Insolvency filings down by 50% in province

Surge expected in the fall if programs come to an end

An Edmonton insolvency expert says filings have dropped by about 50 per cent in Alberta since the end of March due to the COVID-19 pandemic, but that doesn’t necessarily mean the future is bright.

Zaki Alam, senior vice-president of insolvency and a licensed trustee with MNP in Edmonton, said he expects the financial support from the governments like the Canada Emergency Response Benefit is a major factor. Reluctance to visit a trustee during time of economic uncertainty and a global pandemic — even though services are still offered remotely — is likely another factor.

But Alam said he doesn’t expect it to stay this way for long.

“We estimate that there will be a big surge of people needing help in the fall ... Obviously no one knows what’s going on, how long this government help will last for,” Alam said Friday.

He said many could be unsure about whether temporary layoffs will become permanent. Edmontonians may be holding off until there is more certainty in their financial future, he believes.

Alam said people feeling financial pressures should take a step back and take stock of the situation.

“Don’t panic, there is help,” he said. “If there’s help from the government, use that first and see what happens. And then, if their job situation is a bit more certain, then obviously they could figure out what to do next.”

He said people should remain calm, contact their lenders to see if they can come to an arrangement and if deferring payments is an option. He said many lenders have been understanding.

“Hopefully, common sense prevails. Everyone’s in this together, that maybe we can basically work through this, and then figure out what comes up in the next three, four months.”

In a call with other insolvency professionals across Canada this week in his role as president of the Alberta Association of Insolvency and Restructuring, Alam said he heard filings were down by about the same amount across the country.

Transunion updated its 2020 credit forecast on Thursday, predicting more Albertans would fall behind on their credit card and non-mortgage debts because of COVID-19 as well as plummeting oil prices.

Transunion predicted as many as 8.3 per cent of Albertans could face serious delinquency by the third quarter of 2020.