One in three (34%) Manitoba and Saskatchewan residents still experiencing COVID-related disruption to their employment

Indebted Manitoba and Saskatchewan residents urged to seek professional debt advice before borrowing more to make ends meet

WINNIPEG, MB – September 16, 2020 – A new poll by Ipsos carried out on behalf of MNP LTD has found one in three (34%) Manitoba and Saskatchewan residents 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. This represents an eight-point drop since June. Over the past few months, various financial relief measures from the government, banks, and businesses have helped cushion the financial blow of the pandemic for many Manitoba and Saskatchewan households. However, the pandemic is still impacting household income for many as these measures evolve or come to an end.

“While it is promising to see fewer Manitoba and Saskatchewan residents are still experiencing COVID-related disruptions to their household income, one in three continue to have some disruption. We’re going to see creditors beginning to collect deferred payments. And short-term financial relief from the government will soon come to an end. That is when we will start to see people’s pre-pandemic debt problems exacerbated,” says Gord Neudorf, a Winnipeg-based Licensed Insolvency Trustee with MNP LTD.

Twelve percent of Manitoba and Saskatchewan residents say they are currently working reduced hours or receiving reduced pay (-4 from June), while six percent say someone in their household is experiencing the same situation (+1).

“While we have yet to see definitive statistics indicating Manitoba and Saskatchewan residents have taken on significantly more debt since March, I wouldn’t be surprised if some are forced to rely more heavily on credit when government relief and deferral measures end,” explains Neudorf. “When this happens, they will essentially be borrowing against future paychecks, leaving a hole in their next paycheck. And that is a problem. It creates a cycle of debt that is very difficult to break free of.”

About one in 10 (7%) Manitoba and Saskatchewan residents say they’ve had to postpone payments on bills, credit cards, and taxes. This translates to about 179,000 residents across the two provinces.

“Individuals who are heavily saddled with debt and now missing payments should instead seek professional debt advice before borrowing more to try to make ends meet,” says Neudorf. He and his team offer free consultations via videoconferencing and by phone to anyone experiencing debt-related financial challenges. 

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

Nationally, 45 percent of Canadians who are currently receiving COVID-19-related financial support from the government say they will take on more debt in one 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. 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.

“There are going to be severe long-term setbacks for those renter households who are lower-income or fixed-income if they start relying on high-interest loans to keep up with their debt repayment obligations,” says Neudorf. “We will also see overleveraged homeowners in Manitoba facing some tough financial decisions.”

Two in 10 (21%) Canadian homeowners say they will be forced to defer their mortgage payments and 16 percent say they would have to sell their home to make ends meet once COVID-19-related support ends.

“There has been a great deal of uncertainty as a result of the pandemic. But one thing is certain: the underlying debt problems in the province have not gone away. The pandemic has simply allowed people to delay dealing with those problems,” explains Neudorf.

He points to the fact insolvencies are down significantly compared to last year as a result of pandemic-related financial support. The latest stats from the Office of Superintendent of Bankruptcy show insolvencies in Saskatchewan were down 44.8 percent in July compared to the same month last year and 10 percent for the 12-month period ending July 31, 2020.

Insolvencies are expected to increase significantly once COVID-related benefits end. According to the survey, about one in 10 (11%, +5) Canadians currently receiving benefits 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.

“There are cases where a Consumer Proposal or Bankruptcy may be the best choice, but these are not the only options available. In some cases, people simply need help developing a plan to manage their debt, and a Licensed Insolvency Trustees can provide a customized approach to that. They can also offer guidance regarding a range of debt-relief solutions to help individuals choose the right option for their needs,” says Neudorf.

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.

“Don’t feel like you have to face your debt alone. Speak with a professional. Support is available to help put indebted individuals on the right track,” he says.

Those in need of debt advice can visit MNPdebt.ca to book an appointment or to start a live chat.

Other survey highlights include:

• Nationwide, about one in 10 (7%) say that they’ve had to postpone payments on bills, credit cards, and taxes, translating to about two million Canadians. This proportion reaches 11 percent among those who rent their home. Among those who own their home, 5 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) of Canadians 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 (15%, +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 national data is available by request.