According to the latest MNP Consumer Debt Index conducted quarterly by Ipsos, personal finances continue to be a major source of stress for Canadians, and half anticipate that the situation will continue to deteriorate. When asked about the impact of the current economic conditions in Canada on their personal finances, half (50%) say they believe that the worst is yet to come, while one-third (35%) feel that we are currently experiencing the worst part of the economic cycle.
Grant Bazian, the president of MNP LTD., the country’s largest insolvency firm, states that, “facing inflation as well as sharply higher interest rates on their outstanding debts, deeply indebted Canadians may be rightfully feeling that the worst is yet to come.” He adds, “there isn’t much financial wiggle-room in many household budgets, illustrating the toll of higher interest rates, especially for those who can least afford it.”
The Index also revealed that one-third (33%) of Canadians feel that the economic conditions over the last six months were worse than they expected. Nearly half (46%) of Canadians report that they are $200 away or less from not being able to meet all of their financial obligations, including three in ten (30%) who say they already don’t make enough to cover their bills and debt payments. While the number of insolvent Canadians remains consistent, the average amount of money households have left over at the end of the month has dropped slightly to $787, down $64 from the previous quarter.
However, with interest rates stabilizing after last year’s successive increases, Bazian notes that Canadians are feeling some reprieve. Compared to last quarter, the Index rebounded to 89 points, up 12 points from the all-time low recorded that quarter. Fewer Canadians are concerned about their ability to pay their debts as interest rates rise, although six in ten (60%) are still concerned.
Bazian advises Canadians to be proactive about managing their debt and to keep a close eye on their budget, build their emergency fund for any unexpected expenses, and seek professional help right away if they are struggling to pay their bills to avoid a cycle of increasing debt and interest payments.
Licensed Insolvency Trustees are the only debt-relief professionals who can offer unbiased, customized advice about all of the debt-relief options, including informal debt settlement, consumer proposals and bankruptcy. They can stop or prevent collection calls and wage garnishments, as well as offer legal protection from creditor actions. MNP offers free consultations with Licensed Insolvency Trustees across Canada.