MNP Consumer Debt Index reveals declining financial confidence and increasing debt concerns among Albertans as a result of pandemic

• Four in 10 not confident they can cover living expenses this year without going further into debt (+8).
• A quarter say they have taken on more debt as a direct result of the pandemic.
• Far fewer are confident in their ability to weather unexpected expenses without taking on more debt (27%, -6).
• One quarter have taken on more debt as a direct result of the pandemic.

CALGARY, AB –January 18 , 2021 — As the pandemic-related economic pain and wage losses continue in Alberta, there are signs 2020’s financial stressors will continue to exact a toll well into 2021. Now in its fifteenth wave, the MNP Consumer Debt Index finds four in 10 Albertans are not confident they can cover their living expenses this year without going further into debt. This represents an eight-point increase from September. The survey, which is conducted quarterly by Ipsos on behalf of MNP LTD., also finds four in 10 (44%, -2) Albertans are concerned about their current level of debt.

“Albertans’ financial confidence has reached a low point as we approach the one year mark of the coronavirus crisis. Our research shows financial pressure is mounting for a large proportion of the province — not only for those who have been directly impacted by job loss,” says Sandra Landry, a Licensed Insolvency Trustee with Alberta-based MNP LTD.

The survey found one-quarter of Albertans (24%) have taken on more debt as a direct result of the pandemic. This includes using credit cards (11%) or lines of credit (7%) to pay off bills, borrowing money from friends or family (9%), taking out a bank loan (2%), or using a payday loan service (5%). Perhaps because it was done out of necessity, far fewer regret the amount of debt they have taken on (40%, -11).

“Unexpected costs are the biggest cause of serious financial trouble, and the pandemic set many unexpected life-changing financial disturbances into motion — many which people didn’t prepare for and some no one possibly could have. The unanticipated reduction in household income may have a snowball effect for those who are already cash strapped, as many are taking on even more credit just to stay afloat,” says Landry. 

Far fewer Albertans (27%, -6) are confident in their ability to cope with life-changing events without increasing their debt burden. Just one-quarter of Albertans (25%, +4) believe they could cope with the loss of employment or a change in wage or seasonal work. Confidence in their ability to cope financially with the death of an immediate family member (20%, -8) or a change in their relationship status (27%, -2) has declined significantly.

With interest rates low, nearly seven in 10 (65%) feel now is a good time to buy things they otherwise couldn’t afford. Four in 10 (42%) say they’re more relaxed about carrying debt than usual.

“Low interest rates may be driving recklessness or impulsivity for some. But others are simply borrowing out of necessity. They’re struggling to make ends meet and making questionable money choices that could land them in a debt trap,” says Landry.

While the risks of heavily relying on credit are clear, far fewer Albertans say they’re losing sleep over how they’ll pay their bills (19%, -9) or afford essentials for their family (21%, -7). Similarly fewer Albertans (43%, -3) say they’re afraid they could end up in financial trouble if interest rates go up. One quarter (23%, -1) indicate that their debt is keeping them up at night.

“Low interest rates may be providing a false sense of security,” cautions Landry. “Coping with financial trouble by taking on additional debt is like trying to fill one hole by digging another.”

Landry says shame and pride often cause deeply indebted individuals to draw out their situation for far too long. Some may face aggressive collections activity or debt-relief scams which only result in more stress and more sleepless nights.

“Licensed Insolvency Trustees can guarantee legal protection from creditors and help people make informed choices to deal with their financial difficulties,” explains Landry. “Anyone feeling pressure or stress about their debt should get reputable, professional advice before making the decision to take on more.” 

To help severely indebted Albertans understand their rights and determine the best path forward, Landry and her team offer Free Confidential Consultations. During these sessions, Licensed Insolvency Trustees review an individual’s debt, savings, assets, income, and overall financial situation in order to make specific recommendations. They also provide information about each of the debt-relief options available — from debt reduction strategies and debt consolidation, to filing a Consumer Proposal or Bankruptcy ­— and explain each option in detail.

“We are specifically trained to help people find a path out of debt. A Bankruptcy or Consumer Proposal may be the right option for some, but others simply need advice to develop a budget and plan to deal with their debt. Everyone’s situation is different, which is why it is important to get unbiased, customized advice from a federally regulated Licensed Insolvency Trustee,” she says.

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. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3 Minute Debt Break Podcast.

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians. Now in its fifteenth wave, the Index currently stands at 89 points, the lowest reading ever recorded, on the heels of a record-lows in March and September of 2020. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the fourteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between December 1-3, 2020. For this survey, a sample of 2,000 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 some of the provincial data is available by request.