By Shaun Penner

Insolvency

44% of Albertans are within $200 of insolvency: Report

Jul 30, 2019 | 5:30 AM

The amount of people in Grande Prairie and the rest of Alberta on the edge of financial bankruptcy remains at very high levels.

The Consumer Debt Index, a report produced by the accounting firm MNP, states that 44% of all Albertans feel they are within $200 of being financially insolvent.

The lone piece of good news in that is it’s a 4% improvement from the last report in March.

“I’ve been going to Grande Prairie for 15 years now, and I haven’t seen this level, in the past two or three years over that 15-year period,” said Senior Vice President of Insolvency with MNP Zaki Alam. “Even back in 2009-10, when there was a spike.”

“This is deeper than that.”

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A lot of this issue stems from the downturn in the economy, especially the oil and gas industry. Many who have either lost their jobs or are working less than they are used to are finding themselves relying too heavily on credit to make ends meet.

“The Peace region is obviously typical of that. People started to use credit to subsidize their income,” said Alam. “It’s no secret that the income for most people has gone down over the past few years with the re-adjustment of wages, across Alberta generally. That’s contributed towards the overall debt load.”

What makes that worse is there are many out there that would feel too ashamed to get debt relief if they ended up in that situation.

That same report shows 46% of all Canadians are too embarrassed to seek help for their financial troubles. It also come down to a lack of financial awareness and understanding, as the report also says 30% of Canadians don’t know how to get out of debt, or where to turn for help.

Alam says the first steps to getting your debt under control is to simply keep very close track of both your income and expenses. If you find yourself in too deep with fixed expenses such as vehicle payments, a mortgage or any other loans, then talking to a Licensed Insolvency Trustee to figure out your options may be the next step.

“So you can go, as an example, to our office and meet up with our local person… and they can do a financial appraisal of the individual, go through the budget and debt load, see where they will be at down the line, and is it worth while doing something, whether it is a (consumer) proposal or a bankruptcy,” said Alam. “Or, do something else like a debt management program with Money Mentors or the Credit Counselling Society, as well.”

It is also important to know the differences between a bankruptcy and a proposal. MNP provides the following definitions:

• Bankruptcy: A structured, formal process that provides a fresh financial start. You’ll be relieved of all debts to unsecured creditors while still retaining select assets.
• Consumer Proposal: A flexible process that allows you to negotiate the terms of your repayment to unsecured creditors – including the amount you’ll pay back and the timing of your payments. In addition, you’ll retain all your assets.

If you are going down either of these routes, it is important to know that only a Licensed Insolvency Trustee can legally file either of those on your behalf. Alam says to watch for the “quick fix, aggressive” solutions that are out there.

“The main thing is to take a look at your financial situation, and then don’t delay in getting help.”