Albertans’ optimism about personal finances jumps amid relief measures and reduced consumer spending

• The number of Albertans who say they are $200 or less from financial insolvency at month-end plunged 19 points since early March (39%, -19pts)
• Significantly more Albertans are confident in their ability to cover living expenses over the next year without going further into debt (61%, +8pts)
• Far fewer regret the amount of debt they have taken on in life (46%, -7pts)

CALGARY, AB – July 20, 2020 – While the financial picture for many Albertan households looked bleak last quarter, many have stayed afloat thanks to the current raft of pandemic-related support programs. The latest MNP Consumer Debt Index, conducted quarterly by Ipsos, found significantly more Albertans are confident in their ability to cover living expenses for the next 12 months without going further into debt (61%, +8). Significantly more Albertans also rate their current debt situation as excellent (40%, +9) compared to pre-pandemic levels. More than a quarter (26%, +6) believe their debt situation is better now than it was a year ago, and over a third (36%, +7) believe it is better than it was five years ago.

The newfound optimism is also visible in measures showing fewer regret the amount of debt they have taken on in life (45%, -7) or are concerned about their current level of debt (46%, -2).

“The pandemic relief measures currently in place are likely the reason Albertans are feeling more optimistic, perhaps even hopeful about their personal debt situation. Many also found it easier to curb their spending while they were required to stay at home over the last few months,” says Donna Carson, a Calgary-based Licensed Insolvency Trustee with MNP LTD.

With widespread store closures leaving fewer opportunities for spending and many saving on gas and community costs as a result of working from home, Albertans say they have more wiggle room in their household budgets each month. On average, after paying their bills and debt obligations, they report having $387 more leftover at month-end than in early March, the largest increase compared to the other provinces.

“COVID-19 dramatically altered consumer spending with the closure of restaurants, theatres, malls, and other bastions of discretionary spending. Even with marginal increases in groceries, utilities, and online shopping, many households have reported significant savings which, in some cases, have made them feel more comfortable with their personal finances,” explains Carson.

Proportionally speaking, fewer Albertans say they are $200 or less away from financial insolvency at month-end than any other province — with a staggering 19 point decrease since early March (39%, -19pts). This includes 20 percent who report already being insolvent and not being able to cover their bills and debt payments; a decrease of 13 points since the last wave, the largest drop compared to any other province.

 “As the economy re-opens, what we will begin to see is creditors making efforts to get people back on track with their payments. That could mean increased monthly payments or extended loan terms. Those who already don’t have much left at month end may struggle to catch up,” says Carson.

So far, support from the government, mortgage deferrals, and the flexibility of creditors have all contributed to a significant decline in insolvency filings since the pandemic began. In May alone, consumer filings declined 38 percent in Alberta compared to the same month last year.

Given the already shaky ground Albertans were standing on before the COVID-19 crisis — not to mention the magnitude of the virus, its economic impacts, and the government response — Carson says it won’t be at all surprising to see nationwide insolvencies jump.

“As the government financial supports come to an end, deferred payments become due, and consumer spending begins to ramp up again, we expect to see these numbers swiftly return to the levels similar to what we saw before the pandemic,” says Carson.

“While it may be difficult to predict just how many Albertans will be in need of some form of debt-relief to help them recover from the pandemic, it would be fair to say it will likely be unprecedented levels, not unlike the scope of the pandemic itself.”

Some households are bracing themselves for a crash landing when the current relief measures end and leave them to face an uncertain post-pandemic economy. The number of Albertans who expect their debt situation to improve a year from now has declined (31%, -1). In fact, one in 10 believe it will worsen (15%, +6).

When asked about their debt situation five years from now, four in 10 Albertans expect it to improve (46%), a decrease of four points from pre-pandemic levels. As with the one-year timespan, one in 10 believe their debt situation will worsen (13%, +7).

For those who are struggling with debt, Carson notes that Bankruptcy is not the first nor is it always the best option. Licensed Insolvency Trustees are the only federally regulated debt professionals empowered to provide a full range of debt-relief options including Consumer Proposals, informal debt settlements, and bankruptcies. They take a customized approach and provide an unbiased opinion to help severely indebted individuals understand their rights and determine the best path forward.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 230 offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools.

In light of the social distancing measures currently in place, MNP LTD is currently offering free consultations via videoconferencing (Skype, Messenger, Zoom, FaceTime, etc.) and by phone. Their team of Licensed Insolvency Trustees are empowered to help those struggling financially to make the most informed choices to deal with their debt during this time. Visit MNPdebt.ca to book an appointment or to start a live chat.

About the Survey

These are some of the findings of an Ipsos poll conducted between June 1-2, 2020, on behalf of MNP LTD. For this survey, a sample of 2,001 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.

A summary of the provincial data is available by request.