Nearly half of Canadians on the verge of a financial crisis

Nearly half of Canadians on the verge of a financial crisis

Nearly half of Canadians on the verge of a financial crisis

by Nicolas Heffernan

$200 a month: not a large amount by any stretch of the imagination.

Yet 48% of Canadians are either $200 or less per month away from not being able to meet all of their bills or debt obligations each month, according to a new Ipsos poll conducted on behalf of MNP Debt.

"Many Canadian households have come to rely on the continued availability of cheap credit in order to cover basic expenses. That makes them tremendously vulnerable to interest rate hikes," says Grant Bazian, President at MNP Debt where he leads a national network of Trustees who have been working on the front lines of Canada's record-setting consumer debt levels. 

For three in ten Canadians, things are so tight that they plan to take on more debt to pay regular household expenses in 2016. The poll underscored Canadian's vulnerability to interest rate increases revealing that one in three (31 per cent) feel that any increase could move them towards bankruptcy.

For advisors, it represents another opportunity to help clients manage their finances and get to the point where they can start creating wealth.

Given the weakening economy and the expectation that interest rates will rise in the coming years, it is unsurprising that four in ten (43 per cent) regret the amount of debt they've taken on and an equal number are concerned about their current level of debt.

Despite their concerns, only 16 per cent said that they plan to look for information or consult a professional about financial insolvency or bankruptcy. Nearly half do not know where to turn if they were to become financially insolvent. 

"So many people feel helpless when it comes to their debt and that is clearly exacerbated by the fact that many do not know where to turn for help. By the time people speak with a Trustee they are often in an absolute crisis situation; their homes are at risk, their accounts have gone to collections, their wages are being garnished. Had they sought out help earlier, there would be far more options for them. The biggest mistake people make is waiting too long before seeking help with debt," says Bazian.

According to the poll, the average Canadian debtor estimates that it will take it approximately 7 years before they are debt free and fifteen per cent believe that they will never be debt free.
  • Michael J Dumond CFP ChFC CLU TEP 2016-02-17 12:33:49 PM
    How much further strain on these peoples meeting current debt management would the proposed Ontario Pension plan levie. Or rising cost of Hydro. Thank fully the Liberals have pushed it off 2 years. This article is proof that the average worker in Ontario cannot afford to give up $100.00 per month from their paycheck for the the Wynn gov. OPP.
    Post a reply
  • Murray Schultz 2016-02-17 12:34:58 PM
    Looming insolvency is a secret that many households will not be able to protect any longer. The credit bubble is the single most corrosive process at work in our economy. In large markets such as Vancouver and Toronto, people have been living well beyond their reliable means for at least a decade. Out-sized real estate pricing, low wages and declining CDN dollar purchasing power have combined with poor investment returns to make us a nation of underclass citizens in comparison to foreign investors, particularly in the real estate sector. The question is, on what basis have bank and credit card companies expanded personal credit? It can't all be about wallet share.
    Post a reply
  • Donn j Cahill 2016-02-21 5:11:24 PM
    For one sector of the market the home owners, we as independent mortgage agents try to get clients to use any and all options to pay down their mortgages faster ie; annual & monthly prepayments coupled with an accelerated-Bi wkly frequency and to consolidate debt. We do this, so in difficult times clients will have their home as a fiancial resource to draw on ! One issue is banking institutions only make money by keeping their clients in debt, higher interest credit cds, Locs and loans.
    Post a reply