The MNP consumer debt index highlights the financial increase in

CALGARY, Alta., July 20, 2020 (GLOBE NEWSWIRE) – While the financial situation of many Canadian households looked grim in the past quarter, many have been kept afloat thanks to the current round of pandemic-related support programs. After hitting a record low in early March, the MNP consumer debt index climbed three points to 96, with growing optimism about personal finances. The quarterly survey, conducted by Ipsos on behalf of MNP LTD, found that Canadians are more confident than ever that they can cover their living expenses over the next twelve months without taking on more debt (61%, +3). Compared to pre-pandemic levels, many more Canadians rate their current debt situation as excellent (43%, +5).

The renewed optimism is also reflected in measures showing that fewer regret the amount of debt they have incurred in life (44%, -3) and are less concerned about their current level of debt (40%, – 6). More than a quarter (27%, +1) consider that their debt situation is better today than a year ago and more than a third (35%, +1) think it is better than five years ago.

“The fact that many Canadians are more optimistic or even optimistic about their personal debt situation is likely the result of the pandemic relief measures. But it could also be the result of Canadians comparing their own situation to what is happening in other parts of the world, ”said Grant Bazian, President of MNP LTD. “Plus, many have found it easier to spend less in recent months since they had to stay home.”

With widespread store closings leaving fewer spending opportunities and the many savings in gas and transportation costs through working from home, Canadians now say they have more wiggle room in their family budget every month. . On average, once their bills and debts are paid, they report having $ 148 more at the end of the month than at the beginning of March.

“COVID-19 has dramatically altered consumer spending since the closure of restaurants, theaters, malls and other strongholds of discretionary spending. Even with marginal increases in groceries, utilities and online shopping, many households have reported significant savings which in some cases have made them more able to cope with previously unsustainable debt payments, ” explains Bazian.

The number of Canadians who report being $ 200 or less from financial insolvency at the end of the month is down six points since early March (43%, -6). This proportion includes 22% who say they are already insolvent and cannot cover their bills and debts.

“Even if spending doesn’t immediately return to pre-pandemic levels, it wouldn’t take much to push many households back into dangerous territory. A few hundred dollars a month – less an unplanned auto repair or lost overtime pay – may be enough to tip the scales once again towards an insolvency scenario, ”Bazian explains. “As the economy begins to reopen, we should also expect to see a series of efforts from creditors to catch up with people. Whether this takes the form of an increase in monthly payments or an extension of loan terms, the bottom line will likely see most households further behind and more in debt. “

So far, government support, mortgage deferrals and creditors’ flexibility have all contributed to a significant drop in bankruptcy filings since the start of the pandemic. In May alone, consumer deposits were down 51% from the same month last year.

Given the already fragile ground on which Canadians stood before the COVID-19 crisis – not to mention the scale of the virus, its economic impacts and the government’s response – Bazian says he will not be at all surprising to see insolvencies on a national scale surging.

“At best, we’ll likely see these numbers return to baseline quickly as federal grants and stimulus dollars dry up, creditors begin to claw back deferred payments, and consumers return to pre-government spending levels. pandemic, ”Bazian said.

For those who are struggling with debt, Bazian notes that bankruptcy is do not the first and it is not always the best option. Licensed Insolvency Trustees are the only federally regulated debt professionals licensed to provide a full range of debt relief options, including consumer proposals, informal debt settlements and bankruptcy. They take a personalized approach and provide unbiased opinion to help people with serious debt understand their rights and determine the best course of action.

“It’s hard to predict how many Canadians will need some form of debt relief due to COVID, but it’s not a big leap to say that it will likely be as unprecedented as the scale of the pandemic itself, ”Bazian said.

Other survey results:

  • Some households are bracing for a hard landing when current relief measures end and leave them to contend with an uncertain post-pandemic economy:
    • The number of Canadians who expect their debt situation to improve within a year has decreased (33%, -3) and, in fact, one in ten think it will get worse (11% , +2).
    • When Canadians are asked how they think their debt situation will be in five years; four in ten say they expect an improvement in five years (42%), a decrease of six points from pre-pandemic levels. As with the one-year period, one in ten thinks that their debt situation will get worse (10%, +2).
  • Some groups are proportionately more affected by the pandemic in terms of the leeway they now have at the end of the month:
    • Women see a smaller increase in their average finances at the end of the month ($ 97 vs. $ 202 for men).
    • Generation X also sees a smaller increase ($ 78 versus $ 325 for Millennials and $ 134 for Baby Boomers); they are the generation most likely to be in the workforce (as opposed to retirees or in school) and have unpaid debts.
    • While the scale of increases varies from Atlantic Canada (+ $ 73) to Alberta (+ $ 387), those in Saskatchewan / Manitoba are the only ones to see an average decrease in money at the end of the month (- $ 98).

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency firm in Canada. For over 50 years, our experienced team of Licensed Insolvency Trustees and Advisors have worked 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 with an overwhelming amount of debt each year. Visit DebtMNP.ca to contact a Licensed Insolvency Trustee or use our DIY Debt Assessment Tools.

In view of the social distancing measures currently in place, MNP LTD currently offers free consultations by videoconference (Skype, Messenger, Zoom, FaceTime, etc.) and by telephone. Their team of Licensed Insolvency Trustees is empowered to help people struggling with financial difficulties make the most informed choices to settle their debt during this time. Visit DebtMNP.ca to make an appointment or to start a live chat.

About the MNP Consumer Debt Index

the MNP Consumer Debt Index measures the attitude of Canadians towards their consumer debt and assesses their ability to pay their bills, incur unexpected expenses and absorb fluctuations in interest rates without approaching insolvency. Produced by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians. Visit MNPdette.ca/CDI to learn more.

The latest data, representing the thirteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between June 1 and 2, 2020, on behalf of MNP LTD. For this survey, a sample of 2,001 Canadians aged 18 and over was interviewed. The weighting was then used to balance the demographics to ensure that the composition of the sample reflects that of the adult population according to census data and to provide results intended to approximate the universe of the sample. The accuracy of Ipsos online surveys is measured using a credibility interval. In this case, the survey is accurate to ± 2.5 percentage points, 19 times out of 20, if all Canadian adults had been surveyed. The credibility interval will be wider among subsets of the population. All polls and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.

A summary of provincial data is available upon request.

CONTACT

An infographic accompanying this announcement is available on https://www.globenewswire.com/NewsRoom/AttachmentNg/f65a3b4c-893e-42b2-998d-63d6e43bd36c

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