were encouraged to believe that ‘we are all in the same boat’, but it has become clear that some groups are better equipped than others to weather the storm. This is an important distinction that may not be apparent on the surface, but becomes very evident in our research, ”Bazian explains.
There are other signs that more problems could be on the horizon as bills quickly become due. Four in ten Canadians (43%, +3) say they are concerned about their current debt level, the second highest level recorded for this measure since 2017 (peaking in March 2020 at 46%). In addition, whether one has a job or not, the fact remains that four in ten (39%) still fear that they or someone in their household will lose their job, an unchanged concern. at the last wave. Women are more concerned about the loss of employment in their household (42%, +3).
“Given the challenges this year presented and the underlying issues still present since before the pandemic, many Canadians are now in a position where they need help dealing with their debt. What these people need to know is that there is a large system in place; a network of licensed MNP Insolvency Trustees across the country who can offer personalized advice to help them determine the best course of action, ”Bazian said. “Bankruptcy is an option, but it is really the last course of action after exhausting all other avenues available.”
Licensed Insolvency Trustees are the only federally regulated debt professionals who can provide expertise on all debt relief options and ensure those in financial difficulty have access to the full range of options. debt relief available to Canadians.
Bazian says that depending on the extent of the debt and the individual’s income, dealing with debt problems can involve a combination of the following:
- Budgeting – Create a monthly financial plan to help balance and monitor income and expenses, and potentially free up more money to pay off debt.
- Refinancing – Renegotiate the duration and interest rate of existing credit accounts to reduce the monthly cost of debts and facilitate their repayment.
- Liquidation – Sell high-value assets such as vehicles, recreational properties, sporting goods and jewelry to provide the financing needed to pay off debt.
- Consolidation – Consolidate all debts into a single monthly payment with a lower average interest rate to reduce the number of payments and their total cost.
- Consumer proposal – Work with an MNP Licensed Insolvency Trustee to negotiate a legally binding debt settlement with your creditors that will reduce the amount you owe, and which you can take up to five years to pay off.
- Bankruptcy – The declaration of bankruptcy is a legal process that offers immediate protection to people in financial difficulty. For those whose wages have been garnished, who are unable to make their credit card and loan payments on time, who receive arrears notices or calls from collection agents, or who owe more money as the value of their assets, filing for bankruptcy might be the right option.
“Everyone’s debt situation is different, so don’t just rely on what people have told you or what you’ve read online. Get professional and unbiased advice, ”says Bazian.
MNP LTD offers free consultations by videoconference and telephone. Visit DebtMNP.ca to make an appointment or to start a live chat.
Other survey highlights include:
- More than half (56%, +6) of millennials say they regret the amount of debt they have incurred in life.
- While groups who are less confident that they will be able to cover their living and family expenses over the next 12 months without taking on more debt include women (57%, -1) and Generation Z Canadians (48%, – 6), the latter group showed the biggest drop since the last wave.
- More than four in ten households (44%, +5) in the $ 40 to $ 60,000 bracket are $ 200 or less from insolvency, including 22% that are already insolvent (+6). One in three households (35%, +7) comfortably earning between $ 60 and $ 100,000 per year say the same, of which 17% are insolvent (+5). Even in the highest income category, a quarter (24%, -1) of households earning more than $ 100,000 per year say they cannot honor their debts, and 15% of these households say they are already insolvent (-3 ).
- Those in Quebec report the largest increase in those who are insolvent (26%, +8), bringing to 51% (+10) the total proportion of people in this province who are less than $ 200 or less. ‘insolvency.
About MNP LTD
MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency firm in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and Advisors have worked with individuals to help them recover from times of financial distress and regain control of their finances. With more than 230 Canadian offices from coast to coast, MNP helps thousands of Canadians with an overwhelming amount of debt each year. Visit DebtMNP.ca to contact a Licensed Insolvency Trustee or use our DIY Debt Assessment Tools. For regular and in-depth information on debt and personal finance, subscribe to the MNP’s 3-Minute Debt Podcast.
About the MNP Consumer Debt Index
the MNP Consumer Debt Index measures the attitude of Canadians towards their consumer debt and assesses their ability to pay their bills, incur unforeseen expenses and absorb fluctuations in interest rates without approaching insolvency. Produced 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 sits at 94 points, the second-lowest reading on record, after hitting a record high in March of this year. Visit MNPdette.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 and 3, 2020. For this survey, a sample of 2,001 older Canadians aged 18 and over was interviewed. The weighting was then used to balance the demographics to ensure that the composition of the sample reflects that of the adult population according to census data and to provide results intended to approximate the universe of the sample. The accuracy of Ipsos online surveys is measured using a credibility interval. In this case, the survey is accurate to ± 2.5 percentage points, 19 times out of 20, if all Canadian adults had been surveyed. The credibility interval will be wider among subsets of the population. All polls and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.
A summary of a part of provincial data are available on request.
A photo accompanying this announcement is available on: https://www.globenewswire.com/NewsRoom/AttachmentNg/7f9ca4cc-aa06-47ee-add5-5804a1e9f9a2