MNP Consumer Debt Index Update: Canadians increasingly pessimistic about their consumer debt

Index drops five points since September matching the lowest point ever recorded

• Nearly three in ten Canadians say they are already insolvent
• Half say they are $200 or less away from being insolvent at month end, up 2 points since September
• Almost half aren’t confident they will be able to cover their family and living expenses without going further into debt this year, up 2 points since September

CALGARY, Alberta, Jan. 20, 2020 (GLOBE NEWSWIRE) -- More Canadians see grey skies on the horizon for themselves and their families heading into the new year and beyond as fewer expect their debt situation to improve, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos. Canadians’ net confidence in their financial futures a year down the road dropped five points since September. When comparing their current debt situation to five years in the future, net confidence dropped six points.

“Our findings may point to a shift among some Canadians from debt apathy to debt hopelessness,” says Grant Bazian, President of MNP Ltd. “Feelings of hopelessness can make people feel like giving up on ever paying down their debt or, worse, ignoring the debt as it piles up higher.”

Now in its eleventh wave, the MNP Consumer Debt Index has dropped five points since September (96 points, -5) matching the lowest point ever recorded back in March 2018. The drop is not only driven by increasing pessimism among Canadians about their financial futures. Canadians also feel worse off now compared to the past. In fact, net optimism for both one-year and five-year timeframes have reached all-time lows or near all-time lows. One in five Canadians now say their debt situation is worse than it was five years ago.

“It is stressful for those who come to the alarming realization that there is no clear path to repay what they have borrowed, no matter the time horizon or interest rate,” says Bazian whose team of Licensed Insolvency Trustees across the country helps thousands of Canadians each year who are struggling with an overwhelming amount of debt.

Nearly three in ten (29%, unchanged) Canadians say they are already insolvent, meaning that they cannot meet all their monthly financial obligations. This proportion rises to 50 per cent (+2) when also including those who say they are $200 or less away from being insolvent at month-end. Almost half (49%, +2) aren’t confident they will be able to cover their family and living expenses without going into further debt this year.

“Continually financing a lifestyle on credit – particularly on the expectation of rising home prices – is a recipe for trouble,” Bazian says. “Anyone using any kind of credit to make ends meet should sit down with a licensed professional to review their finances, create a budget and make sure they have a plan in place that will allow them to weather rainy-day expenses.”

The index showed that Canadians are uneasy when it comes to being prepared for the unexpected. For example, only about three in ten (27%) are confident in their ability to cope with a life-changing event such as a serious illness (-3), the loss of employment or change in wage or seasonal work (-4) without increasing their debt load.

“Breaking the debt cycle means not only paying off your creditors, it also means changing your mindset and behaviors to avoid getting back into the same trouble in the future,” says Bazian.

He says that while it seems that more Canadians are starting to seek professional help with their debt, one of the biggest behavioral changes required among those who are severely indebted is the tendency to isolate rather than reach out for guidance. 

“Often by the time clients arrive in our offices they have been struggling unnecessarily with their debt for years – even decades,” he explains. “If debt is causing stress or impacting relationships, it’s time to get some support. Don’t wait. There is no minimum or maximum debt required to seek help.”

MNP Ltd. offers free consultations and their team of Licensed Insolvency Trustees are empowered to help those struggling financially to make the most informed choices to deal with their debt. Licensed Insolvency Trustees are the only federally regulated professionals who can provide regulated insolvency options, such as a consumer proposals and bankruptcies.

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 Canadian 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 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. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the eleventh wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between December 4 and December 9, 2019. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. 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. 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 request.

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