COVID Consumer DEBT: Nearly Half of Canadians Plan to Take on More Debt When Pandemic Financial Support Ends (+10 pts)

Four in 10 (43%) Canadians still experiencing COVID-related disruption to their employment, despite improving jobs figures

CALGARY, AB – September 16, 2020 – Over the past few months, various financial relief measures from government, banks, and businesses have helped cushion the financial blow of the pandemic for many Canadian households. As these measures evolve or come to an end, the pandemic is still impacting household income for many. A new poll by Ipsos carried out on behalf of MNP LTD has found four in 10 (43%) Canadians are still experiencing disruption to either their own work situation or that of someone else in their household in the form of lay-offs, reduced pay, or fewer working hours.

“Short-term financial relief is ending but household finances are still disrupted. And on top of that, creditors will soon be looking for ways to catch people up on deferred payments,” says Grant Bazian, President at MNP LTD, the country’s largest insolvency firm. “While jobs are slowly returning across the country, that does not necessarily mean relief for all working Canadians.”  

Fifteen per cent of Canadians say they are currently working reduced hours or receiving reduced pay (-2 pts from June), with another nine percent saying someone in their household is experiencing the same situation (unchanged).

“Even in good times, many household budgets teeter on a knife-edge. We know many don’t have enough emergency savings to cope. And though we’ve yet to see any concrete evidence Canadians have significantly increased their debt loads since March, there’s reason to think many will turn to credit when relief measures end,” explains Bazian.

Among those currently receiving COVID-19-related financial support from the government, 45 percent say they will take on more debt in some form or another when that ends, an increase of 10 points since June. Two in 10 say they will use their line of credit (18%, +6) or borrow from friends and family (19%, +3). One in 10 (11%, +4) say they will take out a bank loan.

Bazian says historic low interest rates may be giving some a false sense of security that will result in increased borrowing. In addition, as eviction moratoriums end, those who are most vulnerable may turn to high interest credit.

The survey showed two in 10 (21%, +4) Canadians will use their credit cards to make ends meet when relief measures end. About one in 10 (8%, +4) say they will use a payday loan service.

Homeowners receiving COVID-19-related benefits are faced with particularly stark decisions; two in 10 (21%) say they will be forced to defer mortgage payments and 16 percent say they would have to sell their home to make ends meet once the support ends.

“Amid all the uncertainty the pandemic has caused, one thing is certain: the underlying debt problems Canadians face have not gone away. For the most financially vulnerable, the pandemic will likely thicken the debt quicksand they were previously trapped in,” explains Bazian.

According to the survey, about one in 10 Canadians currently receiving COVID-related benefits (11%, +5) indicate they will declare Bankruptcy if the financial support ends. Around the same number (10%, +3) say they will file a Consumer Proposal to address their debt.

“A Consumer Proposal or Bankruptcy may be the necessary step for some, but others simply need help developing a plan to deal with their debt. A Licensed Insolvency Trustee can help individuals choose the best option from a range of debt-relief solutions,” says Bazian.

Government-regulated Licensed Insolvency Trustees provide advice to Canadians struggling financially and, where appropriate, can even help them avoid Bankruptcy by facilitating an agreement with their creditors. They can also guarantee legal protection from creditors through the Consumer Proposal or Bankruptcy process.

“A lot of people have been dealing with feelings of isolation during the pandemic, but debt problems are not something people should face alone. There is immediate help available and a system in place to provide support and relief,” he says.

MNP LTD offers free consultations via videoconferencing (Skype, Messenger, Zoom, FaceTime, etc.) and by phone. Visit MNPdebt.ca to book an appointment or to start a live chat.

Other survey highlights include:

• About one in 10 (7%) say they’ve had to postpone payments on bills, credit cards, and taxes. This translates to about two million Canadians. Though this proportion reaches 11 percent among those who rent their home. Among those who own their home, five percent say they’ve had to defer their mortgage payments.
• Other plans for when COVID-19-related government financial support ends:
  • Nearly half (45%, -1) say they will likely have to cut back on consumer spending and expenses.
  • Three in 10 (31%, +1) say they will use their savings to pay their bills.
  • Fifteen percent (+2) say they will sell assets like their car, investments, or rental property.

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. 

About the Survey

These are some of the findings of an Ipsos poll conducted between September 1-3, 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 reques