52% of Albertans are $200 away from financial insolvency

Donna Carson, Licensed Insolvency Trustee with MNP, says it also marks a jump of 10 points from December 2020.

(Supplied by MNP)

“Pandemic-related financial relief measures provided some much-needed breathing room over the last year, but now we’re seeing a rapid reversal. The number of Albertans with virtually no wiggle room in their household budgets has increased significantly in the last three months, which suggests that we may start to see some falling behind on payments.”

Three in 10 respondents reported that they are already insolvent with no money left to cover their payments at month-end.

On average, Albertans are left with $620 after paying their financial obligations, a decrease of $73 or 11 per cent from December.

28 per cent have taken on more debt because of the pandemic including using credit cards, a line of credit, taking out a bank loan, or deferring mortgage payments.

Almost two in five said they have withdrawn from their emergency savings to cover household bills.

“Some Albertans may be seeing their bills coming due even if they are not back to full-time work or full wages,” says Carson. “While many are spending less and saving more as a result of pandemic measures, others are feeling more anxiety or having to increase their debt to stay afloat after job, wage, or small business loss.”

At the same time, some Albertans still plan on doing what Carson cautions against – taking on even more credit to pay for their expenses.

64 per cent believe now is a good time to buy things they could not otherwise afford and 43 per cent are more relaxed about carrying debt than usual.

Over one-third anticipate taking on more debt over the next year to pay their bills.

“Anyone who finds themselves taking on more debt to pay bills should seek professional debt advice right away. Stigma and embarrassment cause many people to struggle for years before getting help. Licensed Insolvency Trustees offer free, unbiased advice about your individual situation and the options available.”

Some options Carson gave for those who are struggling financially include:

Budgeting: Set up a monthly financial plan to balance and monitor income and expenses
Refinancing: Re-negotiate the term and interest rate on existing credit accounts to reduce the cost of your debt
Liquidating: Sell high-value assets like non-essential vehicles, recreational properties, sporting goods, and jewellery
Consolidating: Combine all of your debts into a single monthly payment with a lower average interest rate to reduce the number of payments at their total cost
Consumer Proposal: Work with a Licensed Insolvency Trustee to negotiate a legally binding settlement with creditors that will reduce the amount owed. This can be paid over a maximum of five years
Bankruptcy: A legal process of liquidating assets and potentially making monthly payments to eliminate outstanding debts

by David Opinko

52% of Albertans are $200 away from financial insolvency

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