MNP Survey: Indebted Canadians Say They Would Need To Make Almost 40 Per Cent More To Live Without Consumer Debt

Canadians are more reliant on debt than ever and the outlook for paying it off any time soon appears bleak. This is the story told by a recent Ipsos poll conducted by MNP LTD., which indicates a majority of Canadians (58%) believe a significant earnings increase is the only way they’ll be able to escape their debt. With the average household estimating a 37 percent wage boost would be necessary to pay off their creditors, it appears a poorly performing economy and nearly a decade of record-low interest rates have taken their toll.

Of particular concern are those who are already struggling financially – many of whom may already fit the definition of insolvency. Debtors in this category would need an increase of nearly 1.5 times their current income (49%) to live debt free.

Overall, the results underscore a dramatic shift in Canadians’ relationship with debt. In previous generations, consumers would focus first on putting money away for emergencies and use credit only sparingly when they knew they could afford it. Now, when faced with unexpected costs, such as home or automotive repairs – even basic household expenses, people are going straight to home equity lines of credit, credit cards or other high-interest debt vehicles to make up the difference.

With interest rates on the rise, households are increasingly vulnerable to the exploitive tactics of lenders: taking on more debts to cover their existing ones, investing more of their income just to cover the minimum payments and having less and less money to make ends meet. That’s how the cycle of debt begins; also why it’s so hard to escape. The seemingly expedient solution (debt) is rarely if ever the most affordable, and certainly the lest sustainable over the long term.

The survey also questioned Canadians about who is to blame for their non-mortgage debts. Interestingly, less than half (45%) blame themselves while one in five (20%) point the finger at external factors – including taxes (13%), a spouse (10%) and rising Bank of Canada interest rates (6%).

Even if someone does feel they’re responsible, however, it’s important to look past the potential shame and guilt they may be feeling and understand there are resources available to help. While a significant growth income may not be in the cards for everyone, debt freedom is still attainable for most people. From budgeting assistance to Consumer Proposals, there is an effective option to suit nearly every unique debt situation. It’s just a matter of reaching out and asking for assistance.

Other survey highlights include:

• Of those who have consumer debt, Albertans are more likely (69%) to say they would need a significant increase (21% or higher) in their household income in order to live without any consumer debt, compared to other provinces. This is followed by residents of Atlantic Canada (62%), Saskatchewan and Manitoba (59%), Ontario (55%), Quebec (51%), and British Columbia (50%).
• Those with a household income of less than $40,000 are more likely (67%) to believe they would need a significant increase (21% or higher) in their household income, in order to live without any consumer debt.
• On average, residents of Atlantic Canada feel they would need the highest per cent increase in household income (40%) in order to live debt free. Compared to other provinces, this is followed by Quebec, Alberta, Saskatchewan and Manitoba (38%); Ontario (37%) and British Columbia (35%).
• Saskatchewan and Manitoba residents are more likely to blame themselves (53%) for taking on consumer debt, followed by residents of Atlantic Canada (47%); British Columbia, Alberta and Ontario (45%); and Quebec (43%).
• Households with children are more likely to blame themselves (51%), their spouse (18%), or government taxation (17%) for their consumer debt, compared to those without children.
• Women (13%) are twice as likely as men (7%) to blame their spouse for taking on consumer debt.
• When viewed by region, Albertans are more likely to blame government taxation (17%), followed by residents of Atlantic Canada, Quebec and Ontario (13%); Saskatchewan and Manitoba (10%) and British Columbia (7%).

About MNP Debt

MNP LTD, a division of MNP LLP, is one of the largest personal insolvency practices in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working collaboratively with individuals to help them recover from times of financial distress and regain control of their finances. With more than 220 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit www.MNPdebt.ca to contact a Licensed Insolvency Trustee.

About the Survey

These are the findings of an Ipsos poll conducted on behalf of MNP LTD between March 12 and March 16, 2018. For this survey, a sample of 2,001 Canadians from the Ipsos I-Say panel was interviewed online. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +/- 2.5 percentage points, 19 times out of 20, of what the results would have been had all Canadian adults been polled. Credibility intervals are wider among subsets of the population.