More and more Albertans under threat of bankruptcy

With such little breathing room in the household budget, it becomes very easy to slip into an endless cycle of debt: MNP

Mario ToneguzziThe tough economic times of recent years has taken their toll on Albertans.

A survey released on Monday by MNP says Albertans are feeling worse about their consumer debt and personal finances than residents in other provinces.

“Albertans are maxed out right now and what makes the situation more alarming is that there is no real plan for paying back what they have borrowed. If the economy deteriorates further or interest rates rise, there’s going to be a significant number who will be forced into bankruptcy or insolvency,” said Donna Carson, a licensed insolvency trustee in Calgary with MNP Ltd., the country’s largest insolvency firm, in a statement.

MNP says consumer insolvencies are up 25.3 per cent in Alberta compared to the same time last year, according to the latest data from the Office of the Superintendent of Bankruptcy.

Here are some findings from MNP’s latest Consumer Debt Index, a quarterly survey conducted by Ipsos on behalf of MNP:

  • since September 2018 Albertans’ perception of their debt situation has been on a gradual decline;
  • compared to other provinces, Albertans are the most likely to be worried about their ability to repay debts (64 per cent, up one percentage point), the most concerned (48 per cent, up five points) about their current level of debt, and the most likely to regret the amount of debt they have taken on in their life (51 per cent, up one point);
  • they’re also most likely to say an interest rate increase could move them towards bankruptcy (45 per cent, down three points);
  • 48 per cent of Albertans say they are already hovering close to financial insolvency at the end of the month, just $200 or less away from not being able to pay their bills;
  • 27 per cent say they have no wiggle room at month-end, as they already don’t make enough to cover their bills and debt payments.

“With such little breathing room in the household budget, it becomes very easy to slip into an endless cycle of debt that is impossible to get out of,” said Carson. “This isn’t simply a matter of people living beyond their means. Many households are already at the point where they are borrowing to make ends meet.

“For many Albertans, paying down debt or saving for the future is seen as more of a luxury. Living on credit has become the only way to make some household budgets work and a whole industry has grown up around making that feasible, from payday lenders to credit card companies, to buy-now-pay-later retail offers.”

MNP said significantly more Albertans report taking on consumer debt compared to this time last year – 66 per cent say they have, up 10 points.

Mario Toneguzzi is a Troy Media business reporter based in Calgary. He writes for Calgary’s Business.

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