19h ago

By Pattie Lovett-Reid

A new survey from MNP Ltd found that 53 percent of respondents said they were missing $ 200 or less for not being able to meet all of their monthly bills and debts The number is alarming because it marks a five-year high in the agency’s consumer debt index and marks a 10-point jump from a December survey

This number includes the 30% who said they were already insolvent, with no money left at the end of the month

Government support programs have offered some financial flexibility over the past year but, at best, these programs were intended to be temporary In many ways, the benefits of COVID-19 masked the severity of the Canadians drowning in debt

– The anxiety Canadians feel about making ends meet – or already unable to do so – tells us that we could eventually see an avalanche of households falling behind on payments or defaulting on payments. loans, mortgages, car payments or credit cards, â ???? Grant Bazian, chairman of MNP LTD, said in the report released Thursday

Households may have tried to save more and spend less amid the pandemic, and – to be honest – some have succeeded with great success. However, there are others who have taken on more debt due to job loss, pay cuts or desperately trying to keep small businesses afloat.

According to MNP, a quarter of Canadians took on more debt amid the pandemic Among respondents, 20% said they used savings to pay their bills, 14% used credit cards, 7% used a line of credit, while 3% took out a bank loan or deferred mortgage payments, respectively

– Those who take on more and more debt are increasingly vulnerable to increases in interest rates in the future They might find that their debt becomes unaffordable when this happens, â € “ Bazian wrote

Higher rates should be a real concern for those who borrow and naively think rates won’t go up once the economy warrants it In fact, I find it scandalous that six in ten respondents say the current environment low rates makes it a good time to buy things they might not otherwise have been able to afford

What would be much more suitable for struggling households would be to hit the pause button and look for solutions to get out of this debt trap

– Bazian suggested that a Licensed Insolvency Trustee could offer a range of options for those struggling to make ends meet.These included setting up a firm monthly budget, refinancing credit options to reduce fees and debts, selling high-value assets that can provide additional cash flow, consolidating debt to reduce interest rates on a single payment, researching consumer proposals with creditors or the declaration of bankruptcy

Insolvency

Global news – CA – 53% of Canadians on the brink of insolvency: MNP survey – BNN Bloomberg

Source: http://www.bnnbloomberg.ca/53-of-canadians-within-200-a-month-of-insolvency-mnp-1.1587379