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Four-in-10 British Columbians within $200 of insolvency

Last Updated Jan 21, 2019 at 7:35 am PDT

(Source: iStock)

VANCOUVER (NEWS 1130) –¬†As holiday bills continue to roll in, many British Columbians are having a very hard time making it to the end of the month with anything more than a couple hundred dollars in cash, according to a major bankruptcy consultant.

The MNP Consumer Debt Index suggests there is so little wiggle room that any increase in living costs or interest payments is enough to tip many Canadians into insolvency.

“What our survey has been showing, from a trend point of view, is the number of people worried about it is increasing. Six-out-of-10 in BC are concerned about their debt loads which, in some respects, I take as good news,” says David Gowling, senior Vice President of MNP Ltd. “It means that people are paying attention to how much they are spending just to take care of their debts.”

MNP has found more than four-in-10 (41 per cent) of British Columbians believe they are within $200 of insolvency by the end of each month, up six points since September.

More than a quarter (27 per cent) say they don’t make enough to cover their bills and debt obligations, more than half (51 per cent) of British Columbians are concerned about the impact of rising interest rates, and one-third (33 per cent) have bankruptcy worries.

“What we have been seeing since the fall is that, on average across the country, the number of people seeking help for their situation is increasing. It’s hard to say how that trend will go. A lot depends on future interest rate increases, because now they are talking about holding off on those,” says Gowling. “There’s also all the uncertainty around different trade issues which can affect people as far as their job goes.”

How did we get here? Gowling points to Canadians’ increasing reliance on long term debt.

“As much as the government says the rate of inflation is low, the average person is seeing rents that are increasing far more than what their wages are. They are just trying to keep up. What tends to happen is they have to turn to debt to try to finance the difference. Where we see people really needing help is when they start to resort to payday loans. It becomes the ‘last gasp’ because once you get into payday loans, it’s very hard to get out.”

Gowling says that is when people should be seeking help from a licensed insolvency trustee.

“If they talk to someone like us, our role is to be objective and outline the options. If they are in a situation where maybe it’s just a matter of budgeting or refinancing their home, there are ways that we can refer them out to people who can help them.”

Sometimes all it takes takes is a proper look at monthly finances.

“A lot of times we meet people and it is the first time they actually put down on paper what they are spending each month. It gives them a good idea of just how much is going toward their debts. Are they using debts to pay for their normal monthly expenses? If that’s the situation, then they really have to take a look at how they are going to reverse that and start paying down that debt over a longer period of time.”