More than half of Canadians are $200 away from becoming insolvent

More than half of Canadians are $200 away from becoming insolvent

More than half of Canadians are $200 away from becoming insolvent According to a recent Consumer Debt Sentiment Survey conducted by Ipsos Reid on behalf of MNP Debt, more than half of Canadians (56%) are now within $200 of being unable to handle their monthly expenses.

The online survey took place between September 6 and September 12, 2016. A sample of 1,502 Canadians from Ipsos’ online panel was interviewed online.

“With a weakened economy, a struggling loonie and in some provinces, many facing the reality of under or unemployment, many Canadians are so financially stretched they aren’t sure how they will keep up with the day-to-day cost-of-living, let alone their debt repayments,” noted Grant Bazian, president of MNP Debt.

The survey further revealed that the number of Canadians who say they’re concerned about their current debt situation is up almost 10% since February 2016 (43% in February 2016 versus 52% today).

Bazian has long expressed the need for Canadians to acknowledge the severity of their debt problems. He leads a national team of licensed insolvency trustees in over 200 offices, working tirelessly to address the nation’s debt crisis.  

“It’s actually positive to see that a growing number of Canadians are concerned. Many households have come to rely on cheap credit in order to cover expenses but we can’t continue to be comfortable taking on more credit to finance a lifestyle we can’t afford,” he said.  

Thirty-one percent of Canadians say they already don’t make enough money to cover their bills and debt obligations each month, which technically makes them financially insolvent.

“With so many already feeling unable to cover their bills and debts, there is tremendous vulnerability to any kind of economic shock – the loss of a job, an emergency, a divorce, even things like a reduction in overtime pay or bonuses – and especially an increase in interest rates,” noted Bazian.

Indeed, many Canadians are concerned about the potential negative impact of rising interest rates. Thirty-eight percent said they were concerned that an increase in interest rates could move them toward bankruptcy, compared to 31% who expressed the same concern in February 2016.

Douglas Porter, chief economist with the Bank of Montreal, said that approximately 70% of debt is tied up in mortgages and booming housing markets. He admitted that it was difficult to get consumers to believe they could face a sudden increase in interest rates, which currently stands at 2.7% for a loan tied to the prime lending rate.  

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