Insolvency fears soar as pandemic costs climb
Albertans the most worried in Canada
About half of Canadians and 58 per cent of Albertans are on the brink of insolvency amid the COVID-19 outbreak, according to a survey by a Calgary-based debt-counselling firm.
In its latest quarterly survey, MNP Ltd. found the number of Albertans who say they ’re $200 or less away from being unable to cover their monthly bills is nine per cent above the national average.
It also found 46 per cent of Canadians are concerned about their current debt levels (10 per cent more than in December), while at the same time 34 per cent fear someone in their household will lose their jobs — a seven-point increase.
In Alberta, those numbers come as oil prices sink to record lows, noted Donna Carson, an MNP licensed insolvency trustee in Calgary.
“It has affected the oil economy and not just that — it’s affected everything around it,” said Carson. “A lot of people do live paycheque-to-paycheque, whether it’s from necessity or lifestyle.”
Calgarian Claire Hill said she was already facing hard times, and the arrival of COVID-19 has only made things tighter. Work in the film industry has petered out and prospects for a possible job — producing an airlines ad — disappeared for her when that industry was clobbered, she said.
“The good thing about having nothing is having nothing to lose,” said Hill, 53. “The hardest thing about Alberta is the domino effect — everything just keeps getting pushed down.”
But she said seeing homeless people struggle through the crisis puts things into perspective.
“I have a place to live where I can self-isolate … I have a supportive family,” added Hill, who lives in subsidized housing downtown.
Michael Shepherd is another Calgarian on the economic edge after his acting jobs — and a role portraying a patient for medical students — were suspended.
“My situation is much harder as being self-employed for 18 years, I can’t receive EI (employment insurance) and … I have been out of work since March 14,” he said.
Shepherd, whose pub entertainment jobs have also ended, said he’s had to renegotiate his rental payment schedule with his landlord.
While economic problems are already serious, the worst is yet to come as the fallout from shuttered businesses, layoffs and other novel coronavirus effects set in, said MNP president Grant Bazian.
“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 Bazian.
COVID-19’S bludgeoning of the economy has exacerbated existing insolvency issues, leading many clients to seek more leniency in debt-reduction arrangements, known as proposals, said Carson.
Federal aid in the form of COVID -19 financial assistance to businesses and laid-off employees, she said, will help in the short term but won’t address the longer-term structural issues.
ATB Financial said it has already qualified hard-hit customers for $4.8 billion in deferred loans as part of its COVID-19 relief program.
“It’s an ongoing effort, with our team busy working with each customer to understand their needs,” said an ATB email statement.
Meanwhile, a quarter of the country’s small businesses won’t be able to pay April’s mortgage or rent, suggests a survey by the Canadian Federation of Independent Business (CFIB).
“Last week brought good news for many with respect to an increased (federal government) wage subsidy but the next big bill looming for many is commercial rent,” said Laura Jones, CFIB’S executive vice-president.