More Than Half of Canadians Within $200 of Financial Insolvency

A Deep Dive into The Emerging Crisis

More Than Half of Canadians Within $200 of Financial InsolvencyIn the wake of the global pandemic, a startling financial revelation has emerged. Over half (53%) of Canadians are teetering on the edge of financial insolvency, finding themselves just $200 away from not being able to meet their monthly bills and debt obligations. It’s a significant rise of ten points from December, highlighting the growing financial strain experienced by Canadians nationwide.

A Five-Year High: The Damaging Impact of the Pandemic

More disconcertingly, three in ten Canadians (30%, +7pts) report complete insolvency at the end of each month, unable to cover all their payments. This alarming trend marks a five-year high in terms of financial instability, painting a bleak picture for the future.

The Reversal of Relief Measures

It’s clear that the pandemic-related relief measures that offered a financial lifeline over the past year are now losing their effect. As these government aid and loan deferral programs wind down, the financial crunch is starting to hit home for many Canadians.

The Ticking Time Bomb: An Avalanche of Defaults

The fear of an impending financial crisis is palpable. The risk of Canadians defaulting on their loans, mortgages, car payments or credit cards is becoming increasingly real. The pressure of debt is leading to a surge in financial anxiety, with households finding less money left over at the end of the month.

The Decline in Disposable Income

As per the data, the average Canadian is left with $625 after making their payments, a decline of $108 or 15 percent from December. The end of government aid programs, eviction bans, and payment extensions are likely contributors to this decline.

The Debt Dilemma

Many Canadians are facing a mounting debt crisis. A significant 25% confess to having taken on more debt due to the pandemic’s impact. This includes using credit cards (14%), lines of credit (7%), bank loans (3%), or deferring mortgage payments (3%). One in five (20%) has also reported dipping into their emergency savings to meet bill payments.

The Interest Rate Threat

The vulnerability of these debt-ridden individuals to future interest rate hikes is a major concern. Over half (51%) express worry about their ability to meet debt obligations should interest rates rise. About 35% fear that rising interest rates could nudge them towards bankruptcy.

The Debt Perception: A Cause for Concern

Despite the looming financial threat, many Canadians seem to have a casual attitude towards debt. Around six in ten (59%) believe that now is a good time to buy things they might not usually afford, and nearly half (49%) admit to being more relaxed about carrying debt than usual.

The Need for Professional Advice

A mere 4% of Canadians plan to seek professional advice or contact a Licensed Insolvency Trustee for debt relief options in the coming year. It seems many are planning to take on even more credit to pay their expenses, a move we strongly caution against.

The Role of Licensed Insolvency Trustees

Licensed Insolvency Trustees are government-regulated professionals who can help Canadians reorganize their financial affairs and offer legal protection from creditors. They can suggest several strategies, including budgeting, refinancing, liquidating, consolidating, Consumer Proposal, and bankruptcy, depending on the individual’s financial situation.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

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