Half of Canadians say they are on brink of insolvency as coronavirus threatens to burst country’s consumer debt bubble

The coronavirus crisis is delivering an unprecedented financial shock to Canadians at a time when their personal finances were already fragile, says insolvency accounting firm MNP.

The MNP Consumer Debt Index, released Monday, found that about half of Canadians (49%) surveyed are now on the brink of insolvency, saying they are $200 or less away from not being able to meet their debt obligations each month. A quarter of these said they are already unable to meet those obligations.

“Our results underscore how vulnerable Canadian households are to income interruption. Over the next few months we’ll likely see an unfolding of two crises: the global pandemic and the bursting of the Canadian consumer debt bubble,” said Grant Bazian, MNP president.

As the coronavirus shutdown leads to layoffs across a wide range of sectors, one in three Canadians surveyed said they are worried that they or someone in their household could lose their job, an increase of 7 points since December. One in three also says they are not confident they can cope financially if they lose their job without going further into debt.

“The ability of many households to face any kind of financial disruption was already limited. Now all Canadians are feeling the effects on their paycheques, pocketbooks, and stock portfolios. Those who were already saddled with a lot of debt are in economic survival mode,” said Bazian.

Almost half of Canadians (46%) said they were concerned about their current debt levels, a 10-point jump from the previous wave in December and the highest percentage ever recorded since tracking began in 2017.

The MNP Consumer Debt Index tracks Canadians’ attitudes about their consumer debt and their perception of their ability to meet their monthly payment obligations.

Ipsos interviewed a sample of 2,000 Canadians aged 18 and over for this survey, which it says is is accurate to within ±2.5 percentage points.

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