Six in 10 (59%) Manitoba and Saskatchewan residents within $200 of financial insolvency; up 16 points since December, reaching a five-year high

One in three already technically insolvent, up 10 points

WINNIPEG, MB – April 8, 2021 – As pandemic-related government aid and loan deferral programs begin to wind down, the latest MNP Consumer Debt Index finds the number of Manitoba and Saskatchewan residents hovering close to financial insolvency has reached a five-year high. Six in 10 (59%) say they are $200 or less from not being able to pay all their bills and debt obligations each month — a whopping 16-point jump from December and the highest compared to the other provinces. This includes three in 10 (31%, +10pts) who report they are already insolvent with no money left to cover their payments at month-end.

“Government financial relief measures provided some breathing room over the last year, but now we’re seeing a rapid reversal,” says Tanya Reynolds, a Licensed Insolvency Trustee with MNP LTD in Winnipeg. “The number of Manitoba / Saskatchewan residents who have with virtually no wiggle room in their household budgets has quickly risen to the highest level in five years.”

Conducted quarterly by Ipsos and now in its sixteenth wave, the Index finds roughly a quarter (23%) of Manitoba and Saskatchewan residents have taken on more debt because of the pandemic. This includes using credit cards (10%), using a line of credit (4%), deferring mortgage payments (4%), or taking out a bank loan (2%). More than one in five (21%) have also reported relying on emergency savings to pay for household expenses.

“Some are seeing their bills coming due even if they are not back to full-time employment and have to take on debt to stay afloat,” says Reynolds.

With the spectre of rising interest rates looming over the medium to long term, nearly half (48%) are concerned about their ability to repay debts if and when that happens. About one in three (34%) worry rising interest rates could move them towards Bankruptcy.

Yet, despite the concern, significantly more (64%, +8) Manitoba and Saskatchewan residents believe the current low-rate environment makes now a good time to buy things that they otherwise couldn’t afford. Four in 10 (44%) even say they’re more relaxed about carrying debt than they usually are (-1 from December).

“Using credit to make ends meet has become a reflex for some, which makes them increasingly vulnerable to interest rate increases in the future,” says Reynolds. “For those concerned, it’s probably a good time to professional advice to help deal with concerning consumer debt.”

However, the survey found very few Manitoba and Saskatchewan residents plan to seek professional debt advice (3%) over the next year. Instead, it seems many plan to do exactly what Reynolds cautions against: taking on even more credit to pay their expenses. More than a quarter (28%) say they plan to take on more debt to pay bills over the next year, including using high-interest options like credit cards (7%) or payday loan service (4%).

“I cannot stress this enough: deeply indebted individuals — particularly those who find themselves taking on more debt to pay bills — should seek professional debt advice right away. Everyone’s situation is different, which why it is important to get customized, unbiased advice from a Licensed Insolvency Trustee,” says Reynolds. 

She says a Licensed Insolvency Trustee may recommend one or a combination of the following options depending on the extent of the debt and the individual’s overall financial situation:  

Budgeting — Setting up a monthly financial plan to help balance and monitor income and expenses and potentially free up more cash to pay down debt.

Refinancing — Re-negotiating the term and interest rate on existing credit accounts to reduce the monthly cost of debts and make them easier to repay.

Liquidating — Selling high-value assets such as non-essential vehicles, recreational properties, sporting goods, and jewelry to provide the financing to pay down debt.

Consolidating ­— Combining all debts into a single monthly payment with a lower average interest rate to reduce the number of payments and their total cost.

Consumer Proposal — Working with a Licensed Insolvency Trustee to negotiate a legally binding debt settlement with creditors that will reduce the amount owed and can be paid over a maximum of five years. Consumer Proposals can only be administered by Licensed Insolvency Trustees.

Bankruptcy — A legal process of liquidating assets and potentially making monthly payments to eliminate outstanding debts and help insolvent consumers achieve a financial fresh start. A Bankruptcy may only be administered by a Licensed Insolvency Trustee.

Government-regulated Licensed Insolvency Trustees are empowered to help Manitoba and Saskatchewan residents reorganize their financial affairs 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 processes.

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 240 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 sixteenth wave, the Index currently stands at 96 points, up seven points compared to the last wave conducted in December 2020. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the sixteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between March 4-9, 2021. 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.