The 2020 BC Consumer Debt Study, a new BC-specific study focused on consumer debt issues in the province, reveals that having a debt problem can lead to devastating impacts on a person’s mental health, physical wellbeing, and even their most important relationships.
Furthermore, recognizing the point at which debt has turned from manageable payment to money problem is not always easy, and many consumers may not realize how close they are to facing financial crisis until the situation is severe.
Sands & Associates’ Senior Vice-President and Licensed Insolvency Trustee Blair Mantin joined CTV News to share some of the study’s critical findings when it comes to how debt problems can affect us, warning signs to be on the lookout for, and where consumer can seek debt help.
Watch the clips here and read more below:
Key Findings from the 2020 BC Consumer Debt Study
Over 1,800 consumers across BC who eventually made the decision to file personal bankruptcy or consolidate their debts with a Consumer Proposal were polled as part of the study, weighing in with their unique insights.
Impacts of Financial Stress
Findings of the 2020 BC Consumer Debt Study highlight the alarming realities of how debt-stress manifested for consumers prior to them ultimately seeking professional debt help:
- The stress of debt caused a range of effects, including:
- Feeling helpless and/or hopeless
- Arguments with spouse or partner about money
- Nearly 80% of study participants said their debt-stress resulted in anxiety or depression.
- Roughly 1 in 6 people said the stress of debt resulted in them experiencing thoughts of suicide.
- Over two-thirds of participants said their self-esteem suffered because of being in debt and 65% of respondents said their health suffered.
- Nearly 70% of respondents said their relationships with family and others were negatively impacted by being in debt.
- Almost 40% said being in debt prevented them from moving forward with milestone life events such as starting a family or purchasing a home.
Debt Problem Warning Signs
Two-thirds (66%) of participants in the 2020 BC Consumer Debt Study said ‘overwhelming stress’ was how they knew their debts were becoming a problem. Other signs of a debt problem reported were:
- ‘Only making minimum payments,’ reported by almost 60% of respondents.
- ‘Accumulating more debt,’ noted by about 45% of participants.
- Around a quarter of people (27%) said they realized their debts were becoming a problem because they were using credit to make debt payments.
- 20% said being turned down for a bank consolidation loan was a clear indication that their debts had reached an unmanageable level.
It is striking to note that that the top-most reported sign of a debt problem wasn’t “transactional”, but rather could be evaluated by the toll debt was taking on the individual. The impacts of debt stress can be serious; emotionally, physically, financially – virtually all aspects of a person’s life can be impacted by a debt problem.
Money Stress and Worrying About Debt
Past studies have shown that money often becomes a daily worry for people who are struggling with their debt – the 2020 BC Consumer Debt Study aimed to identify some of the specific concerns for consumers dealing with financial strain:
Prior to finding a debt solution to address financial problems, respondents’ top worries were:
- Paying off debt, reported by over 75% of respondents.
- More than 65% of participants worried most about being able to meet their basic costs of living.
- Seeing debt balances remain almost the same every month was a top concern for about 55%.
- Not having enough money to fund retirement was reported by a third of respondents.
- Over 20% of participants worried about not being able to buy things for their children.
Delays in Seeking Debt Help
Only around 5% of study respondents say they sought professional debt help right away. There were a range of reasons respondents reported as leading them to wait to seek help, with troubling findings:
- Over 70% said they were trying to manage on their own.
- 38% said thought there was no solution to their situation, and 32% didn’t know where to seek help.
- Sadly, many people were held back in seeking support they ultimately needed because they felt ashamed they couldn’t manage their debts (49%) as well as worry about being judged or being embarrassed to ask for help (46%).
After taking action by consolidating debt with a Consumer Proposal or declaring bankruptcy, consumers’ money stress appears greatly diminished, with positive changes being noted in many areas:
- Around 37% of study participants say they worry now about meeting living costs – a sharp decrease from more than two-thirds of individuals who worried about being able to meet their basic costs of living prior to resolving their indebtedness.
- After receiving professional debt help, consumers’ attention dramatically shifted to allow consideration of financial goals such as funding retirement (48%) or wanting to buy a home (30%).
Discovering the light at the end of the tunnel and getting a plan to be debt-free can be an extremely positive experience, even life-changing:
- 65% of survey respondents said their experience allowed them to improve their budgeting and/or savings skills, as well as increase their confidence in day-to-day financial management.
- More than half (53%) said they now have a better understanding about credit and borrowing.
- Almost half (49%) of survey participants said they are now more open in discussing finances with others, and 40% said they gained financial skills and/or knowledge to share with others.
- Over 70% of respondents polled said they felt extremely satisfied about their choice of a Consumer Proposal or bankruptcy to deal with their debt and would recommend the option to others.
How to Cope with Financial Stress – Where to Get Professional Debt Advice
If you are dealing with a debt problem or helping someone else who might be struggling with debt above all know that you are not alone. Debt is a problem like many others in that it has solutions. Professional help and support are available.
In Canada there is only one professional endorsed, qualified and fully empowered by federal and provincial governments to assist consumers with debt – a Licensed Insolvency Trustee.
- You can access resources via a Licensed Insolvency Trustee confidentially to discuss your personal situation, get advice about your options and assess available solutions to deal with your debts.
- You are under no obligation to commit to any formal debt management proceeding.
- There is no cost to connect and get assistance.
When evaluating your personal financial situation, you may want to consider:
- Based on what you can afford to pay towards your debts each month, are you making true progress on paying them off? Particularly when it comes to credit card debt, minimum payments are generally not sufficient to get out of debt.
- Do the “rule of 60” math: Divide your total non-mortgage debts by 60 – does the number look like a monthly payment you could afford to pay your debts off in 5 years?
- Are you feeling any worry, anxiety or stress about your financial situation?
- Have you considered a consolidation loan, with or without a co-signer?
- Are you thinking about using assets such as your RRSPs or home equity to make debt payments?
- Are you avoiding your account balances, or filing tax returns from fear of the balances owing?
If you are feeling anxious but still not quite ready to take that step and connect with a professional, at least try to open up and connect with someone about what you are experiencing. You are not alone.
If you believe you’re approaching a “warning sign” debt situation, be especially cautious about relying solely on a self-assessment without getting professional advice from a Licensed Insolvency Trustee.
- The laws around consumer debts and their remedies are ever-changing and many people have misunderstandings about how debts can be resolved in Canada.
- We often hear from people who mistakenly believe they can’t get help with things like tax debt, or who are about to deplete retirement assets because they believe their creditors can get to them.
- Licensed Insolvency Trustees can help you assess your situation and evaluate all the options available to you so you can make informed decisions and take back control of your future.
- Even if your situation does not require a formal filing such as a Consumer Proposal consolidation or even personal bankruptcy, we can assist you in gaining knowledge about resources and remedies that may offer you relief you need to get back on track.
- Confidential consultations are free and can be done online from the comfort of your home.
To learn more about debt management options available to BC residents or get advice about dealing with debt book your free confidential consultation today.